RB Global, Inc. (RBA) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by and welcome to the Ritchie Bros. Investor Day Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Sameer Rathod, Vice President of Investor Relations and Market Intelligence. Please go ahead, sir.

Hello, and good morning, and thank you for joining us for our Virtual Investor Day. Joining me today are Ann Fandozzi, our Chief Executive Officer; and Sharon Driscoll, our Chief Financial Officer; as well as other members of the management team who will present and will be available for Q&A. The following discussion will include forward-looking statements. Comments that are not a statement of fact, including projections of future earnings, revenue, gross transaction value and other items, the acquisition of Rouse and the anticipated benefits of acquisition are considered forward-looking and involve risks and uncertainties. The risks and uncertainties that could cause our actual financial and operating results to differ significantly from our forward-looking statements are detailed in our SEC and Canadian Securities Filings available on our Investor Relations website at investor.ritchiebros.com. We encourage you to review our earnings release and Form 10-Q, which are available on our website as well as EDGAR and SEDAR. On this call, we will discuss certain non-GAAP financial measures. For the identification of non-GAAP financial measures, the most directly comparable GAAP financial measures and a reconciliation between the 2, see our earnings release and Form 10-Q. Presentation slides accompany the commentary today. These slides can be viewed through the live or recorded webcast or downloaded from our website. All figures discussed on today's call are in U.S. dollars, unless otherwise indicated. I'll now turn the call over to Ann Fandozzi, our Chief Executive Officer.

Thank you, Sameer, and thank you to everyone for joining us virtually. I would like to start this call by saying that all of us at Ritchie Bros. hope that you and your loved ones remain safe and healthy during this unprecedented global crisis. We all look at the numbers and the news every day, and here at Ritchie Bros., we continue our drumbeat of health and safety every day for the benefit of our employees and customers. At the end of our time together today, I want you to walk away clearly understanding our new vision of becoming the trusted global marketplace for insights, services and transaction solutions for commercial assets. Turning to the agenda page. You can see we have a lot to share. Today, what we will be talking about is our long-term vision of becoming a trusted global marketplace, and how we are going to get there. Is this agenda a comprehensive list? No. But we want to give all of our stakeholders a deep understanding of where we're headed and ensure we are on this journey together. Next slide, given this event is virtual, we are taking a belt and suspenders approach here and have prerecorded some parts to optimum sound quality and limit any technical difficulties. Although we wish we could be with you in person, the entire management team that you see on this slide here is with us on the call live, and we look forward to interacting with you during our 2 Q&A sessions. There are a lot of new faces on the page, including mine, but there are also a lot of faces you recognize. And together, this is the winning team that is going to help Ritchie Bros. evolve into our global trusted marketplace vision. Next slide, so let's talk about my story in perspective first. I get asked all the time, what do you think, 4 months in, 6 months in and now almost 12 months in? And the answer always starts the same. This is a magical business. And the more I get into it, the more fascinating it becomes with endless possibilities. When I was diligencing Ritchie Bros., I formed several hypotheses. I share these with you, so you understand the analytical lens through which I think about the business, a testament to my being a geeky engineer, first and foremost. My first hypothesis was growth potential. About roughly $5 billion GTV, the U.S. is $2.8 billion; Canada is $1.2 billion; and international was about $1 billion or 20%. So the U.S. to Canada relationship is roughly 2:1. And most metrics one looks at, be they consumer or financial, U.S. to Canada should be 10:1. Obviously, unlocking this potential will take work, but knowing that it's there gave me confidence. Similarly, international is 20% of the total business. And any metric, the international business should be equal or greater than North America. So coming in, I thought there was a long runway for growth. And after being here for 12 months, I have even more conviction that this is right. But -- and this is where it's hard to contain my excitement. Let me tell you the rest of the story, it's even better. And that is what this Investor Day is about. It is about our long-term vision, the growth, and how we're going to get there. We have all heard the $300 billion number, the annual transactions of used commercial equipment, of which auctions address about 10%. And today, we have less than 20% of that. In the other 90% or so, we don't have significant participation at all. Our marketplace strategy, as you will hear throughout the day, not only allows us to participate more completely in this 90%, but also offer products and services associated with these transactions, not included in the $3 billion headline number. As an example, think about parts sales and service contracts. By the very nature of what we do, we transact, use commercial equipment, they require parts and service. The global trusted marketplace to which we are evolving will allow us to participate in this value stream, to name one example. Next slide. Let me now introduce our strategic pillars. Each one of these pillars is instrumental in supporting our vision of becoming the trusted global marketplace for insights, services and transaction solutions for commercial assets. To be clear, each one of these pillars is about enabling growth. And let me just say that I and the entire leadership team are excited by the growth we see ahead of us. Let me talk about each one in a little more detail. First, let me talk about customer experience. Offering the best customer experience is paramount in today's world and here at Ritchie Bros., we already have a culture that is centered around the customer. We say we bleed orange, a real passion to go to great lengths to do anything for our customers. But going to any length to help the customer isn't enough. We need to learn of new ways to make the customer experience easier, so our team doesn't need to bleed. And part of this journey is making our process easier, our offerings more complete and our brand simpler. You will hear more about this from Jim Kessler, our Chief Operating Officer. Next is the employee experience pillar. You cannot deliver a great customer experience without great employees. This involves creating the best workplace for all employees and creating a place where they want to stay. This is about diversity. This is about inclusion. This is about having open and honest, 2-way lines of communication with our value team members. We have an [ ask and e-mail ], where anyone can send an e-mail for any reason. I personally read all of these and respond. Sometimes it's about things like where is my T-shirt. And if that's on people's minds, we figure out where their T-shirt is. But more often, it's a venue to share real thoughts about our business and how to make it better. The very best employee experience is about our monthly townhall. It's about listening and solving issues that are important to our employees. It's about fixing processes, and using technology to remove human band aids from our operations and drive productivity. You will hear more about this from Carmen Thiede, our Chief Human Resources Officer. The next pillar is about a modern architecture. Our business is transforming to a trusted global marketplace and the architecture underneath it needs to evolve as well. Technology is ever-changing. And having a modern architecture is about flexibility and agility to enable scalable growth for us, our customers and our partners. You will hear more about this from Baron Concors, our Chief Information Officer. The fourth pillar is about industry-leading inventory management system, or IMS. We see our IMS as a gateway into becoming a marketplace and a single source of truth for inventory. Just like having an integrated view of our customers, we need a similar integrated view of our customers' inventory. This is about having a road map and helping customers make decisions. It will also simplify our workflows and make the process digital, automated and scalable. You will hear more about the evolution of Ritchie Bros. Asset Solutions or RBAS from Matt Ackley, our Chief Marketing Officer. Now finally, let's talk about the growth pillar. While we're thinking strategically about the key building blocks for transformational growth for the long term, there are some shorter-term opportunities that are just so critical that we want to get after them right away. This is where you're going to hear us talk about becoming a learning organization, about pilots from which we learn and transform our business. The best part about these pilots, we make money as we learn. What's better than that? You'll hear about 2 examples of these pilots from Kari Taylor, our President of North America; and Karl Werner, our President of International. Next slide. You heard me introduce some of the new faces a few slides ago. But let me go through and talk about the changes we have made and how they align with the strategic pillars and how we see them enabling our growth story. We created a new Chief Operating Officer role and hired Jim Kessler to lead that. Jim comes from a long, rich history of finance and operations experience. And when one thinks about transforming 60 years of Ritchie Bros. operations and 20 years of IronPlanet operations into one cohesive customer experience, I couldn't think of anyone more able than Jim. I joke that this job is so simple because he only has 3 KPIs, delivering the best customer service with the lowest cost to serve with the highest share of wallet. How simple is that? When our prior CHRO retired, Carmen was my first choice. She is a people leader, who has a passion and love for people, coupled with a math degree, a unique combination of analytics and heart, what more could you want? She is phenomenal and has already made a huge impact to the Ritchie Bros. organization. And when it became clear that a modern architecture was a critical step in our evolution, we asked Baron Concors to join us. He has previously led very successful digital transformations at significant scale at other companies and could bring those learnings here to fast forward our digital evolution. A truly premium problem we have at Ritchie Bros. is that there are so many things we can do and so many ways we can grow. A great organization understands that just because you can do something doesn't mean you should. And prioritization, analytics and KPIs become critical success factors. We asked Kevin Geisner to join us as the Head of Strategy. He comes to us with a perfect blend of strategy experience from McKinsey and a digital-first mindset from his time at Microsoft and Amazon. And last but certainly not least, we saw the need to share learnings and facilitate growth across North America. Kari Taylor had joined us in 2019 and had already made a great impact in the U.S. sales organization. We therefore realigned all of North American sales under Kari and she is driving learnings, north and south across the continent. Next slide. Many of you have asked about our learnings through the COVID pandemic. The way I think about the world is normally through 2 main facets: things that are in our control and things that are not. We don't worry about the latter, but we are obsessed with the former for our customers, for our employees and for all of you. We still have limited visibility to when the pandemic will truly end. And while I am optimistic about the vaccine, the timetables around vaccination remain murky at best. Coming into the year, we had no idea about the border closures or the types of stimulus government and central banks would offer. And going forward, we have limited visibility on the size, shape and focus of the stimulus as well. The number of second and third order impacts from COVID are countless and the overall impact on business confidence remains uncertain. That said, let me tell you what I do know, the things that are in our control. We learned and adapted to COVID-19 relatively quickly. If you look at 2020, it was the tale of 3 cities for us. Q1 was tough. There was no way around a shutdown of international markets and fear that struck the hearts and minds of our customers. The second quarter was more normal with some puts and takes. And the third quarter put a bit of tailwind in our momentum as some markets and customers were catching up transactions they missed in Q1. This did not happen by chance. We were not destined to have a successful business model in the pandemic. We learned, we adapted and we move forward. Right out of the gate, we focused on health and safety of our employees and customers. We engaged our employees in an open and honest 2-way dialogue. We made at the time the very bold decision to curtail ramping and live in-person auctions and move to 100% online. That was not an easy choice at the time. Ritchie had never done it and employees, customers and management didn't know what was going to happen. We did it, and we were there for our customers, both sellers and buyers, every step of the way, and we made it successful together. We implemented Timed Auction lots technology for international and on-farm auctions. We focused on the customer health and safety with all new scheduling for equipment pickup. And once we went online, we poured the gas on our digital marketing engine. By going to 100% digital transactions, we were receiving much earlier and more comprehensive signals of demand. We were able to leverage the new tons of data by feeding it to our data science team to glean insights, which in turn, informed our marketing team on how best to drive buyer demand. We invested in capacity, functionality and usability of our technology. We did all this, protecting our balance sheet and being nimble in engaging strategic M&A such as Rouse to drive long-term value for our stakeholders. And yes, all of this has resulted in the stack performance you have seen year-to-date. Congratulations to all of you and a heartfelt thank you to the team making it happen day in and day out. Next slide. We are a learning organization. We showed that in 2020, and now as we go forward, this is a never-ending journey for us. Today, we're going to hear some of what we are testing around the globe, what we are learning and how we're going to scale. All of this while making money. We are using flexible resources. We are establishing clear KPIs. When things don't work as we have thought, we learn why not. And when things work well, we learn how we can make them bigger and better. I am excited to be part of Ritchie Bros. I'm excited about our vision, and I'm excited about the team sharing it with you today. We are a people business, so what better way for us to kick off today than with people. Carmen, over to you.

Thank you, Ann. Hello, everyone. My name is Carmen Thiede, and I'm the Chief Human Resources Officer at Ritchie Bros. As you've heard from Ann, one of the company's 5 strategic pillars is delivering the best employee experience. Because Ritchie Bros. is a learning organization, this work centers around listening to our employees and learning what's important to them. You'll see this theme continue throughout my update as I share some of the ways we're building stronger relationships with our employees and how our efforts help us develop and attract new talent. Delivering the best employee experience requires creating a seamless competitive experience around the moments that matter to our employees. The principles that guide us are ensuring employees have a voice to share what's on their mind and getting employees involved, identifying solutions and bringing actions to life. We've created this #MyRBstory visual to highlight the importance of understanding the moments that matter most to our employees. It also gives us common language and framework to connect our people initiatives to those moments and helps us prioritize our programs, mind share and investment spend. An area that directly connects to our employee experience is diversity and inclusion. At Ritchie Bros., we aspire to have a culture that fosters respect, inclusion and growth for all. We began our journey by focusing on gender diversity with the Women's LINK Employee Resource Group, a global initiative to support the development of women within our company, now in its third year. 2020 gave us and companies around the world the opportunity to look critically at our workplace culture and ask difficult questions around diversity, inclusion and racial justice. We invited our employees worldwide to participate in roundtable discussions, asking whether they have observed or experienced racist network. Continuing our diversity and inclusion strategy, we formed a company-wide Black Lives Matter team, comprised of employee volunteers. This team self formed around 4 areas of opportunities: education, such as unconscious bias training, which will begin this month; talent practices, how we can expand our sourcing of black candidates; community, how we can better represent our local communities; and communication, how we can influence change through ongoing important feedback. We're early in this work, but as we shared with all employees recently, we hope it's the first of many organic grassroot efforts to create employee resource groups that support our employees' needs. Next, I'd like to talk about corporate social responsibility. Here, again, we're early in our journey, but we're building on a legacy with local volunteerism and giving at its core. Now we want to broaden our efforts and create more impact. To accomplish this, we've recently commissioned support to help us build a best-in-class corporate social responsibility plan. Specifically, we want to better understand how employees have supported their local communities in the past and the social issues they care about most. We're starting here because employees know their communities best and our plan should reflect that. We'll then use their input to identify the causes we'll support and build our long-term plan. And because candidates care about such strategies, this is also part of our talent attraction strategy. There's much more work ahead, and to do it all, we'll continue to support our commitment to delivering the best employee experience, to listen to and to learn from our employees. Not only is it the right thing to do, it leads to a stronger relationships with our team and higher engagement from our team. #MyRBstory helps bring our culture to life. It declares our intention to employees and sets a standard to live up to. We believe that delivering the best employee experience is a foundation to delivering the best customer experience. Thanks so much for your time. And with that, let me turn it back to Ann.

Thank you, Carmen. This is a great segue into our inaugural sustainability report. You heard Carmen talk about diversity and inclusion and our efforts around the S or social components of ESG. But we all know there's so much more. We are on a journey. And we are at the phase where we are sharing our story through the ESG lens for the first time. This is about listening. This is about having a dialogue with all stakeholders. And understanding how Ritchie Bros. can be the agent for change for issues that are critical for society. We pride ourselves on deep-rooted social lens. For our part, for the S in ESG, we proudly serve local markets and customers, employee and develop local talent and take great pride in giving back to local communities. We give these local communities a global platform on which to thrive. But what I'd like to briefly focus on today is the E in ESG, the environmental lens, so critical for our sustainable future. For Ritchie Bros., that is about the role in our circular economy. Ritchie Bros. is the world's largest practical green re-commerce company, meaning we encourage market liquidity for used commercial assets. Each year, hundreds of thousands of customers use our platform and solutions to reuse and recycle previously owned assets, giving them a new life and avoiding landfill waste. The ESG topic is very much core to who we are and what we do, and I'm thrilled to share it with all of you. You will be able to find the entire report on our Investor Relations website later today. And I highly encourage everyone to go and learn more about our efforts in this space. Earlier, you heard how we are becoming a learning organization. I am especially fond of any learning if you're making money while doing it. We are testing different models around the globe for many facets of our business. First, we're going to turn this over to Kari Taylor, our President of North America, to discuss our new go-to-market approach we will be testing in Texas. Kari, over to you.

Thank you, Ann. My name is Kari Taylor, and I'm the President of North American Sales. And in this section, we're going to introduce our accelerating growth initiatives. Our work is to learn and spearhead sustainable growth across North America, beginning in Texas. Texas was chosen for its size, its diversity, potential to test, incubate, retool and cascade how we evolve our go-to-market selling strategy. The building blocks for this go-to-market work includes: being incredibly clear on what we sell, delivered in a manner our sales team effectively shift from a transactional orientation to that as providing and anticipating solutions our customers need; intersecting digital touch strategy brings together sales and marketing. As we map customer journey and position why Ritchie Bros. and why now, the synchronization of both functions enhance how we are experienced by our customers. Exploring a new sales coverage model puts customers at our forefront while orienting our team's agility, focus and skills. Finally, delivering growth is linked to maximum daily customer outreach and increased seller productivity. As we learn, element by element, we will regionally cascade proven learnings and successes across all of North America and share our best practices with our global teams as well. Okay, to the next slide. Foundational to this work was examining the role of the territory manager. Traditionally and still today, our territory manager is a one-size-fits-all selling role, covering anything and everything. Literally, all accounts, all selling efforts for a defined territory. Central to this initiative, we are testing the transition to a customer segmented sales coverage model, shifting from a territory manager, a generalist role, to 3 unique selling roles that differ by purpose and expertise. Our hypothesis being a one-size-fits-all generalist sales role inherently limits our ability to serve all types of consignor needs. On this slide, we illustrate the account manager, farmer, dedicated to main high potential customers, whose job it is to grow share of wallet. A business development hunter is then positioned to eagerly go after new business with customers of meaningful potential. Finally, an inside selling function is assigned the high volume of account defining our long tail, a lower cost selling resource to supercharge market reach with greater touch frequency. Inside territory managers engage all customer types with annual growth transaction value or GTV potential below $70,000. These sales reps are armed with the supplemental digital marketing engine. We also plan for future application of predictive analytics to inform [ call planning ]. Reconfiguring the sales team in this manner is all about steering focus. What better, customer focus. Next slide. We are very proud of the credibility, respect and trust, built on a 60-plus-year rich history of relationship selling. We have an unmatched reputation with great responsibility to carry forward these value strengths. Our enviable position to proudly partner with loyal customers includes relationships over decades and even spanning generation. We are very pleased for what SAGE has brought our sales team. Recall last year, we implemented our sales activity charter, coined SAGE, for sales activity generation engine. Through SAGE, we have measured and improved our customer outreach these last 18 months. Assuming greater discipline and accountability has taught the organization that volume and rigor can be additive to our priced relationship. And now we are highly motivated to unlock greater RB potential beyond that of auction deal makers to trusted business advisers. Informing customer dispersal strategies means expanding tools and services that shape solution selling. Here we built upon relationships and activity within a scalable framework to orient and prioritize who we are selling what to, knowing why and with clarity how our sales team facilitates their pursuits. Stepping into the selling realm takes our sales team well beyond asking, would you help through my next auction to what factors inform your fleet management decisions. Next slide, please. Guiding our sales team on a unified path as effective trusted advisers requires clarity and tool. We owe it to our hundreds of sales reps and all of Ritchie Bros. to be clear as to our mission, reason simplification and repeat example after example our customer wins. Offering clarity, not all current TMs will intuitively shift their selling behaviors. Incubating in Texas, we will learn how best to spell out and prescribe the transitionary work and thinking to bring the full team along. By selling role, each sales playbook will reason and funnel opportunities through an offer matrix, to then package and prepare customer discussion, supported by data and insights, to help our customers navigate their dispersal strategy. Enabling selling tool is about mobilizing repeatable and proven selling processes. Examples include the process to identify opportunities, clear processes to execute a seamless workflow as well as processes supported by technology to tabulate progress. This initiative continuously reinforces scale and certainty, who to sell what to, when and why. Four specialized offers are presented on the right side of this slide are being tested in Texas. Winning with expanded solutions provides greater depth and choice for our customers' business need. Here, we leverage our omnichannel advantage, put data to work, create sticky and complementary solutions and evolve our go-to-market strategy. This propels us as a responsive solution-selling organization, valued for our influence and market contribution. And then the next slide. What we learn, what works, we will cascade. The cascade isn't dependent on all aspects of this sales initiative to have proven and completed its stake. Triggers are defined for each body of work allowing sub initiatives to cascade stand-alone. The pace is determined as we learn and conclude successes. As with prototyping, some efforts will be expeditious and some quite controlled. Initiative leaders will transition with the cascade, bringing forth best practices and prospective to the next region. You may ask, why not all at once? The magnitude of the change reason this prioritized approach. Big bang risk diluting the impact and lessening the significance of this undertaking. I expect we will learn tremendously. We know we are making good decisions and ones that will require future pivots. We will adjust, we will act, and we will put points on our scoreboard. Being a learning organization, we are in pursuit of the possibilities. Acknowledging agile iterations will make us better, being committed to act and to learn is how we will grow. Now back to you, Ann. Thank you.

Thank you, Kari. I hope you are all as excited as we are about the potential of organically growing our business with this -- that this go-to-market model represents. And before I turn it over to Karl, let me say a few words about setting up the test we will be running in Australia. When I was researching Ritchie Bros. and heard us talk about live and online sales, I had a retail perspective in mind. That is to say, I thought the more business we moved online, the less yards we would need. And I'll honestly say that it seems strange to me at the time that although 2/3 of our live events transactions were already happening online, our yards continue to operate. It created a question in my mind, and one we are spending quite a bit of time thinking through and answering. As we are learning through COVID, the main purpose of our yard is about the care, custody and control of our customers' equipment than the sales day itself. Customers want to drop off their equipment and let Ritchie Bros. do the work, inspecting it, appraising it, stripping it up if it needs it, marketing it. Managing pickup and shipping logistics with the buyer and then just sending them their money. In fact, our yards are busier than they ever have been at a time when 100% of our transactions have moved online. This is a true manifestation of our omnichannel platform. So what does this mean to our footprint moving forward? Over to Karl Werner, our President of International, to explain how we are answering that question via test in Australia. Karl, over to you.

Thank you, Ann. The silver lining of what we've been dealing with during 2020 is that it's given us the opportunity to experiment with new ways to improve our business. One of the benefits of transition to 100% online auction events has been understanding what is important to our customers when they are participating in online-only events as both buyers and sellers. We learned that transportation efforts and costs were major hurdles. This is highly relevant with lower cost assets where transportation expenses can quickly erode our value proposition. We learned that care, custody and control was also an important trust component when transacting completely online. Items being sold from our yards had much more bidding activity when customers had the comfort of knowing that a Ritchie Bros. employee could reduce friction at all points of the transaction process and provide a higher level of brand trust. In many areas, where travel was restricted by border closures and quarantine requirements, we began testing satellite sites to reduce transportation costs and increase access to new customers. The satellite sites are small, secured sites with minimal staffing. They're low cost. It give us a way to provide local feel while delivering a global experience. We started testing the satellite site concept in Australia in 2019 prior to COVID. However, the pandemic has given us the opportunity to accelerate these tests. Moving on to the next slide. Our learnings in Western Australia were very promising. Not only did we experience GTV growth of 85% over 2 years and organic online revenue growth, but even more importantly, we had a very positive customer feedback. We can reach not only new customer bases, but also new customer types, customers that typically prefer to buy and sell in their local area as well as a higher percentage of end users. This is important because our analysis shows that end users typically pay more for equipment compared to other types of buyers. This translates into better price realization for our sellers and ultimately, higher GTV for Ritchie Bros. Moving on to the next slide. As you can see from the images of the Perth satellite site, it is a very minimal build out and is therefore low cost, unlike our typical full-service facilities, which have in person registration, theaters and refurbishing services. That said, a local presence provides an important customer experience and leverages a hub-and-spoke service model. Moving on to the next slide. The next phase of our learnings will be to scale our findings in Australia. During 2021, we will continue developing this new hub-and-spoke model to expand on the success of our Perth test. We combine our data science team with our local sales team in the field to find optimal yard locations. Through this process, we have identified 3 additional satellite sites in Adelaide, Mittagong, Dubbo to test and scale in 2021. As you can see from the customer activity heat maps, these satellite sites will further enhance our presence outside of our main facility coverage in Geelong, our Melbourne hub; and Brisbane, the hub to the north. Both Mittagong and Dubbo will give us improved access to customers surrounding the Sydney metropolis. Through this test, we will prove this model along with its efficiency and customer benefits. Moving on to the next slide. The learnings that we are obtaining in Australia will help us drive new operating models around the world, including larger markets like the U.S. We plan to continue to test our hypothesis that lowering the transportation cost burden will positively impact the supply of used equipment. In U.S., we will be testing the addition of satellite yards in hub-spoke configuration in key regions. As this heat map displays, there are large opportunity markets in the U.S., where we can add smaller footprint storage sites to facilitate low-cost access to our selling platform. This pilot could unlock significant value for our consignors as well as drive GTV growth with a low cost to serve. I'll turn it back to Ann.

Thank you, Karl. I believe this kicks off the first of our 2 Q&A sessions, followed by a 10-minute break. The entire executive leadership team you see before you is online with us today and ready to answer your questions. Operator, please open the call for questions.

[Operator Instructions] Your first question comes from the line of Larry De Maria from William Blair.

Two questions for the first presentation. As you think about expanding your sales, at least your responsibilities, I'm just curious if you have the right people in terms of the territory managers? Or do we need to go out and add more people and support? And obviously, what does that mean? And how easy is it to do? And as you go into the parts and service business, is there any conflict with the Caterpillar relationship historically?

Yes, Larry. So how about -- this is Ann. Thank you for joining us. Let me answer the second part of your question first and then I'll turn it over to Kari, who's been doing quite a bit of work on people assessment, obviously, working with Carmen's organization. So parts and service, you actually stole our thunder from a little bit later in the presentation. Our intent is to work with our customers and most importantly, with our partners in order to enter markets or facilitate markets through our marketplace in whatever best way for them. So as you're about to hear in the second part, so I'm not going to steal thunder from both Matt, as it relates to RBAS, and Baron, the idea is to have a flexible architecture that allows third parties to plug and play. So we could facilitate parts, for example, from our Caterpillar relationship or any other relationships we have to plug into our architecture via an API and make those parts or service contracts seamlessly available to customers on behalf of our partners. So that's -- I'm kind of preempting a more detailed conversation they're going to have a little bit later in the call. So hang tight and then if it's not clear, we'll answer it in the second Q&A as well. And then Kari, over to you for the first part of the question about the sales force.

Yes. Thank you, Ann. And I appreciate the question. The question is actually at the root of a lot of the learning journey thus far. We spent a fair amount of time not just developing the model, but outlining what skill sets pair to the success we're looking for and the responsibility. So when you talk about share of wallet and the account manager, we're really good at nurturing relationships and cultivating more business. The part where we've spent more time really understanding the profile is within the hunting role, and we have had some internal folks transition to that, and we are sourcing 4 new ones. And then the inside TM role has largely been in an internal shift. So it's about getting very clear what is the work, what skills deliver on the work and then how do we learn along the way.

Your next question comes from the line of Cherilyn Radbourne from TD Securities.

And I wanted to ask about something that you introduced early in your remarks. And that's the idea that the U.S. market for Ritchie Bros. is about 2x the size of Canada, which doesn't line up with the normal relationship. And that's been true for some time. So could you sort of comment on whether any progress has been made in rightsizing that geographic ratio? And what your analysis has uncovered in terms of some of the drivers as to why Ritchie's penetration is so different in Canada versus the U.S. And is that, in fact, a driver behind the satellite site strategy that was just described?

Yes. So Cherilyn, hello, and welcome. Good to hear your voice. So that was actually -- one of my first, right, hypothesis, as I shared with you guys, is not to take anything away from Canada, which continues to thrive and grow, but the U.S. needing to be significantly bigger. So let me answer the question a couple of different ways. The first is, as you've seen through the quarters of this year and that although Canada continues to grow, the pace of growth in the U.S. is speeding up. So this is about an and, and not an or, continuing to foster and cultivate the fact that we're a Canadian company, obviously, started there and have a deeper penetration, but the way that the U.S. is going to kind of get to the levels we're expecting is to outpace its growth trajectory. So that's number one, and we're seeing that this year play out, quite successfully. The second is really about reexamining our go-to-market models, and it's really the conversation that Kari just took us through and what we're testing in Texas. The hypothesis is that we can have bigger, better and more productive growth with enhancing and changing our go-to-market model kind of from historic norm. There's no big surprise by the testing in Texas. Obviously, Texas is in the U.S. It's a big market. When you compare Texas to Edmonton, it's "underrepresented" if you view the lens of 2:1 going to 10:1, and then that will inform kind of how do we then roll that out around the globe with, obviously, the highest potential markets getting the rollout first. And then third, exactly, as you said, the satellite sites then become the next piece of that puzzle. We're testing in Australia. We're heat mapping around the world. You saw Karl presented heat map of Australia, the heat map of the U.S., similar exercise everywhere to basically say, once we have confidence in any piece of this, go-to-market, its pieces; satellite site, its pieces, to actually fuel the growth even faster. And I would be remiss if I didn't mention our marketing organization and my initial results of really fueling the fire, driving global demand regardless where the inventory sits, showcasing our products the best way, giving confidence to our sellers that the buyers will be there, bringing buyers in droves. These are all of the pieces that give us confidence that the U.S. and international can significantly speed up the growth trajectory they've been on.

And with respect to the accelerating pace of growth that you've seen in the U.S. year-to-date, are you able to segment that between sort of the cyclical backdrop versus internal initiatives and the impact of those?

We are, Cherilyn. And let me give you kind of one example, and this is where I also had the kind of the tale of 3 cities in my opening remarks. So first of all, we have the KPIs and analytics down to a very detailed level. But I think if we look at the quarters, it will kind of highlight what's going on. So let's look at our strategic account organization, for example. In Q1, many of our strategic accounts kind of hit the pause button, right, where they said, "Well, look, we don't know. It's uncertain. We don't know if we need to hold on to equipment, we don't know what we need to do." And then Q2 was kind of steady state. Q3 brought some tailwinds, if you will, where the folks that were hanging on the side lines in Q1 kind of caught up. That said, the entire strategic accounts group is up and it's up with very detailed initiatives by subsegment that Jeff Jeter and his organization are driving. So that's one example. We have the exact same conversation on regions around the world where international was hard hit in Q1 with border closures, pivoted to timed auction lots. We saw some success with that in Q2 that gave us confidence, we rolled it further and deeper in Q3, had some catch-up with the things that we're waiting in Q1 but really saw the high watermark lift. Same examples across Canada, same examples across the U.S. The organization is very much looking at the world as in our control and out of our control and taking great pride in the initiatives and the pieces that are being put forward that are in our control.

I guess I'm still a little confused as to in Q3. You had some tailwinds, as you indicated, which is customers basically taking their finger off the pause button. How do you differentiate between that impact and the positive impact that your initiatives would be making in an otherwise stable market environment?

You got it. And so let me start, and then I'll turn it over to Sharon. When you look at year-to-date, Cherilyn, I think you're exactly right that if you look at any one point in time, things are cloudy. If you look at year-to-date, we can really see what's going on. And so kind of on a year-to-date, if you take all of the puts and takes, we kind of view it as we're in a net neutral. Q1 was hold back. Q3 was catch up. Year-to-date is about a steady state place for us to be. And as we take a look at the year-to-date numbers and we see the initiatives that we have put in place across all of the regions, across all of the pieces of the organization, we feel really good about what we are driving underneath, and that's in our control. Sharon, do you want [indiscernible] stores -- yes?

I was just -- so can you actually see that you gained market share year-to-date?

Yes. So sure. That's my favorite topic. So of the things that this industry is magical, there are some things we don't have like a market share metric that other industries have. We are working diligently to put one in place, both Sameer and Kevin Geisner, I'm sure, are smiling, our strategy officer, at this question. We have proxies for market share. Over time, we will develop much more stringent ones. We scrape third party sites. We see what's going on. So we have a high confidence, in fact, that yes, we have grown market share through this, but no kind of specific X to Y numbers that we can point through.

Your next question comes from the line of Gary Prestopino from Barrington Research.

I wanted to ask a question on this test of the satellite sites, and you're going to be eventually trying to roll that out in the U.S. Does that take away from the traditional IronPlanet model of selling where pieces of equipment are sold on site? Or how do you view that? I kind of look at that and say, that may cannibalize that traditional business.

Gary, Ann again. Absolutely, great question. So I think this is at the heart of the pivot that we are making and that you're going to hear a little bit later from Jim Kessler, our Chief Operating Officer. We are pivoting our organization to be central to the customer experience. And so if we can just for a minute think about what Kari said and then what you're going to hear from Jim. So this is about customer choice. And we have products and services that allow customers to fulfill whatever needs they have today and then ones into the future, as you're going to hear about from Matt. So just using this example of satellite sites and IronPlanet. So if we start with a customer requiring liquidity, and I'm just taking you through when Kari said, it's about solution selling, and it's about putting the customer first. And then you're going to hear from Jim, bringing our operations under a customer experience lens. Let me just take everything through kind of an example of the mindset. So let's say, I'm a customer, I have a piece of equipment, I need to sell. The very first question is the speed with which you're looking for liquidity versus the certainty of that liquidity. And what I mean there is that then unlock, would you list something through MPE with the reservation price if in fact you don't need liquidity right away, and you want to kind of test [ full bonkers ]. And this is the solution selling that our sales organization will be going through. Then you say, no, no, no. I need liquidity, I need it fast. You say, perfect. Let us talk to you about what it is you want to do with the equipment. If you want to hold on to it, that kind of funnels you into the historically what we call the IronPlanet operations, right, where you hold on to the equipment, we market it for you virtually. We send our inspection team out to you, those types of things versus the vast majority of our customers, and that kind of is right for folks that have -- think about who that's right for, dealers, rental companies that have yards to store equipment, right? But by and large, the majority of customers say, I'm done with this thing, take it. And so again, this is less about IronPlanet, Ritchie Bros. and more about what is it you would like to do with equipment and then do you want to take your custody in control and then transact it, or do you want to hold on to it, and we'll transact it that way. So we become much more true to our vision, customer experience at the forefront, omnichannel and let kind of the customer guide wherever the need takes us.

Your next question comes from the line of Craig Kennison from Baird.

I think in the Brisbane example, you were saying that you saw a higher mix of retail customers. And if I heard that right, I mean that would seem to be a very important development if you can scale it because, obviously, if you're getting higher prices, consignors would love to sell more items on your platform. Did I hear that right? And why do you think you are getting more retail customers? And if so, do you think that will scale globally?

Yes. So Craig, let me start, and then I'll turn it over to Karl to add some color commentary. We are seeing -- it's one of the KPIs we look at for exactly the reasons that you said that if we have a lot more retail end consumers, that obviously drives up the transaction price. We're in this kind of circular economy, where if we have higher pricing and more demand, we have more sellers, and we keep going with the flywheel. We have seen several developments, you heard correctly, where we're seeing more end customers. So on the one side, having local sites. And the reality is that almost in any "sale," there's just a lot of local -- local buyers are a bigger percentage kind of looking -- if you break down every region. So the more local, say, the more local guard you have, the more local buyers you could bring. So that's kind of in-the-yard philosophy, and we're going to be testing that. Again, we're seeing that early days, it's giving us confidence. Exactly, as Karl said, we're going to be launching a few more sites. We may do a few in the U.S. as well to test that hypothesis. So that's one thing that's happening. The next thing that's happening is just from a marketing standpoint, we are driving an incredible -- now that all of our transactions have moved online, and we can actually gauge demand down to an individual product level, down to an individual customer, we are driving to end consumer marketing more than we've ever been able to before. We're seeing the eyeballs. We're seeing the prebid. All of the technology pieces that have been put in place. So that's the second thing we're seeing. The third is as we add formats, and let me just do 2 examples, the Timed Auction Lots and MPE. So Timed Auction Lots, one of the things we're seeing and it's early is that in international, perhaps we've had a language barrier and by having a fully digital solution, without kind of an English auctioneer -- English-speaking auctioneer, may change the make up. We're seeing that early. We're going to test it, of the end buyers being more comfortable with the format, where they weren't before because of the kind of in-language English nature of our auctions previously. And then new formats like MPE, things that allow sellers to test pricing, to put things in with a reservation price, and it's a lot less about the transaction, but it's a lot more about the product itself. And we have a marketing component associated with MPE, again, where we're marketing those items to end consumers. So long answer to your question, but we have a lot of this philosophy of learning organization, we have a hypothesis that we can drive end customers, and we're testing it lots and lots of different ways, including the satellite guards. And we agree with you, very exciting early learning across all of those tests.

Your next question comes from the line of Scott Fromson from CIBC.

Just a question on the growth strategy. [indiscernible] sales that come from the U.S. and international. And I guess this follows along with Cherilyn's question on market share. Who are you going to take market share from? Does this require acquisitions? Does this require partnering with other parties, maybe similar to the Cat's relationship? Just trying to get a better sense of where the growth is going to come from.

Yes, so we tend to think about the world as kind of the what and the how. So what you're hearing from us today is very much the what, our strategy. And the how can take lots of shapes, right? It can take acquisitions as you just saw us announce with Rouse, partnership, historic and new ones, and organic. So the answer is we are looking across the various -- each of the initiatives, the pillars and then the sub initiatives across them to say what is the best way for us to first understand, if in fact our hypotheses are correct, and that's where we're all about the testing, and then how best to scale, which, in some cases, will need acquisitions in some cases, organic, in some cases, partnerships and so on and so forth. And so when you think about kind of the traditional landscape, and we'll get more at this in the afternoon, and you think about the $300 billion market, there's really kind of 2 ways to think about that. Auction, so they represent -- auctions represent about 10% of the market. And we play in 20% of that. So when you think about kind of market share to be had, there's certainly a runway across the traditional auction space, if you will, that, again, from early signs, scraping the things we've been doing, we believe our omnichannel solution has been doing very well and will continue to do well, and we will scale that up and make that even easier through go-to-market approaches and yards and all of these other things you've heard today. And then there's 90% that today transact this huge industrial equipment, they do not use auctions. And this is about where the idea is to provide products and services, technology to make it seamless, to be able to facilitate solutions in the 90% that we don't have today. An example of one thing we are doing, and we're seeing really disproportionate growth, and I'm going to ask Matt to talk into kind of what we're doing with marketing across MPE and others. But in MPE, that's a perfect example of where we're going upmarket. It's a reserve format. We're allowing customers to dip their toe, and we're getting demand signals from the market that's allowing us to kind of move what we'll call upstream into that 90%. Let me pause and have Matt weigh in on some of the other marketing pieces we're putting in place.

Yes. Sure. Thanks, Ann. So on MPE, it's really interesting. We've seen a very interesting trend in terms of, as Ann spoke, there's a bunch of people, both buyers and sellers out there that just haven't been auction-friendly or auction -- it's just not their preferred disposition format of choice. And so when we introduced MPE, we introduced this buy now, make offer format that's seen a nice growth in traction over the last couple of years. And what you look at both on the seller side and on the buyer side is you actually see a lot of first-time users of our platform gravitate towards this format. By the way, it's something similar to what I saw at eBay many years ago. There's just certain products that people don't want to auction off or certain -- they have certain business cases where they don't want to engage in auction. And on the buy side, you think about the convenience of it, right? You don't have to wait until the next event. You can just come in and make that purchase and go, and it's a much more -- I have to attend a live sale or anything like that. So we've seen an uptick in growth there because of our ability to penetrate a different user base, a more consumer-type user base. And we see that in the numbers and we see that in our marketing techniques as well. So we've introduced things like buying guides and buying centers to help people who aren't necessarily familiar with a piece of equipment or a -- don't go and are not as comfortable with as-is-where-is nature of a live auction. We've introduced a bunch of stuff to help them through the process, and we've seen an uptick there. And then if you look at our marketing techniques in general, right, they've shifted a lot over the last couple of years. When I came in from the IronPlanet side, we had more of an e-commerce type marketing approach, always on paid search is just a perfect example. RB had traditionally done paid search around the event and only bought certain terms that was maybe associated with equipment from that event. That's a difficult paid -- that's a difficult strategy to use in digital just because of the -- how Google works, how Facebook works and stuff like that. And so now with the addition of inventory that is always there through something like an MPE as well as some of our other technology improvements, we're always on now with digital. We're generating thousands and thousands and thousands, tens of thousands of keywords that we're buying all the time and driving traffic continuously to the site. And that's -- that creates a network effect that kind of, from a buyer base perspective, not only lifts all boats, but using some of these digital techniques, we're actually able to attract more of that retail-type buyer base. So lots of things in play there, lots of initiatives that we've put in place over the years that are coming to fruition now with the advent of this online-only world.

That's very thorough and very helpful. Just a quick follow-up, though. Can you -- do you have a sense of how big that retail market is of the $400 billion?

I don't, not off the top of my head. As Ann said, we're still looking through some of the market share capabilities. But just in terms of our ability to go after -- just the shift, one of the things that I look at is kind of the shift in search terms online and the shift towards digital from some of these consumer-type entities, and you can start to see traffic patterns and stuff like that and the types of people who register. We're just seeing a lot of growth there. And -- but I just don't know where that -- what percentage of the market that would actually be. But the growth over the last, I would say, 1.5 years has been very, very nice to see.

Our next question comes from the line of Michael Feniger from Bank of America.

Can you just flesh out the idea of the hub-and-spoke model? When you think of the satellite sites, how much lower is the cost to serve with pairing up the online and the satellite site versus your normal in-theater location? Why do you think this has helped drive growth? If you -- and can you give us an example of where you would pilot some of this in the U.S. just so how we could think about it? And does this allow you to have a premium pricing or service to have these physical yards? Is that where the competitive advantage is? Or will you be able to actually charge for that?

Yes. So Michael, let me start, and then I'll turn it over to Jim to answer the question about kind of at least what we're thinking in the U.S. and how practical we're being about the approach. Again, we're in test mode. We like making money in test mode. And so we don't like to pour a lot of cost into test mode. Let me just spend a minute on hub-and-spoke to explain at least the vision, the things we're testing, right? So when you think about our traditional yard, you think about -- let's think about 2 pieces. One is everything that's in place for the equipment and then the other is everything that's in place for sales, okay? So a auditorium, staffing offices, all of those type of things. So -- and that's the vast majority of the cost of the site. Immediately when you think about these hub-and-spoke sites, you say, okay, well, that's not going to be there. The next piece is, when we think about hub-and-spoke, the reason for the things we're testing, we still want to provide the exact same premium service. But it may be kind of through more virtual mobile teams. And again, I'm going to ask Jim to speak to that. So for example, if we know the magic is omnichannel, being, if a customer wants to hold on to their equipment, great, we will send inspectors and -- out to you and market it. But in the majority of the cases, customers want us to take care, custody and control of their equipment. How do we do that but in sites that are much closer to where the customer is? As Karl said, reduce the transportation cost, but still allow us to provide all of that service through either a mobile unit, proximity to other yards, third parties, so on and so forth. So that's at least the way to think about hub-and-spoke at a high level. Let me turn it over to Jim to add more to that and how is he thinking about tests in the U.S.

Sounds good. Thanks, Ann. And really, what I was just going to cover is with our GovPlanet contract that we won a couple of years ago, we've had smaller sites that we've added across the United States that have some capacity in them. So what we're planning to do for the United States in a pilot phase is actually look at all those sites, look at the capacity we have, compare them to where our larger sites are at. So as we think about this pilot, we definitely have the ability where we already have some open real estate capacity to test out the theory. And is it bigger equipment, smaller equipment, what makes the most sense for our customers through their lens of them taking custody of their equipment. So the great thing for the U.S., I think we have the real estate space to pilot this, to figure out a lot of the questions that are being asked on the call. But we do have the real estate. So that's really how we plan to pilot in the U.S.

Okay. Fair enough. And I guess I'm just -- you mentioned the 90% of nonauction transactions. This is a pretty dumb question, but what is the typical nonauction transaction? Who are the 2 parties? How is it conducted? What is the biggest bucket that you see that MPE or even TAL, all these initiatives that you kind of have going, maybe you're seeing in the hub-and-spoke, where -- what bucket is that starting to be able to grab more towards the Ritchie channels?

Yes. So let me start, and then I'm turning it over to Sharon to add more to this. But really, the 2 biggest buckets that I see is direct to end customers. So for example, somebody who, let's say, a dealer selling direct to end customer, to an end consumer, their own used inventory or peer-to-peer, right, so dealer-to-dealer. Those are fairly significant buckets that obviously stay away from auction. And the way that we're thinking about that is, again, new products that facilitate transactions in ways other than traditional auction. But also, as you will hear in Matt's section, lots of products and services we can offer as value-added into the 90%. So for example, peer-to-peer, even if we're not involved in the transaction itself, we can certainly facilitate and provide the inspection and charge for it, the appraisal and charge for it, the financing. So when we think about more the customer lens of that 90% and what it represents and disaggregating and unbundling the way we think about the process for the customer about equipment evaluation, inspections, appraisal, marketing, from the actual transaction itself, it allows -- it unlocks a tremendous amount of potential that's included in the 90% and actually even things that are well in excess of that $300 billion number. Sharon, anything to add there?

Yes. If I can just kind of also add to the upstream elements, there's also brokers and private end users selling directly to other end users. And as Ann said, even whether it's a dealer or a broker that does actually operate with us as either a supplier or a seller or a buyer, we've been in this space of kind of that cooperative competition before. And the idea is how do we help them facilitate their business in a much more effective way. And that I think is what we're getting at with this upstream component. We're not necessarily looking to displace significant competitors in that space. It's more how do we start to participate in some of that upstream volume, whether it be through dispersal or alternate services that we offer through our marketplace platform.

Got it. That was helpful. And just lastly, and you mentioned how -- when you discuss how year-to-date trends have played out, how in Q3, customers really took off the pause button. Have you observed anything within your channels, post-election and with the vaccine news, any shifts in behavior that you picked up in your channels in terms of hitting the pause button again or keeping the fingers off the pause button? That would be helpful.

Thank you, Michael. And how about to answer that since Kari is President of North America and has been living through the woes of the election cycle, I'll turn it over to her to answer the question.

Yes. It's a very powerful question. We felt a lot of consignor inks coming into the election and, let's call it, to the time where it became more clear what the outcome would be. There were a number of weeks we would tag as wait-and-see mode in what comes from this election. And it was very clear. The market was waiting. As things have become more certain in direction the country is heading, we've seen business pick up, and we've been busy. The comment there is busy at a very fast pace, so catching up, if you will. But there definitely was impact in our business from the election.

And that -- and just what you were saying is there was impact, but it seems like things have picked back up in its normal course consumer trends we observed pre-election?

I would say we're in steady consignment mode, would be the best way to answer that question.

Your next question comes from the line of Michael Doumet from Scotiabank.

I'll keep it at one question. So just thinking about the reconfiguration of the go-to-market approach that is being tested in Texas. So I'm thinking about the farmer, hunter and hybrid. Where do you see the largest opportunity for increase or growth? And also, should we expect similar type productivity from a business development manager or inside territory manager as an account manager?

Great question, Michael. Who better than Kari to answer it.

And Michael, those are excellent questions and ones we're spending a lot of time on. So first and foremost, I'll answer it backwards from productivity perspective. And this is a bit of the testing and the unknown is what the pace is to go after new customers. What's exciting is we had some nice wins early from some existing folks who had been a territory manager who are now BDMs. So that's a good learning. What we don't know is the pace and the consistency of going after new customers. As far as the inside TM, to me, that's the magic of the long tail. And to me, that might represent the biggest opportunity we have. And why would I frame those 2 as such? If you're a one size fits all generalist, your time does get consumed with your biggest customers where your relationships are the greatest. So to me, the beauty of the new go-to-market coverage model becomes about focus. You have somebody dedicated to always going after new business, and you now have an inside TM dedicated to our long tail. So I'm expecting to see growth on both sides. How it will play out in the productivity measure will be what we learn. And what I expect to see is we can also boost the productivity of our account manager with the focus of shedding those 2 functions elsewhere.

That concludes the current portion for Q&A. I turn it back to Ann Fandozzi, Chief Executive Officer, for any comments before first break.

Awesome, Jason, thank you, and thank you all for participating in this, we'll say, less than ideal format and thank you for your attention and great questions. So how about we pause here. We promise the 10-minute break, we'll do 9-minute break, and we will start at half past the hour and pick back up to the second half of our portion. Again, that will be followed by its own Q&A. So we will see you back in 9 minutes.

[Operator Instructions] [Break]

Ladies and gentlemen, thank you for standing by, and welcome back to the Ritchie Bros. Investor Day conference call. [Operator Instructions] I will now turn the call back over to Ann Fandozzi, Chief Executive Officer. Thank you. Please go ahead.

Thank you. And hello, welcome back, everyone. Hopefully, everybody replenished coffee. I did, and I'm double fisting. Big coffee fan. So let me kick off this section by reminding us all with how I started the day, which is that if you take one thing away from our strategy and where we're headed, it's towards becoming the trusted global marketplace for insight, services and transaction solutions for commercial assets. And although we're crystallizing this vision now, we've actually been on this journey for some time. Over 16 years ago, Ritchie Bros. started as an unreserved live auction company. Over time, we've acquired and built key building blocks, the latest of which is our recent announcement of our acquisition of Rouse Services. To further explain how this marketplace is taking shape, I'm going to turn it over to 2 speakers. The first will be Matt Ackley, our Chief Marketing Officer, who will then turn over to Jeff Jeter, our Global Head of Strategic Accounts, to give color as to how RBAS is resonating with some early customer feedback. Over to you, Matt.

Thanks, Ann. Good morning, everyone. One of the components of transforming Ritchie Bros. into a technology-driven marketplace is changing the way we work with equipment owners. A large portion of our conversations with equipment owners today is centered around auction sale dates and disposing of that equipment. However, the world of asset management and disposition is much more complex, and we must change the way we approach the market. Technology and data play an important role today with the advent of the progression of Internet technologies. And there is a large opportunity for the organizations that can leverage these capabilities in the right way. Two years ago, we developed RB Asset Solutions to address these opportunities. We think of RB Asset Solutions as a whole suite of tools, services and marketplaces, or a platform that equipment owners use to maximize the value of their used equipment. There are 3 major building blocks of this platform. First, an inventory management system, or IMS, that can easily capture inventory on behalf of an equipment owner in numerous ways. Inventory or supply is the foundation of a marketplace and capturing and cataloging inventory is key to what we do. People give us inventory because we provide value and return through a range of services. Data. Data plays an important role in our verticals. In a marketplace of high-priced assets, asset value is a key driver of decision-making. It is imperative that we create the ability to quickly and accurately value assets at any stage of the used equipment life cycle. It is also the first service that customers look for in exchange for providing inventory. And finally, services. The inventory management system enables a broad suite of services. These services, ranging from inspections to storage, to private marketplaces, to public options, to advertising, will enable equipment owners to optimize the value of their assets. We are evolving as a business, and these innovations are seen day in, day out in the way we work with our sellers. From providing machine learning-based pricing estimates to workflow tools that allow equipment managers to automatically order inspections, even if they are selling it themselves, we are creating solutions that help asset owners understand, manage and realize the value of their equipment. Next slide. So let's talk about asset entry. The key to all this is getting assets into the IMS. The IMS is the gateway that we use to deliver all the other services that RB Asset Solutions has to offer. These services can range from appraisals for asset-backed loans to selling an item on a private marketplace to captive dealers. Today, we have approximately 1 million assets under management in the IMS. With the addition of Rouse, we expect that number will grow significantly. Because of the foundational nature of the IMS, creating numerous and easy ways of getting equipment into the system is important. We have API-based integrations with our larger customers who run ERP system. Rouse also does this because the core of their customer base is larger customers, and they've been doing this for years and have created a number of standard integrations with multiple ERP systems. Because RB has traditionally worked with smaller entities, we have also developed a number of DIY solutions to asset entry, such as single-item processes as well as a functionality that enables a spreadsheet uplift, making it simple for our clients who work off spreadsheets or legal pads to add their equipment. We are making this process easy for our consignors in removing all barriers. At the end of the day, our TMs will be able to help clients add equipment. And eventually, when you buy something from one of our marketplaces, that equipment will automatically be populated into your IMS. Next slide, please. In order to make all of this work, asset entry, valuation and even disposal, we must be able to properly classify equipment. Make, model, year, attachments, conditions and many more features have a large impact on asset value and buyer demand. Think search and SEO, for example. In order to ease asset entry, we must make it simple for users to have access to functionality that quickly identifies a piece of equipment. Also, this same functionality must be able to validate what is entered and provide immediate feedback. If we do not get this right upfront, all other downstream processes can be impacted. Key to this effort will be developing a VIN-like system for used equipment. In the automobile space, the VIN allows the user to quickly understand that exact piece of equipment and its history. While a little more complex in the industrial capital asset space, we will endeavor to achieve the same promise. For example, the equipment ID would allow us to easily track equipment that travels through our marketplaces more than once. This happens all the time. People buy from us one year and sell the next. Our ability to quickly recognize this piece of equipment will allow us to facilitate the appropriate service, be that lifting the item, inspection history or analytics on pricing. A key step forward here was also the acquisition of Rouse. Because they work with numerous large sophisticated owners of equipment, they have developed tools, some pictured here, that enabled them to ensure all the equipment they receive is categorized and normalized. Here, you see an example of a Rouse tool which does this. For example, they have the ability to understand that certain configurations were only available in certain years or certain models or simply, certain models can only have certain years. As we begin to deal with more and more data using these processes, we expect our systems to get smarter and smarter. This is a perfect example of database network effects that have played out in other industries. Next slide, please. At the end of the day, the goal of all this is to help our customers make better decisions. We have talked all along about being a trusted adviser to our clients. Now we are creating the technology to truly embrace these capabilities. When we throw all our data into the hopper with select data from clients, we can create solutions that help the customer maximize the value of their fleet. When we talk about RB data, we are talking about more than auction results available on our websites. Over the past couple of years, we have introduced a product called Market Trends, which not only provides detailed pricing information, but also demand information. Where is the equipment being purchased? For how much? What channel? Should I sell this piece in particular regions? Are international buyers paying more than domestic buyers? And much more. We are providing this information not only at the equipment category level but at the brand level as well. Which brand and which class holds its value over time. What are the residual values after 5 years? 10 years? At what year or usage is the best time to sell to maximize that value? Combine all that with our newly introduced price indices, we are creating content with these reports to give owners an idea of what is happening and why. With the addition of the Rouse data, we will be able to provide our customer with a broader perspective. Specifically, a perspective of what is happening outside the auction market. Take all of this data that we are providing and combine it with the company's own utilization data and maintenance records, and it gives an owner an idea of what is the best way to sell, when is the best time to sell or where is the best place to sell. Next slide, please. Key to all of this is providing this information at the asset level in the application where our customers are managing their assets, the IMS. We've already started down this path. With the recent introduction of the RB Price Estimate tool into the inventory management system, we are providing customers with a prepopulated version of our machine-learning-based pricing algorithm, which was built for internal use. Developed over the last 4 years, this algorithm analyzes all parameters associated with an asset, compares them to actual historical prices achieved on RB and IP and provides an estimated value of that asset. For this process, our team of data scientists is using actual audited transaction data combined with detailed equipment information from the largest public equipment transactional marketplaces in the world. This is just one small example of how we've been using technology and data to transform the way we do business. We have used these values internally to set prices and determine marketing strategy for years. And now we are making this available to customers through the inventory management system. At the same time, we understand we need to be more than a black box. We know all too well that our customers are knowledgeable and they want control. That is why we linked to our newly launched RB asset valuator tool directly from the IMS to give customers the details behind our calculations so that they can continue to make their own decisions. Finally, the Rouse data tools will also play an important role in this process. The addition of the Rouse data to the equation gives customers an understanding of what the values are outside of the auction space. Whereas RB has traditionally approached the problem from a marketplace or auction perspective, Rouse has always approached this from an asset level. By combining these 2 sources of data, we are able to give a more complete picture of an asset's value over the life cycle of that asset. This is a great value to equipment owners, but also to other players in the ecosystem. Take finance companies, for example. The ability to derive residual models at the equipment type level will allow companies to understand the true value of the equipment portfolio regardless of the situation. Next slide, please. The driving force behind the development of RB Asset Solutions and the inventory management system is to build a platform that allows equipment owners to access the global used equipment marketplace on their terms through a wide range of services. The inventory management system is the heart of this platform and serves as a gateway that allows sellers to access a wide range of disposition-related services. We define the concept of services very broadly. As mentioned earlier, easy access to data and analytics is a key service that enables decision-making. We view our public marketplaces, MPE, live, online options as services available to our customers based on specific needs. Today, we are beginning to break up our traditional full-service offering into micro services, so that asset managers can consume them on an as-needed basis for ultimate flexibility and choice. We think of inspections, escrow, financing, payment processing, title transfer and storage in this manner. All of these services are offered through the RB Asset Solutions platform with the inventory management system acting as a gateway. Take inspections as a current-day example. When an asset is loaded into the system, an IronClad inspection can be ordered with a click of a button. That request is routed to the inspection team, and then the inspection is automatically scheduled. The result of the inspection now lives with the asset in the inventory management system. That inspection can be used with the customer's own private auction, can be used on their branded website or if they decide to sell it on IronPlanet, it can be transferred over there. The request for an inspection could even come from a buyer looking at an item that has not been inspected yet, for instance, on a listing site. We are doing the same thing with our marketing and technology capabilities. Customers using RBAS can run their own branded websites, their own private marketplaces and drive demand using services that we offer on the platform. Today, we power the used equipment sites of many leading brands with a true private label approach. CAT, Volvo, Komatsu are just a few brands that use this technology. The addition of Rouse will add a new stable of customers as well as new technology in this area. In a similar fashion, we have a number of customers who manage private marketplaces for closed sales to specific groups of buyers, often a dealer network, based on our technology. In the future, we will continue to layer on other services via the platform in such area as parts, repair services and logistics, to name a few. This can even include services from third parties. The goal is to offer all of these services in the most value-added manner possible in order to provide the greatest amount of choice for our customers, ideally at the asset level. We want them to be able to access the used equipment marketplace on their terms, asset by asset. In summary, RBAS represents a new holistic way of going to market. We are focused on building technology and services that allows equipment owners to easily build a database of assets, tap into our analytics resources to help understand the value of those assets and access a platform, which helps maximize their value at the time of disposition. The goal is to put the decision-making into the hands of customers and provide them with an unparalleled menu of micro services so that they can achieve that objective.

Thanks, Matt. Again, Jeff Jeter, President, Global Strategic Accounts. I just want to illustrate and talk for a minute about what we're seeing and the value we're delivering for many of our strategic account customers, some of the largest global fleets that we're now helping manage in new ways. As Matt mentioned, the value that we drive today as a trusted adviser is much more than showing up and talking only about auctions. One of the components of transforming Ritchie Bros. into a technology-driven company is changing the way we work with equipment owners. As you can imagine, our larger strategic accounts are becoming more sophisticated today in terms of inventory management and some have large fleet planning teams managing multibillion-dollar fleets. The value to the enterprise is significant given the original equipment cost of fleet and the ultimate recovery they are looking to drive at some point in the equipment life cycle. The world of asset management and disposition is becoming more complex. While still relatively early days, we have made much progress in RBAS integration across our larger enterprise customers. And this is where we've been able to make meaningful impacts with a more consultative approach and now with more sophisticated tools, Ritchie Bros. Asset Solutions, to help solve complex inventory management issues in managing large equipment fleets. Through RBAS and IMS, we now have the visibility and transparency to drive upstream value to these strategic customers in addition to our transactional marketplace platforms. Through this increased level of visibility, we can now deliver insights back to our customers with regards to valuations, pricing trends and insights and workflow tools to help optimize the disposition of assets, whether through their own direct selling efforts or one of RB's marketplaces, helping them navigate the right time and channel to drive the highest net recovery. One of the exciting things about our RBAS technology platform is the applicability to solve problems across all the industry sectors that we serve. The national rental companies, large construction companies, OEMs and their dealers, financial institutions and oil and gas companies. And we can do this through a common set of tools that can scale across all sectors with minimal customization at the sector or account level. And as Matt discussed, with this increasing level of integration, we can drive additional value through our service offerings for sellers that are looking to do appraisals, inspections, redeploy of assets to one of our yards or refurbishment work. Likewise, I'm very excited with our recent combination with Rouse, where we can further enhance the breadth and depth of data that we provide, insights and analytics and increasing levels of value that we can drive for our customers. Ultimately, as we drive greater value across our large enterprise customers in managing their fleets and enable them to make better and more informed decisions, the stickier our relationship becomes that will help enable RB growth through technology. With that, let me turn it back over to Ann.

Thank you, Jeff. What you heard from Matt and Jeff is the what, the global trusted marketplace we are evolving to and some early learnings and feedback from customers about the value that we're providing today and that we're going to continue to grow. Now you will hear from Baron Concors, our Chief Information Officer, about the how, the technology platform that will enable the marketplace to come together and scale. With that, Baron, over to you.

Thank you. My name is Baron Concors, and I'm the Chief Information Officer here at Ritchie Bros. In my part, I'm going to talk about how we are using technology to enable scalable growth with a specific focus on micro services. Technologies are constantly evolving and innovating, and things are no different here at Ritchie Bros. While we continue to deliver on innovation that drives the business like PriorityBid and Ritchie Bros. Asset Solutions, we must also evolve the foundation of our technologies to ensure our technologies remain scalable, easier to manage and improve our speed to market. Next slide, please. A big part of this is breaking down our monolithic applications into components known as microservices. Microservices allow us to be nimbler by allowing smaller teams to work on these components to deliver improvements in innovation faster. They allow us to focus on business capabilities instead of applications. For example, we will have a team working on the checkout process and constantly improving on that process to make it easier for our customers. Of course, all of these microservices are being built in the cloud, which will result in best-in-class reliability and scalability. Next slide, please. Here, we see an example of how a leading video streaming platform has implemented microservices in the cloud. They have teams dedicated to each of these areas, which allows them to deliver enhancement and innovations in days. If this was one giant application, these enhancements would take months. Next slide, please. Part of this journey to microservices has been breaking our business processes into smaller business capabilities and activities. We then assess which of these make sense to be microservices. Here, you can see just a sample of the work to date and how we are building our microservices to align with the business. For example, with transactions, we have small teams building the business capabilities that make up our complex transaction engine: bids, listings, fraud prevention and risk management. Next slide, please. We will also fuel our growth by building all of our microservices with application programming interfaces or APIs. An easy way to think about it is that an API allows one application to talk easily to another. These APIs allow third parties to access functionality or data to use on our site or application and vice versa. These APIs will give us a competitive ecosystem of tools to grow our business and expose our marketplace to our partners. Whether it's shipping or payment providers or third-party parts and services partners, they will easily be able to plug into our ecosystem using these APIs. Thanks so much. I'm going to pass it back to Ann.

Thank you, Baron. From our earliest days, Ritchie Bros. has put the customer at the forefront of everything we do. And our evolution to the global trusted marketplace, keeping the customer experience at the forefront is more important than ever before. Let me introduce Jim Kessler, our Chief Operating Officer, to hear how he will be scaling and evolving the customer experience. Jim, over to you.

Thank you, Ann. As Ann mentioned, my name is Jim Kessler, and I have been with Ritchie Bros. for the last 6 months. Before Ritchie Bros., I spent the majority of my career in the automotive sector focused on mechanical and collision repairs, working with customers from large insurance corporations to individuals involved in accidents. I am very excited about the potential that is in front of us here at Ritchie Bros. And one of the opportunities that I am most passionate about is improving the customer journey. What do our sellers and buyers experience when they choose one or several of our marketplaces to interact with us? The customer experience initiative ties nicely with our continued integration of the IronPlanet platform. As everyone is aware, Ritchie Bros. has built out its Ritchie Bros. live marketplace and operations over the last 16 years and was built with a live event in mind. On the other hand, our IronPlanet marketplace was primarily built for an online or digital experience. As we continue to evolve and bring the 2 together, we are ensuring that we are looking at this combination through the eyes of our customers from both the seller and buyer's lens. This journey already started with the implementation of MARS. You have heard us talk previously about MARS and recall that MARS will combine all of our customer activities under one common back end support system so we can ultimately provide an effortless customer experience. Next slide. Over the last 6 months, I have seen firsthand what it means when we say we bleed orange. I had been amazed at how focused all of our teammates are on our customer in ensuring that they are satisfied. Our teammates will immediately respond and resolve any dissatisfaction they may have. This is an amazing trait. But at the same time, we need to be able to analyze why the dissatisfaction occurred and ensure that we have solutions that are intuitive for our customers so they can have a streamlined experience on all our marketplaces. Another opportunity in our customer journey is managing and having full visibility into our third-party partners and their interaction with our customers. They represent a critical part of our customers' journey, and we need to ensure they are integrated into our front- and back-end systems to ensure the interaction remains easy. Finally, we need to finish building out MARS, but we also make sure our operational teammates are able to work across all marketplaces. Our goal again is to be easy to interact with. Next slides. On the next 2 slides, we have examples of our current customer journey from our sellers' and buyers' lens. We documented every touch point to better understand how many times we request data, call, e-mail or survey them. The goal here is to understand and uncover consistent pain points. We continue to learn, analyze and optimize our marketplaces to ensure maximum ease of service for both our sellers and buyers. Next slide. To track success, we will be piloting and implementing a new customer score. This score will measure customer effort. We will measure how easy we are to interact with. Also on this slide, we have some examples where we could potentially interact with our customers to begin to measure CES at different stages in their journey. I'm a big believer that you need to be easy to interact with and when you are, it will transform customers into lifetime advocates of your brand. Last slide. The question we've been asked many times is will you be returning to live auctions after COVID? In order to answer this question, we are applying the same customer lens as we will be using to the rest of our business. Currently, when we operationally think about sales day for a live event, we include equipment valuation, ramping, in-person registration, catalogs, event day, et cetera, as the activities we need to execute against to have a successful day. We also think about these activities as one big activity, sales day. But when you ask the question, what is the purpose of sales day from the customer perspective, you quickly realize you can disconnect the active sell equipment and evaluating equipment from having to be on-site to buy equipment. We are disaggregating each of these sales day activities in asking 2 fundamental questions: One, what customer need is this activity fulfilling; and two, how can we improve the experience to give the customer even more. An example of future innovation in regards to the evaluation of equipment will focus on using video, pictures and our network of inspectors' vast knowledge about equipment, which allows us to accurately describe the condition of the equipment, so our customers can have a virtual evaluation experience and have complete confidence in their purchase, which I ultimately believe will result in our sellers getting the best price realization possible. We also have the ability with our physical site to have special preview days in the weeks leading up to the sale, where our customers can schedule time and inspect the equipment they have interest in and can even have one of our senior inspectors answer any questions they may have. We have also heard from our customers what they enjoy about sales day is the social and network and aspect of the event. The question we are asking ourselves is, can we provide an even better social experience, one that gives our customers invaluable insights as well as the networking they've come to love, disaggregate it from a day when we happen to sell equipment at a site. As we progress in our customer experience initiative, we will have more exciting innovations to share across the customer journey. At this point, I will turn it back to Ann, and happy to answer any questions you may have.

Thank you, Jim. We've shared a lot of information today about where we're headed. As a reminder, we're headed to the trusted global marketplace for insights, services and transaction solutions for commercial assets. I bet you're all thinking, what will all this mean to Ritchie Bros. into the future? To frame that up in the context of where we've been and where we're headed, let me introduce you to Sharon Driscoll, our Chief Financial Officer. Sharon, over to you.

Thank you, Ann. And hello, my name is Sharon Driscoll, and I am the Chief Financial Officer for Ritchie Bros. And in this section, I will be walking you through how our financial model has performed over the last 6 years relative to our evergreen targets that we first introduced in early 2015. As well, we will highlight how our financial model is expected to perform over the longer term as this team executes the strategy that we are presenting today. I will be sharing our refreshed Evergreen Model, KPI metrics and principles that will guide our definition of successful execution and capital allocation in the years ahead. Next slide, please. Let me start by looking back over our financial performance since 2014 and what has been a solid history of delivering results for all stakeholders. As we first introduced our Evergreen Model, we were clear from the outset that this model was not annual guidance, but more how we expected execution against our transformational strategy to financially perform over a 5- to 7-year period. This was the initial period of transforming Ritchie Bros. into a technology-enabled company and was punctuated with a large acquisition as we purchased IronPlanet in May of 2017. This acquisition, in addition to our Mascus, Xcira and internal digital investments prepared us for this COVID-19 moment as we were able to seamlessly transition to 100% online bidding. Due to the acquisition, learning along the way and some accounting changes that significantly impacted our revenue metrics, we had modified our evergreen expectations over this period. Our initial view on top line revenue metrics was to deliver revenue growth of mid-single to high single digits, resulting from stronger volume or GTV growth. And post the acquisition, we increased our revenue growth expectations to high single-digit to low-teens growth. Our actual performance when using our service revenue growth, as there was 5 measure for old revenue or net agency proceeds, delivered 11% growth, solidly at the midpoint of the range established post acquisition. I will review the service revenue metric itself in more detail a little later in this presentation. Although GTV was shy of our targeted range, we were able to deliver on our revenue expectations through upside generated from our harmonized buyer fees and our value-added service revenue streams. This strong top line performance enabled delivery on our upwardly revised EPS growth target. And although our performance of a 10% CAGR growth is at the lower end of the post-acquisition targeted range, we are encouraged by our operating income performance in recent years. Our operating free cash flow performance has been remarkable during this period, delivering well above our target of greater than 100% of net income. This exceptionally strong cash flow performance has enabled us to maintain our dividend payout ratio at an average of 58% during this period and has enabled partial repayments of debt, which was incurred to acquire IronPlanet. Today, we are at a leverage ratio of 0.5x, well below our stated leverage target of less than 2.5x. This leverage level enables significant flexibility to both endure continued pandemic uncertainty as well as drive for growth as meaningful strategic opportunities emerge during these uncertain economic times. Although we were on pace to make our 15% ROIC target for 2021, we instead chose to preserve cash instead of repaying debt due to COVID-19 uncertainty as well as fuel our future growth with the recently announced acquisition of Rouse Services. To sum up my review of our historic financial performance, I would say this. We transparently laid out our strategy, we said what we would do, we said what we thought the financial performance could be, and we delivered against those performance targets. And in doing so, our Ritchie Bros. stock has significantly outperformed the S&P 500 and the TSX over this period. Now let me touch on some of the individual KPIs in a bit more depth. Next slide, please. Starting with GTV, we have seen steady growth in this measure of volume. However, our underlying lots have grown at a significantly higher pace. The reduction in average sales per lot is a function of several factors, including the increase of our transportation sector assets and government surplus contracts. We continue to dig into the data to better understand the shift in mix and underlying drivers of lower lot values to help us better determine opportunities for GTV growth or margin expansion. Moving to our revenue metrics. Our total revenue growth masked the true health of our top line performance. Our reported revenue is made up of 2 types of revenue: revenue from inventory sales, where we take title to inventory and resell; and service revenues, which is the combination of commissions earned on straight and guaranteed contracts and fees from all transactions and services sold on our platform. You can see the disproportionate impact that inventory contracts have on revenue versus their share of total GTV. In addition, inventory contracts have a different margin profile and due to customer choice, the magnitude of inventory contracts can vary significantly year-on-year. As such, our services revenue growth, which captures the lion's share of the GTV selling across our platforms and all of our service revenue streams, is therefore the most reliable measure to determine the health of both our top line and underlying margin performance. Moving on to cash flow. We are very pleased with our cash generation from operating activities and our disciplined approach to capital spending. During this period, we transitioned our CapEx towards technology investments to support infrastructure integration and digital product development. We also relocated our U.K. location, closed 5 yards in North America, sold several pieces of excess property as well as funded site maintenance requirements to ensure yards were safe for employees and customers, and to enable the care, custody and control of equipment for consignors. Moving to our profit measures. Our operating income performance was negatively impacted through the integration phase of the acquisition. But I am pleased to say that in recent years, we are delivering significant improvements in sales team productivity and operational cost leverage, driving both margin expansion and earnings per share growth. Also, we are very pleased with EPS growth through this period as we focused efforts to reduce debt, deliver alternate income streams through sales of property and minority held investments and delivered tax benefits associated with the acquisition. Next slide, please. Since the start of 2015, the company has generated $1.1 billion of operating free cash flow and returned more than 55% of that free cash flow back to shareholders. Total dividends of $433 million have been paid out during this period. We have grown our dividends with earnings, and dividend payments represent 70% of the total cumulative cash returned to shareholders. Next slide, please. Now looking forward, here is how we are thinking about our evergreen metrics and how we believe our financial model will perform over the next 5 to 7 years as we execute on this next phase of our strategy. I will remind you that this is not to be taken as annual guidance, but what we believe execution against our strategy is able to deliver over the longer term. As you have heard on today's call, we are a learning organization, and we have shared just a few of the various pilots and tests we are working on. And although we expect to make money on all the pilots as we learn, we anticipate scale benefits to be delivered in 2 to 3 years. That said, it is also important to note that we are rolling out the strategy in the midst of a pandemic, rife with uncertainties beyond our control. So we do urge you to think of this model as what we are committed to delivering in a steady-state, post-pandemic environment using 2019 as our basis for measuring our performance. As you can see on this slide, we are simplifying our evergreen scorecard to focus on 4 key measures: GTV growth, service revenue growth, operating income growth and operating free cash flow. Let's start with GTV growth. Each of our strategic pillars are designed to drive and support transactional volume growth. When we look at our platform, we see GTV growth opportunities inside each region, each sector, each channel, each format and across each customer category. As we have highlighted today, we will use our test, learn and scale approach to unlock that GTV potential. As such, we are recommitting to our original evergreen metric target of delivering GTV growth in the high single-digit to low-teens range. Our second metric is service revenue growth, with the target of delivering low double-digit to high-teen growth. With the combination of GTV volume growth and the vast array of service offerings that will be enabled through our platform, we have accelerated our view of growth potential in this metric. As Matt has highlighted, with the inventory management system as the gateway to our platform, customers will have easy access to our services, whether it be dispersal, data, inspection, appraisal, storage, web shops and much more to come. Our third evergreen metric is operating income growth, with a target of exceeding service revenue growth. Our first 3 strategic pillars presented today all focus on using technology to make the customer and employee experiences easy, positioning ourselves for a sustainable growth and efficiency. This improvement in productivity with fewer friction points in our processes will ultimately drive margin enhancements and operating income growth greater than service revenue growth. And our final evergreen model metric is operating free cash flow and maintaining our target of delivering OFCF at greater than 100% of adjusted net income. Next slide, please. With respect to capital allocation priorities, our key focus is flexibility. We have adequate sources of capital to fund our growth agenda through the combination of strong operating cash flow and debt flexibility. Additionally, we are open to both organic and inorganic options to deliver the growth potential within our strategic pillars. With the recent announcement of our acquisition of Rouse Services, and with the potential of additional acquisitions or partnerships to accelerate our strategic priorities, we wanted to share our guiding principles related to leverage and return on invested capital. If necessary to fund the right opportunity, we would be willing to increase to a debt level we are comfortable servicing from our strong operating cash flow. Also, ROIC in the early years of acquisition may be tempered, but we will use as a guiding principle that ROIC should always be greater than our internal weighted average cost of capital. Our dividend and dividend growth is important to our shareholders, so we will continue to grow the dividend as we grow earnings. We will also consider share repurchases and further debt repayments, but only when near-term prospects to fund growth priorities have been exhausted or the financial case is compelling to do so. And with that, this wraps up our financial review, and I will now hand it back to Ann.

Thank you, Sharon. Two final items left for us to discuss today. What TAM does this global trusted marketplace represent? And what are the key investment highlights for Ritchie Bros.? I will handle the first, and ask Sharon to speak to the second. So on the TAM slide, let me explain a little bit about the total addressable market. Not only does our new strategy allow us to better serve our customers, it unlocks new markets for us. You've heard us describe in the past the $300 billion GTV in used industrial equipment that transact annually. Of this, an estimated $30 billion goes through the auction channel. This was our historic core business and remains the lion's share of our business today. In the past few years, we have added solutions like Marketplace-E, our reserve price channel, and launched RBAS, which gave us a presence in these upstream markets, and they are among our fastest-growing parts of our business. Building an integrated, easy to use marketplace that you've heard us describe today and becoming a trusted adviser to our customers opens huge additional potential for our business. It is important to note that on the left-hand of the slide, the used industrial equipment market is characterized by $300 billion GTV or gross transaction, of which we transact less than 2% today. And on the right-hand side are the products and services which we believe will be unlocked through our marketplace. They are sized in revenue. So let's talk about the new potential revenue opportunities we see. First, with all the inventory tracked in our inventory management system, we will be incredibly convenient provider of inspections and appraisals. Our Rouse acquisition adds to the capabilities we already have in this potentially $2 billion to $4 billion market. Adding a listings offering globally is strategically critical. The revenue potential here is less important than the access and insights to huge volumes of equipment that's ready to transact and will serve as the on-ramp to many new customers and their fleets of equipment. We also [ won ] financial services solution today and in the future, we can offer more. This is a $25 billion to $35 billion market in which we are uniquely positioned to play a bigger part. Another large new market this strategy opens up is products and service. This is a $100 billion market, which obviously represents a huge opportunity for Ritchie Bros., but is critically important to our partners and customers as we discussed earlier. We will work closely with them to find ways to participate here that are mutually beneficial, utilizing our microservices architecture, of which Baron spoke earlier. There are other opportunities as well. We will sit at the center of critical pools of data which can both offer tons of value to our customers as well as potential for monetization. Our marketplace will attract a lot of eyeballs, which opens possibilities for advertising and search monetization as well. You can see why we're so excited about this strategy. It's great for customers and provides tons of headroom for us. Now don't expect all of these offerings overnight. This is our strategy, our vision, and to do it right will take us some time. But we are already underway. Everything you have seen today and on this page is in flight at some levels. Like you've already heard, we will test, we will learn, and only then will we scale. These extensions are no different. We're not jumping headlong into these spaces. We will start, as always, with our customers and our partners at the forefront of our thinking and make sure we're building what they need. Once we prove the value proposition, then look to us to scale. And with that, Sharon, over to you.

Great. Thanks, Ann. And so if we can go to the next slide, I think one thing is very clear. That what you've heard today positions us as to be much more than just an auction business. And that's how we've been predominantly viewed in our history. So where we are headed is to become the trusted global marketplace for insights, services and transaction solutions for commercial assets. What we are is we are an omnichannel marketplace, positioned for growth. The care, custody and control of assets is a huge competitive advantage for us in this sector. We are also the market leader with brand, data and scale advantage. We fundamentally provide liquidity for used commercial assets through our global reach, and that's both global reach for access to used equipment as well as access to a global buyer base. Our growth agenda that we just laid out to you today is supported by our strong cash flow profile and balance sheet flexibility that is perfectly set up to enable us to grow. And we are approaching all of the changes that we've layered in today as a learning organization, where we are unlocking that growth through a test, learn and scale approach. And this is a very experienced leadership team with a history of innovation and success to deliver on this vision. And with that, I'm going to hand it back to Ann to lead us through our next Q&A session.

Thank you, Sharon. So just a quick set up before we turn it over to the operator to open up the next round of Q&A. We have just close to 40 minutes for a Q&A session, should we need it all. And after that, and this is on the IR website, this format of kind of static pictures and just hearing our voices isn't the most ideal. So we have put a ruling in. So at the top of the hour, the leadership team that you've been hearing from today will be available via video for about 30 minutes. Feel free to join us so you can put names to faces live. Feel free to go about your way. But I just wanted to let you guys know if you didn't see that we have an additional 30 minutes we've put on the Zoom link. Again, no need to join, but if you would like to, give you a chance to interact with the team live. With that, we are ready for the second round of Q&A. Operator, let's open it up.

[Operator Instructions] Your first question comes from the line of Cherilyn Radbourne from TD Securities.

It seems to me that the growth targets that you've outlined looked pretty ambitious when I consider that your 5-year EPS CAGR to the end of 2019 was 7%. So maybe you could sort of address what you think the organic growth rate of the used equipment market is in total, what's the organic growth rate of the auction segment that you participate in and what kind of penetration are you assuming of the other 90% of that market.

Yes. So Sharon, do you want to kick off, and then I'll add some color?

Sure. So Cherilyn, thanks for the question. I think we're not going to be able to go into a lot of those detailed specifics. But here's how we are looking at the future. Clearly, the platform that we have put together through all of the investments we have made over the last 6 years have paid off to allow us to pivot so successfully at this moment to 100% online transacting. And I think the CAGR that you're referring to is probably not adjusted and not looking at some of the elements that we would consider as not repeatable opportunities. And clearly, we are beginning to leverage, on a combined business basis, the true opportunity of what bringing these 2 large businesses together is able to deliver. And where we see the future, when we look at this strategy, the whole unlocking and using our technology as a platform really opened a very large opportunity to grow service revenues as well as grow GTV volume outside of our traditional auction space. So the combination of the total addressable market that Ann walked you through and our confidence in our ability to be that trusted partner with our buyers and our sellers is what gives us confidence that we will be able to hit these service revenue growth targets that you're chatting through. And then in terms -- Go ahead, Ann.

The only thing I would add to Sharon's comments is, as she reminded us in her opening remarks, we're still -- and I did in mine, all of this assumes, obviously, a post-COVID, steady-state environment really for 2 reasons. One, let's get out of the things that are out of our control that could have repercussions. And two, obviously, that time will allow us to put some of these tests behind us, some of those learnings in place, so on and so forth. So just as a reminder, these are kind of longer-term steady-state numbers.

I see. Okay. But 2020 is still the starting point. And so I guess, I'm curious how you're thinking about that in the context of the operating income growth target because 2020 has basically seen rather dramatic expansion in your service revenue margin, in part because of this pivot to 100% online operations, and then in part because certain normal travel and entertainment costs are not being incurred. So with that as the starting point, how should we think about that?

Yes. So Cherilyn, I did say in my comments that just to eliminate the impact of COVID, we are using 2019 as our starting point for growth over that 5- to 7-year period. That will help to ease anything that we're seeing that is not repeatable in current year. And again, we're not presenting this as annual guidance. It is more how we view once we get these test and learn opportunities up to scale, how we believe that the growth potential will flow through. And as you're knowledgeable of our business, clearly, with more growth comes more services, and with that comes a high degree of efficiency and flow-through of that incremental revenue into operating growth.

Your next question comes from the line of Bryan Fast from Raymond James.

Maybe can you elaborate on increasing your participation in the financial services market. And then maybe just have you considered using the strength of your balance sheet to target this market?

Yes. So how about a few of us will answer this? Let me kick off, and then turn it over to Sharon on balance sheet comments. We view that as a huge source of competitive advantage, obviously. And then our RBFS business reports into Jim Kessler. So some comments from him as he's 6 months in, in kind of assessing the opportunity. So at a high level, we believe that we know that an overwhelming portion of transactions in our space are [ finding ]. That's a fact. And we love the growth rate of our RBFS business, but we know there's quite a significant growth trajectory on top. Both to be unlocked with our balance sheet, as you note, but also through additional products, additional services and playing much more in that upstream world than we do today. So with that, let me pause, turn it over to Sharon and then over to Jim.

Sure. So we are testing a couple of things right now with respect to use of our balance sheet in this space. And I think a couple of things to note. Clearly, our weighted average cost of capital is significantly higher than any financial institution. So clearly, we can't play in the prime space and get the return that our shareholders would expect. So our use of capital is really supporting how do we get further upstream and easier access into areas where we think companies are coming into distress. And therefore, we end up with a little or a lot more control over the timing and access to the disposition rights of that equipment. But it is -- it's importantly strike an interesting balance because we don't want our customers to see that it is us that's actually tipping them into bankruptcy or tipping them into forcing them to sell assets. So the choice we've made is to partner and work with a couple of providers to really look at where the opportunities in this space where we can both leverage our capital and also get earlier access into disposition. So that is something that we will continue to test and learn from over the next year or 2. But again, I wouldn't see this as a significant risk to balance sheet capital because, again, we recognize that first and foremost, we're not a bank and don't have access to the cost of capital that they do have, but we do see opportunity to use some of our excess cash in this area. And with that, I'll throw it over to Jim Kessler.

All right. Perfect. Thanks, Sharon. And I'm just going to keep it very high level. So one of the first things that we did from the customer perspective was actually find out from them, where are the areas that we can be most helpful as you think about the transaction? And you saw it today in a lot of the presentations, the parts and service, the financial sectors, is where it really came back from our customers that they would like us to take a look at and how can we participate in those areas. So as we go through this and we pilot and we test, you're definitely going to hear a lot more around those 3 major sectors. And the sectors I didn't mention will be less of a focus for us and transportation was one of those sectors as a service. That was on the bottom end of the scale. But definitely, parts and service in the financial sector, and Sharon mentioned some things and you heard about the parts and service from Ann earlier as she went through it, but really those 3 areas from services where we'll be diving into.

Your next question comes from the line of Michael Feniger from Bank of America.

Can you just help us understand how RBAS kind of works exactly? Like do you give it away for free? Is it really to help the smaller customers that don't have the infrastructure? Or is it actually, with Rouse now, going after the big national rental fleets? And maybe you can just give us an example, because it's been around for 2 years, of some success you're having with a specific customer and how you guys are offering services to that customer that would be kind of different from a few years ago?

Yes. So Michael, how about I start it and then I'm going to turn it over to Matt. So just at a high level, think of our RBAS time in the last 2 years as a learning journey, right? So where we started with RBAS was kind of large enterprise customers, and you heard from Jeff, as we've evolved the data information flow, the value of that product has significantly increased and their use of it. We then launched something called RBAS business, which was much more targeted, again, in the spirit of learning and understanding the answers to these questions to smaller customers down to the DIY segment, as Matt said, where you are able to list inventory and kind of what we're monitoring there is also their needs, uses of the product and data. But let me click up one level and then we'll turn it over to Matt for a concrete example. That Page 15 shows that had kind of that ecosystem of the marketplace is really the heart of how we're thinking about RBAS and ultimately, value to the customer and monetization and growth for Ritchie Bros. So the linchpin is the inventory management system, right? What we view is essential is to give customers all of the reason to load their inventory into the IMS because they're gaining a lot of value. And to your point, today, many of those reports are free. You guys have asked the questions from us on, "Hey, are you guys going to monetize data?" We've answered the question, yes, and we've acquired Rouse, which is literally in the business of data monetization, to kind of help create a platform of how you monetize and how do you bring that to large, medium and small customers. So that's the first piece, right? The second piece is all about them. What do you do with that data that you are monetizing? You are providing value to customers so that they can start making informed decisions, to Jeff's point, on how do you transact and how do you extract the most value from that transaction. And it can be on their terms, in their own marketplaces, it will us or anything in between. And then think about then RBAS as a platform, I think, Matt in previous calls have said, it's the easy button, right? So let's say you see a piece of equipment on a listing service that lives in our IMS if we're successful, when we're successful. And you just say, "Hey, even as a buyer, I wouldn't have to think of pricing, right?" It's on MPE or posted somewhere. I saw it, I want it, I want some assurance. And the entire RBAS platform, when you think of it from even a global listing service, you think of it as any of the services we've disaggregated, all the way to our own third-party sites we can help power or our own auctions. All of that then becomes at the customer's fingertips through RBAS to be able to partake in any and all part of that value chain. Obviously, huge value to the customer and then the growth and monetization for Ritchie Bros. So that's at least at a high level how RBAS has crystallized for us, how the IMS fits that it's a critical gateway. That's why Matt spent so much time on it and how it's going to manifest over time. But in terms of shorter-term specific concrete examples, Matt, maybe you can walk us through at once.

Yes. Let me give you a couple of examples. One, both for what we -- what an enterprise customer might do with it as well as what a non-enterprise customer might do with RBAS business. So as I mentioned in my talk, one of the key for services we integrated into the IMS was inspections. And so we have a customer who basically sells fork or finances forklifts. They track in the IMS all the forklifts they have actually out for -- out on for finance, right, who customers are using and so forth. When that forklift comes back off lease, it, once again, achieves a new status in the IMS. And with the click of the button, the company will go and order an inspection for that forklift so that they can actually price it and resell it. So when they do that, they're actually calling on our inspection network to go inspect that particular asset. We conduct the inspection just like we would for ironclad if it were selling on one of the IP channels. And then -- what they will then do is they will go and sell that or attempt to sell that forklift in private auction sites, right, that only dealers can access through their existing dealer network. So once again, they're using our inspection technology. They're using the IMS technology. They're using our auction technology but in a private manner. So it's a branded website that dealers access through a specific sign-on ID, they hold the auction with their dealer network. If they do not sell it in the auctions through their dealer network, then they have the opportunity to cascade that down to our public auction channels or a public -- or NPE for that matter. So there is an example where the IMS is managing the inventory. We're leveraging several services, the inspection service, the private label auction service, and then eventually the public auction services, all managed by this workflow concept in the IMS. And that kind of approach, it has been adopted by a number of our larger customers. So what that also allows us to do is, right, we're seeing that inventory and we're facilitating those transactions, even though they do not traditionally occur on our public marketplaces. So that's one example. The second example is with the new business, IMS, that we rolled out earlier this year. When COVID hit, we actually -- a good example is a customer in a remote part of Canada still wanted to list. We actually couldn't get our inspectors up there because of COVID and travel restrictions and all of that. They were actually able to, using RBAS business, go and self-list the item, inspect it themselves, if you will, take the photos, put the descriptions and then flow it right into the NPE channel, which they had been using predominantly and have it sell, all without our traditional processes touching that item before. So once again, they were able to actually use this DIY capability to access our public marketplaces we view -- in this construct, we view them as services. So they were to access that through IMS, complete the sale and continue their operations during the COVID downtime. So just a couple of examples there, how we're using RBAS in the IMS.

That was helpful. And I'm just a little confused on one of the buckets, its parts. And I've always thought that was traditionally the dealer business, mostly for the dealers. Are you just going to go head-to-head with the dealers? How do we think about ways you're going to penetrate that market, or find fees and services to touch that market? Maybe you could flesh that out a little bit more.

Perfect. Michael, let me take that. So you guys know I come from big auto, obviously, car dealers, and it's no secret that dealers make a very large portion of their money on parts and services. So the answer is collaboration and facilitation, not competition. So again, let's put up one level. By the very nature of what we do, we transact used equipment, used parts and new services. Today, in fact, we have some pilots going with some of our partners, some we may have mentioned earlier, about how do we drive attachment to the transaction if it goes to one of our transaction channels, NPE, any of our auctions, so on and so forth. So the idea is the same kind of easy button, take this as more illustrative than guiding. But imagine a shopping cart kind of functionality, you bid on a piece of equipment, you win it. The shopping cart literally says to you, "Hey, this piece of equipment could benefit from this parts bundle", again, using all of the AI and now kind of people who bought this often use this. All of that plugged in, the AI ML was through us, but the bundle offered through a dealer, in this case, but through the third-party APIs that Baron talked about. So to the customer, it looks like it's just part of the same transaction. I won my auction, I'm a buyer. This part is offered, they don't need to know behind the scene. So think about kind of Amazon marketplaces, right? You click on something. Most people don't know if it's coming from Amazon directly or from a third-party seller, that's the same idea. And in terms of our ability to monetize, it would then, in that example, come from kind of a transaction-theme model, if you will, but not head-to-head competition. We're facilitating an incredibly valuable value stream that candidly dealers have been asking us for. With that, let me just turn it over to Matt to talk a little bit about a test with a large OEM and a dealer network we are conducting today, again, the same kind of spirit of a learning organization.

Yes. Thanks, Ann. So Ann talked about building the shopping cart functionality. But before we actually go and build that technology, we're in the process of putting the kind of the groundwork in place for that. We've actually been working, I think, on 2 levels with dealers and other types of smaller manufacturers when it comes to parts and attachments and services. So today, for a large equipment OEM and dealer network, they're very, very interested in upselling services plans to consumers who are -- or to businesses who buy equipment. And so we're actually able to use some -- Ann also talked about advertising earlier, we're actually able to use some targeted advertising capabilities sort of in the My Account section as well as targeting users who just purchase certain types of equipment with specific e-mails and other types of messaging around the opportunity for these service plans. So we're offering these service plans under the branded opportunity of that particular OEM and dealer network under their brand. We're sending e-mails. We're displaying advertisements to basically sell in their service plans to buyers on our marketplace who have just purchased specific types of equipment. And we've been running that test for a couple of months now, and we're using that test to kind of assess where we want to go with this. But once again, working collaboratively with those folks. Additionally, there's a number of kind of smaller manufacturers and/or distributors out there, once again, where RBAS comes into play, right? And they don't have dealer networks and need direct access to a marketplace. Once again, we can set up a website for them, they can syndicate -- they can sell items on their own website. They can actually syndicate those items to our marketplaces where we can actually either sell them in any type of format. Most of these folks initially use kind of the NPE, buy now, make offer format depending on the price point of the item, kind of giving them direct access to our marketplace. Now once again, those aren't showing up in kind of the basket or the shopping cart that Ann's talking about. But what it does is it allows them to take advantage of a buyer base that's coming there day in, day out to buy equipment and expose their inventory to those folks. And we can do it in a way, once again, that's very DIY on the part of the seller. So just a couple of examples there.

Your next question comes from the line of Scott Fromson from CIBC.

Great. Just a quick question. You've shown quite a bit of detail in your Evergreen Model. But what we haven't seen is CapEx. Do you have an idea of a range of cumulative or annual CapEx you expect to put against these growth initiatives?

Sure. It's Sharon here. We have traditionally just given an annual range. I think in the past, it's been -- we lowered it this year, I think, to between USD 40 million to USD 50 million on a gross basis. I would certainly carry forward with that, the intention would be that we continue to provide a little bit more color as we start to enter the year so that you've got an annual number to look at. But right now, that would be sufficient to cover all of our kind of organic capital for both digital and property to date.

[Operator Instructions] Your next question comes from the line of Craig Kennison from Baird.

A follow-up on RBAS, might be best for Matt, but what are the right KPIs for outside investors like us to use to measure traction of that platform? Is it the number of subscriptions, the number of assets, the number of -- or the value of that asset? I'm just trying to understand from an outsider's perspective, how we can really measure the kind of traction you're getting there?

Yes. So how about...

Ann, you want me to...

Yes, how about I start and then you add color as it relates to today?

Go ahead.

Perfect. All right. So Craig, the way to think about it is imagine and we're clearly KPI diehards. So you're making Kevin Geisner, our Head of Strategy, smile. Think about KPIs in the way of a funnel. So if you -- let's break down the RBAS experience, first, with IMS, right? So early KPIs are about -- think about just the amount of inventory in IMS, that could be a KPI. The next goes down from that and kind of how that rate is increasing and among which customers, right, if you want to think about the next order down. Then think about data or think about it in terms of 2 usage cases. One is internal usage to the customer, which is what data are they looking at and how frequently and this. And then a different use case around what they -- are they looking at that's actually driving them to behave a certain way on our best. So kind of KPIs associated with data usage. And then the next level down in the funnel, think about that monetization. And when you think about monetization, as Matt said, we view the entire platform of RBAS as a set of products and services, including our auctions that become products and services we offer and anything starting from data moving through that entire funnel of listings, private sites or on any of the monetization that then RBAS is powering. And we have a set of KPIs around inventory flowing into each of those monetization opportunities and then as well as conversion. So that's at least at a high level, how we're thinking about KPIs across RBAS and measuring success. And obviously, we're at the early stages of that funnel. We've been in learning mode around -- really around the data usage and what customers value what And then how easy, to Jim's words, during his presentation, are we to flow inventory through the various gates within RBAS. Let me pause there at a high level and then turn it over to Matt.

Yes. And I mean I think Ann covered it very comprehensively there. We've started to look at these stats. And I think with -- as we -- another potential stat we could look at is the overall value of the equipment that is in the IMS as we get better at understanding the particular data points and basically not only auction pricing levels, but retail pricing levels and so forth, right? And I think as we go along, we will continue to learn and watch. We've actually just implemented into RBAS, one of the new features we've implemented is just basically an ability to understand how people are using RBAS, because it is so new to us, to see what features they're finding the most relevant as we start to expand the user base of the platform.

And simply as a follow-up, related to the Rouse acquisition, should we understand the primary motivation behind that acquisition to really create an additional value for those who would choose to give you information about their inventory? I imagine that's the big hurdle, right? If you could convince everybody to give you all of their information about inventory, you'd be in nirvana. So I'm guessing, Rouse is really that -- it's just one piece of the value proposition you're trying to add. And If I'm right there, what are other value propositions you could add to really motivate further IMS sort of data coming your way?

Yes. So when we talk about Rouse, we kind of think and the acquisition, very excited about it. We think about it as direct benefits and indirect benefits. So let me just spend a couple of minutes talking about that. So as we said when we announced the acquisition and on our call, Rouse is -- comes with revenue and profitability and a healthy growth rate. So when you think about a direct value, Ritchie Bros. just happens to have a much bigger ecosystem of customers across the globe to introduce the Rouse product into. So that's a very direct benefit as they were on growth path A, and we can put them on growth path B just by the nature of the Ritchie Bros.' ecosystem. The indirect value, which is the equally candidly more so exciting piece of the acquisition, is about this potential for RBAS as it now relates to adding value to customers. So when you think about even the comprehensive data offering, right? So Rouse has kind of the original equipment price, any retail transactions, those types of things. And then we have kind of the day-to-day -- and they have those real time, we have real time. This is what's happening with the liquidation and auction and demand around the world. Marrying those 2 things up just creates an incredible amount of value for customers. We believe that, and we've heard that. So then think about what does that mean? So if that data becomes even more valuable to customers, of course, more are going to want to come in kind of loading that nirvana, as you say, of the inventory management system because the data is invaluable for them to drive the best decisions and as Jeff said, the best outcome of their transactions, the most monetization. And then think about a rising tide lifts all boats. Once the inventory is in and customers are partaking up the data and deciding what is in their best interest, we then have this layer via our back of products and services that we offer, whether or not they ultimately transact through one of our auctions or not. Again, think of, maybe Amazon is the best example where you could shop through them but do buying through a third party and just happens to flow through their system. The same idea is here, which is people can transact separately, but can partake of any and all of our products and services throughout the value stream by the nature of assets and inventories in there, and is an easy button to transact with. So that's kind of the rising tide lifting all the boats is a way to think about it.

And as a quick last follow-up, you had mentioned the automotive industry, which has VIN information and you're hoping to build something similar in your world. Would that VIN number, so to speak, be unique to Ritchie Bros. and somewhat proprietary to you? Or would this be an industry-wide kind of number?

Yes. So I come from -- it's much like the market share comments we had. There are just some critical tools that we believe need to be built. So we are being very practical. There are areas we've been investing in, and Rouse clearly has been investing in because it's important to have a marketplace and to be able to provide comprehensive data so that customers can make decisions to get the data clean. So the idea is we would build it, again, value to the entire industry -- every OEM has kind of their own way to go-to-market. We're not thinking that we're going to skew their behavior. So think of it as almost like a translator where -- to the extent that OEMs more closely align, it would make everything easier, but we will have the customer at the forefront and what a customer needs is an easy way to load their information and for us to double check its accuracy so we can properly track it through its life cycle, advise to the sellers on kind of, again, how to best extract value and then give confidence to the buyer that we know that piece of equipment, and we can, as Jim said, portray it in the best possible light to give confidence to buyers and obviously drive transaction price. So, that's the intent of this VIN system. And I think in the same spirit of rising tide lifts all boats, we would be transparent with it because we want to encourage the entire ecosystem to kind of benefit from the value that's driving obviously separate and apart from various ways for us to monetize it.

Your next question comes from the line of Larry De Maria from William Blair.

I just would like to better understand the leverage in the model. Obviously -- updating, obviously, is usual operating income to exceed service revenue growth. And we know some costs will come back to an earlier point next year. But you're also driving higher-margin scalable revenue. So are we structurally changing, I guess, an incremental margin potential? And if we could just drill down in, what is a fair incremental margins of 30% to 40% through the cycle? Or just how do we think about a little bit better on the leverage through the model?

Sharon, do you want to take that one?

Yes, sure. So I think a couple of things. And I think one of the reasons we've gone to operating income growth is just as I went through the revenue impact with inventory, the margin rate is just not a good measure to measure our performance, in my mind. So our commitment to continue to grow operating income dollar growth at a greater level than service revenues is doing 2 things. It is reflecting that our historic model will flow through -- will continue. So we'll keep that model. We also believe that over time, there is incremental leverage. But again, we still have to lay some of the tracks to build out some of these new service offerings. But I do think what you will see is -- we've said before that we're in learning mode right now during COVID and really trying to understand what are the experiences of both buyers and sellers at this time, and how is it actually -- how do we think of it in terms of driving an improved customer experience. So if we can hit that nexus, that says we could actually deliver the same or better customer experience to a buyer and a seller, but we certainly -- if we can also get cost reduction at the same time, that's kind of nirvana. And that would lead to more of that permanent operating margin lift. We have said on our last earnings call, we do expect some of these costs to come back. But I do think that there are certain aspects that our learning will show that we're actually able to deliver an improved customer experience but do it at a lower cost to serve. And -- but again, not really looking to quantify that today, but I think there will be some margin or operating income growth improvement to service revenue growth that will come out of those earnings.

Okay. And then just one final question. Have you reached out to the Rouse customers, some of which are probably already your customers, obviously? And how do they think about your ownership? Do they see the upside or they wary of being too big with you guys? Just some of the initial feedback from the Rouse customers, maybe the new ones that you're acquiring and then the ones that you already have an existing relationship with.

Yes. So let me take that. Overwhelmingly very positive and why don't I bucket it and kind of -- I always think in terms of 3 bins, for those of you that have been on calls with me before. So one bucket is obviously the customers that completely rely on data to drive their business. They instantly connected the dots that we were talking about and came to us saying, "Wow", okay, so excited. So that's kind of one bin. Another bin is we hired a third party to help us diligence and really understand how the Rouse products and services viewed by their existing customers, incredibly positively. And if anything, through those interviews also a sense for we want more. We want eco data. We want to understand -- really kind of on that trajectory. And then third is -- and this is the area we have been focusing on is data, confidentiality and integrity. One of the ways in which Rouse built their business and we built ours is holding that customer data incredibly confidentially to make sure that their interests are protected first and foremost. It is a commitment -- when we went out with the announcement, it is the first commitment we make. It is the last commitment we make to ensure that all customer data is handled with the same confidentiality they rely on from Rouse and Ritchie Bros. and leverage across that one.

That concludes our Q&A portion for today. I turn the call back to Ann Fandozzi for closing comments.

Perfect. Thank you. So I close with this, I hope by the spirit and the nature of the questions, we left you with the same level of excitement around the potential for this business. This global trusted marketplace, we think, is the clear vision to bring us into the future to both allow us to kind of continue into the next phase of the journey that was started with the multiple acquisitions and organic build to truly accomplish this right where we started, this vision of becoming the trusted global marketplace for insight, services and transaction solutions for commercial assets. So with that, full circle to the fact that on the -- on our IR website, there is a link to Zoom where -- just because of the nature of how this has gone, we just wanted to make the leadership team available live and in-person. You are welcome, and we would appreciate you guys joining. Again, it's intended to stay live until half past hour. So to the extent that we'll see some of you there, that's wonderful. And for everybody, thank you so much for giving us such a big chunk of your day and have a wonderful rest of your day.

That concludes today's conference call. You may now disconnect.