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

Hello, and good morning. This is Sameer Rathod, for those joining us virtually, VP of Investor Relations. Thank you so much for joining us today virtually, in person. We really appreciate you taking time and your day to listen to our story. I'm going to go over a few technical points for the folks on the phone or virtually, and then I'll read the safe harbor statement. So for those of you who have dialed in, I highly or strongly recommend that you join the webcast instead, we will be demoing various videos, and we will be doing Q&A through the webcast to simplify things. So if you have questions, use the system online or e-mail me, and I'll pose the questions in the room during the Q&A session. For those of you in the room, we'll have Q&A after each section. You can ask questions. If you're shy, I know there's plenty of you, you can e-mail me and I can pose those questions as well. Now for the main event, which is the safe harbor statement. The following discussion will include forward-looking statements. Comments that are not a statement of fact, including projections of future performance, are considered forward-looking and involve risks and uncertainties. The risks and uncertainties that could cause our actual and operating results to differ significantly from our forward-looking statements are detailed in our SEC and Canadian Securities filing, available on our Investor Relations website, investor.ritchiebros.com as well as EDGAR and SEDAR. For an identification of discussed non-GAAP financial measures, the most directly compared full GAAP financial measures and a reconciliation between the 2, see our most recent earnings release, Form 10-K, and they're also available on our website. So let me now hand it to Ann Fandozzi, Chief Operating Officer, Ritchie Bros.

All right. I'll do -- I'll take any hat. Thank you, Sameer. Pleasure to be with all of you today. I'm going to start, but Jim Kessler, our President and Chief Operating Officer, this is how I tell you that I'm going to start doing your job, too. Promoted, demoted, who knows what's happening. But we're basically going to tag team the front section. We're going to tag team the Q&A and the sessions between the teams. For those of you in the room, welcome. For those of you online, welcome as well. Sorry, you couldn't join us together. Today is about an extension of the session we actually held in December of 2020, and we'll keep referencing that. We set forth an incredible strategy, and we are going to be delving deep into it. And unlike normal where Sharon and I, our Chief Financial Officer, occupy all of your brain space, we are going to decidedly take a back seat, and you guys are going to hear from the team, the incredibly talented team that's actually getting all the pieces done, you'll get a chance to ask them questions directly through each section. So today is really about that. So a little bit on agenda, and then I'll do a prequel and then I'm going to turn it over to Jim. So what you can expect today is we're going to go through our strategy that we set out in December of 2020 to become the trusted global marketplace for insight, services and transaction solutions comes to be. And so when we rolled that strategy out for you guys originally, we said, look, this is a journey that's never going to end. It is forever. So the first question is, when will you get there? Never, right? Because we're transforming and then we're going to transform, we're going to grow, we're going to keep tacking things on, number one. The thing we're not going to cover today is the financial model because that hasn't changed. What Sharon and I committed to you guys is that it's incredible as Ritchie Bros. has been in the past and one with incredible history, the one Achilles' heel the company has had is the growth. We could be very honest about that. We've been at kind of this low single-digit GTV, just as a history lesson for the better part of the decade. And our commitment, and you're going to hear from the folks today that are actually doing good on that commitment, bringing that to you is to get to mid-single digits, high single digits, low double digits on and on and on. So that's the first reminder. The second, as it relates to marketplace is you'll know it's working because the gap to services revenue is going to continue to widen. So where the GTV is going to get to mid-single digits, high single digits, low double digits, the services that we're going to be offering aren't going to be tied to underlying GTV, and we're going to hear from some parts of our business today that we're already seeing that happen. And so that growth rate will be higher than the underlying GTV growth rate. But what you're hearing from us, hopefully, over and over and over are one, if there is a mantra, it's about growth. It's about customer, it's about growth and it's about how the pieces come together. So that's two. And how that translates in the Evergreen Model is, again, you're going to see this trajectory of GTV, the trajectory of services revenue. It's an incredible business like marketplaces are, so then the flow through, the efficiency goes to the bottom line even more incredibly as it translates to the EPS. That's what you can expect to see from us. How we're doing it has not changed from the promise we made in December. We're going to test and learn, okay? And you're going to hear all of the tests we've had going, and drumroll, not all have done well, right? So you're going to hear from us like this didn't work. This is what we're taking forward, this is what we're testing next. As a reminder, I'm a geeky engineer by training, love KPIs, love numbers, love testing. And our only goal as a team is like, let's be right more often than we're wrong, be right on the bigger things, wrong and the smaller things. We're going to be printing money together. And that's where the team is headed. And so -- and M&A as -- we're still in the previous slide. I'm going to turn that over to Jim. So where does M&A fit. Because you're going to hear about some companies today that we bought and how do they fit. There's only one KPI there, and that is speed. We look at M&A as something that can fast forward this transition to a marketplace. And what do we look for in M&A? And you guys will see for yourselves. We look for incredible businesses, first and foremost, right? We're not looking for no revenue, bet on the come. That's right for some people, that's not right for us. I'm going to steal Sharon's words, we're a tech company, but that makes money. It throws off cash like you've never seen. Very happy with that model, don't want to disrupt it. Two, they have to come with incredible management teams and that's why it's important for you today to hear from those management teams that are making that happen. And then third is that they need to somehow fast forward our transition to a marketplace. So it's a great business and a great team, but there has to be a really critical piece in it that's really going to enable the broader enterprise to realize the vision sooner. So I share all of that with you guys because we set out in December of 2020 together. We're now 18 months into the journey. It's never going to end. And for you guys today, it's first and foremost, meeting the people that are driving that, assessing the pieces and how they're coming together. So you can see for yourselves how we've gotten here, why we've gotten here and what's in our minds and then have a chance to hear from you directly and hear from us. So with that, I'm going to turn it over to Jim Kessler, our President and Chief Operating Officer.

Thank you, Ann. Really appreciate it. This is the first time I heard double digits was the third, not single as we go through, so thank you. I got a little relief for a couple of quarters of how we get there. My name is Jim Kessler. I'm the President and Chief Operating Officer of Ritchie Bros. And before I kind of get into what I do, the one thing I'm hoping last night when you got to go to the site, you got to meet a lot of our team members. To Ann's point, you have the leadership team here today, but you really got to meet some of the people who get the work done day in and day out. And hopefully, you saw their passion of when we say people bleed orange, and we all have the orange RB on our shirts today, and that's the team that bleeds orange. That's the team that gets it done every day. And hopefully, you got to spend a lot of time with Kevin, [ Doyle ] and Ryan and the whole team that was there last night because they really make this whole thing go forward. And for me, for my role, the way I look at it is really a support function to make sure all the teams have all their resources, tools they need to be successful. And how do we clear roadblocks to make all that happen. So really, when I think about the role of the leadership team, we're here to support everyone else. So how do we make that happen? So how do we bring this vision to life day in and day out for our customers and our teammates, and that's really the way I look at our role. It's really not directing people, telling people, everything that you're going to hear today really comes from the whole core of Ritchie Bros. up into the organization. So Sameer, if you don't mind going to the next slide, if you're a growth company, the one thing you need is a flywheel, right? If -- you're not cool if you don't have a flywheel. So of course, we are cool and we have a flywheel. And what I'm going to talk about for this is really pieces of it that you're going to hear today. Because the one thing when we say Ritchie Bros. marketplace, I think it's important for everyone to realize these pieces all exist today. Now can we make it more intuitive, easy for the customer, easier to use? 100%, yes. But all these pieces that you're going to hear about happen today. And I'll give you an example for Ritchie Bros. Financial Services, it's a business that we have today, a lead comes into one of our platforms, that lead goes into the financial services team, they then call the customer. It's not intuitive. It's not the easiest experience, but it happens today and it allows us to grow that business tremendously today. Now as we talk about the future of the marketplace and bringing things together, I'm sure you can imagine how that can come more intuitive for the customer. When do you need financial service? When do we present it? How does it happen digitally versus someone picks up the phone and calls you. And each of the pieces have their own component of how they operate today, and we have multiple platforms that do it. But what you're really going to hear today is how does this transform and evolve and become easy, intuitive, at the right time the customer needs a service or an insight or a transaction, how do we make that so easy for the customer that it just -- there's no other place I want to do business besides Ritchie Bros. because you're a part of everything we do, you're part of the whole life cycle of equipment and this is the easiest experience that I'm going to have. So just real quick, you're going to hear Kari talk about transaction solutions today from the seller point of view and how we're working with the seller. As you can imagine, when COVID happened, Ritchie Bros'. 60 years relationships. I know everything about your family, your business. The first visit I went on, with one of our customers, it wasn't even about sale of a transaction. I heard about the business for 45 minutes of what his father created. And he was at the point where I'm in my 60s. I want to retire. Is this the right time to sell? And how do you help me get $800,000 so I can retire. That's the relationship that the team has. They understand the business, the people, the family, how this business got created. So for us, super important of how do we keep that relationship, but we also do realize there's a digital transformation happening. And what you're going to hear from Kari is about the inside sales model. So how do we reach more people? How do we build relationships. But then we're also working on, do we need more feet in the street to get more market share? So what is the transformation? And how does the sequence and happen over a period of time. So Kari's going to take you through our local yards. So from a physical standpoint, how do we get closer to the customers. Diesel is so high at this point, as you can imagine, going 300 miles to deliver equipment at this point, having those local yards to be closer, what that means to our customer. So on-site, online, digital and also the platform of IronPlanet, you can leave your equipment at your site, right? So we have everything from leave it at your site, no transportation cost to a local yard, to the main yard. And everything across is dependent on what's going on in the world, we can take advantage of all of it. So Kari will take you through sales coverage, relationships, how we're transforming from interrelationships to digital relationships and how do we do that, which we have the ability to do all of it and then local yards, sales venues all that good stuff. The next part of the flywheel that you're going to hear that I really love is just insights, right? And especially everyone here in this room, the reason why you're here is to get insights. What does this mean for Ritchie Bros. So this is why you're here. And for us, we know the company with the data that can actually take that data and provide useful insights to our customers, no matter if it's rental rates, if it's valuations, if it's whatever that insight, how do we turn it into useful, valuable information to our customers that when they think about Ritchie Bros., they realize there is value in what you're providing to me. So Gary and the Rouse team, Doug and Phil will take you through insights and Rouse and make sure you have a really good understanding of that. And then the one thing that I'm just very passionate about, especially coming from cars. Earlier in my career is around services, right? Just not being a disposition engine for people. I love that business, and I want every market share that I can get my hands on, right? I want all of it. But I also be valuable to the customer and all their needs across the life cycle. And the one thing dependent on if it's a strategic account down to a customer in a long tail that might have 5 pieces of equipment, they need different services from us at the right time, needs to be intuitive. So it's not going to be everything. United Rental needs X, long-tailed customer needs Y. So the ability to provide all those services across our network is going to be super important as we talk about the marketplace and how to make it intuitive at the right time. When you're thinking about transportation, it's not when you bought it, you already maybe did a priority bid. And now when I have this piece of equipment, I know I need to transport it, you need to know earlier in a chain as you're making decisions. How much is the transportation cost? Should I get it into the financing, right? You can't do all that stuff at the end. So how do we make this intuitive and instinctive for the customer as we go through it. And you're going to hear today about Ritchie Bros. Financial Services, Blake is going to come up and talk about that business. You're going to hear from SmartEquip our most recent acquisition. And Fern and his team and Alex are going to come up and talk about parts and service. And coming from cars and -- Ann and both of us coming from cars, understanding how big parts and service contracts and what we love about it, we already have great partners in dealerships and OEs of how to this come together. So we don't need to carry parts and create our own service contracts. We already have partners that have this. And when you have a used piece of equipment that it might be the third or fourth owner of that piece of equipment, how do we reconnect them back into the dealership network and where is the marketplace to make that happen. And of course, I'm always greedy, so how do we monetize that as we go through with our partners, but we're adding value to our partners on both sides. Customer gets what they need to keep their equipment running. The dealership has their life cycle, their network going and we utilize what they're really good at. So they're going to be the big pieces of the marketplace that we have in place. And like I said, we have all these pieces. And what Baron is going to bring to life is how do we make this intuitive and easy because if you go on our website, you see we have separate platforms. The fact that we have IronPlanet, a weekly featured, we have a Ritchie Bros. live, and I can keep going, crews and this and that and Ritchie Bros. -- there are different platforms that we have to bring together to make more intuitive. And what you're going to hear from Baron is how do we create this platform and infrastructure to bring everything together. And the one thing that I hope people can see, as we talked about IMS. How do we -- the most important thing is how do we get data and ingest it into a common format for these platforms. So when we talk about IMS, we're really talking about how do I take data no matter if it's from an enterprise customer or regional account, bringing it into Ritchie Bros. financial platform, have a similar taxonomy because you imagine marketing in 8 different platforms with different ways to call a piece of equipment. For Matt and his team and the marketing team, how to make that efficient. So when we think about IMS, think about how do we ingest data and then how do we feed it easily to our platforms and make that so simple for our customer that they have the ability in the marketplace to kind of go, based on what liquidity needs do you have. I need money today. So a live event is awesome, but I can wait 90 days, so Marketplace-E and a reserved auction is more I want to do. How do we make this so intuitive for the customer in one platform. But the first thing is you have to ingest the data. You have to make it common across all your platforms, and then we have the foundation to get it into the marketplace. So the one thing that we want to share with you right now is we're constantly working on this marketplace. You're going to hear from Baron, early stages of how do we transform this and you're going to see early wins as we go through this and what they call thin slices. But we wanted to bring it to life in a video format of what could this feel like for the customer? So we put a little video together that I think Matt and Sameer and his team did a great job. So Sameer, if you want to play the video. [Presentation]

I was hoping for one clap. I think Matt did a great job. So I'm going to pass it back to Ann. And we talked about how cool a flywheel is. For me, the next cool thing is TAM and how big are all the things that we talked about, which really get me excited about why we're putting so much effort into the marketplace. And Ann is going to take you through TAM.

Thank you, Jim. And yes, for sure, Matt, congratulations, that video. We get a lot of questions about how does it all come together. So we were like, well, why don't we make a video of what's in everybody's heads. And that way, it will be very clear. So I love the slide, TAM, TAM, TAM for Kevin Geisner, our Head of Strategy as we set out on this journey. So I'm not going to spend a lot of time on the slide except to say the opportunity is incredible. So for me, personally, when I joined Ritchie Bros. in January of 2020, you have to understand, I actually started talking to the Board of Directors in June of '19. So what the heck, takes me so much time to make a decision? And the answer is that whenever I look at a business, I evaluated for months and months for a single KPI and that KPI is the potential of the business. How big can it get? Yes, I read about incredible business, very profitable, cash machine, I love all these words, but single-digit growth. When the light started coming on about the potential and this chart really brings that together, it is about an underlying marketplace that is $300 billion of GTV. Just to be clear, when we walked into the business, we were around $5 billion. Now we're $6 billion nice growth, COVID, but from $6 billion to $300 billion, an incredible runway. And that's what's on the left side of the slide. The little lock is the marketplace because it unlocks the potential for the right side, which actually dwarfs the left side. So as big as $6 billion to $300 billion is, the monetization of the services is staggering. Jim loves money, ditto. That's why we work so well together. When you think about the services and what they can encompass, whether it's the parts and service contracts on behalf of the OEM dealers, whether it's the data monetization, whether it's the financing. Each of these actually has the potential, on its own, to dwarf the $300 billion on the left. The magic that you're going to hear about, 2 of them we're going to -- or actually 3 of them we're going to hear about today, RBFS, which is a homegrown solution, but when you think about financial services. When you hear about Rouse and the data, the thing to remember is 20 years in the making. So you guys often ask me the question, and you can ask the team about what's the moat. I mean there's nothing -- 20 years it has taken Rouse to get to where they are, right? And now they're part of Ritchie Bros., you know what that means. SmartEquip. The original idea, you're actually going to meet the founder, Alex, literally a professor with an idea in his head, 20 years to get this business, Fern as the CEO. I mean when you think about the amount of time, the proprietary nature of these businesses, it's mind-boggling: one, in what they've created, they should be so proud. Again, we buy great businesses with great teams. The pride is theirs, but the impact to Ritchie Bros. and our ecosystem is staggering. And that's what gives us confidence in this TAM. So Jim and I have spoken enough. It is time for you to hear from the team, and we are going to start with Baron Concors, who's going to -- who's our Chief Information Officer and is going to bring the architecture to life. Baron?

Thank you so much, Ann, and good morning, everyone. And for those of you I didn't get a chance to meet yesterday, I'm Baron Concors, Chief Information Officer for Ritchie Bros. I started just slightly over 2 years ago. I think my first week on the job is when the world shut down and the business went 100% online, and I'm really thrilled with how the team responded and the business just continued to operate on all cylinders. And so prior to Ritchie Bros., I spent almost 10 years in Yum! Brands. I was Chief Information Officer for Yum! Brands and held other positions there like Chief Digital Officer for Pizza Hut. And then prior to that, I held a variety of leadership positions at FedEx and technology, including Director of Innovation and VP of Retail Technology. So -- but I love Ritchie Bros., I love this business. It's just unbelievable. And when we talk about modern architecture, it's really critical to the company, and it's really 1 of the 5 strategic pillars we've made, our teams just rally around. And one of the things I've learned in my career is that technology is just adapting and changing rapidly, more rapidly as time goes by. And one of the things that we don't know is what's going to happen. But one thing I know for sure is I need to be able to be fast and I need to be able to be flexible in our technology solutions. And I go back to like my time at Pizza Hut, one of the things I always recall is like Apple Pay came out. There are companies to this day that still cannot accept Apple Pay, right? Because they don't have the right technology architecture, but there were some companies that were able to roll it out in days. And that to me is what is indicative of speed and flexibility as we don't know what's coming, but we know that we're going to be able to adapt. We're going to be able to implement it quickly. We don't know what tools are going to come out. They're going to make us better harvest customer insights, better market to our customers, but if we can implement those technologies in days, that's how we're really going to win. And so that's what modern architecture is all about. And so next slide, Sameer. And we know today Ritchie Bros. has made some amazing acquisitions over the years. And those acquisitions are -- fuel our marketplace today, but they're legacy stand-alone systems, as you heard Jim talk about. So we have a tremendous opportunity to sort of simplify our customer experience and unlock many business capabilities that we don't have today. So -- and so Ritchie Bros. is all about bringing this vision of a singular marketplace to life. And if I drill down on this picture, what's not apparent is how we're going to build this marketplace. And when we say marketplace, it's conceptual because it's actually made up of dozens and dozens of what I'll just call LEGOs, that are independent business capabilities. So think about checkout, think about customer account, think about IMS, and we're going to build these individual LEGO blocks, which in technology we call micro services, to be independent, that are going to talk to each other through APIs. And what this is really going to do is unlock our ability to make changes to those individual LEGOs in days and hours versus weeks and months. And so we'll have small, nimble teams that are going to be able to really deliver innovation in a very rapid amount of time. And so late last year, when we sort of started talking as a team about how we can move faster to achieve this vision. We decided it really is about speed and delivering on this vision as fast as humanly possible. And we decided to seek an outside partner to help us move faster. And it was really important for us to pick someone who brings that expertise in product design, engineering, creating frictionless customer experiences and then obviously, building for scale. And so we made that decision through a really robust selection process. And we chose one of the preeminent engineering firms in the world, and that's Thoughtworks. And they've helped some amazing companies in their digital transformation like Delta Air Lines and Target, but even more important to us, they have a great deal of experience in marketplaces with companies like Mannheim, Auto Trader and even more experience in our own industry when you think about John Deere and Caterpillar and some of the companies they've helped as well. So they came on board early this year. We started working with them. They're doing really amazing stuff. And so -- next slide, and when we think about our approach for RB 2.0, it's really about delivering business value through these quick wins. I'm going to talk a little bit more about this in a little bit. And so it's technology, companies have evolved. They've really moved to this. We all heard about agile that's getting -- delivering these business value every quarter, every month. And it starts with business outcomes. So when we talk about things like selling a service. When we talk about that, we say, what do we want the outcome of that to be before we even start the software development. And that really galvanizes the teams and helps them focus and make sure what we're building is actually going to achieve that business outcome, and not reinventing tech for tech's sake. And when I say that, what I mean is, if there's something off the shelf that solves the problem for us, then we should look at that, right? We're not going to go out and build customized solutions for everything we do here. We want to build -- focus our customized solutions on the things that are proprietary to us, things that really differentiate for us and use off-the-shelf wherever we can for the other reasons. And then finally, one of the things that's going to be magical about this new marketplace. You heard me talk about APIs. It's not just how we talk to our systems internally, but it's also exposing those APIs to partners and third parties that they can tap into our marketplace, we can tap into them and really unlock some really great possibilities. So we start with -- when we talk about Ritchie Bros., I mean, clearly, 2 of the big business goals for us are to maximize flow-through and enhance customer satisfaction. We have tremendous opportunities to provide more transparency and visibility to our customers with Ritchie Bros. 2.0. And we know when we do that, like -- things like enabling self-service for our customers that's really going to make the team -- lives of -- our team members' lives easier as well. So things that they have to take, customer phone calls to -- for today, they're no longer going to have to do. and really making sure that everything we do in Ritchie Bros. ladder was up to these business goals. And then next slide, we turn these business goals into product goals. So one -- examples on this page are, be the easiest and most trusted way to buy and sell used equipment and related services. So each of these goals have what we call bets, we're going to place. And those bets are what come to life through our software development. And you'll hear me talk a little bit about that in the next few slides. But really, business outcomes, goals, the bets we're going to place that are really going to help grow this business. So next slide, the thin wedge, you heard Jim mentioned a little about, this is really about focusing on things where it starts with something that's highly desirable by a customer, but also highly usable. So when we start development of Ritchie Bros. 2.0, it's really about picking these things that start on the very front end of the customer that they can actually purchase or use, going all the way through our infrastructure to our back-end systems and solving for all these things as we go. So we're not picking a siloed little piece. We're really going to the need of some of the opportunities we have in solving from end to end. And so that turns into each thin wedge we build. It starts to become an approach we call bootstrapping. So you may have heard about this approach before. And each thin wedge ladder is on top of the other. And so we talk about examples here, like how we would build a stand-alone -- or purchase a stand-alone service. And if you were at the tour last night, you heard Kevin and Concors say, we're soon going to have the ability for a buyer to buy an inspection on our assets. And that's an example of one of the first things that will come to life with Ritchie Bros. 2.0. And when we do that, we'll have more foundational things we'll build, like buying an asset, selling an asset, uploading assets. And all of this will come to life and build on top of each other to what ultimately we have that vision of a singular marketplace on Ritchie Bros. 2.0. And so this next slide, I think this came straight from the kickoff meeting with all of our teams internally. And we really wanted to make sure everyone kind of has the same sort of guiding principles as we build Ritchie Bros. 2.0. And I'm a big believer that whoever is the easiest is going to win. And so when we think about our customer experience, buyers, sellers, third parties, it's about how do we make it so silly simple for them to do what they want to do on our digital properties that they just want to come back again and again. And then also enable scalable growth. Clearly, as we grow this business, we want to make sure that we do that without a negative impact on the quality of our service and without an increase to ongoing costs. And then finally, how do we drive efficiencies. We know when we come up with a new way of doing business on Ritchie Bros. 2.0 and really unlock many capabilities, we'll need to make some decisions to stop doing some of the business processes we've done in the past. And so just to wrap it up, when we look at the future expectations, the platform matures as we sort of build these foundational components in the near future. The effort needed to enable the new features is going to be aggressively reduced. You heard me talk about it earlier, how are we going to be delivering and experimenting and talked about, we have a test and learn culture. Great technology companies are testing 30 and 40 different things at the same time. They're measuring them. And that's what we're going to unlock with Ritchie Bros. 2.0, constantly trying things, measuring them, getting the KPIs and making a decision, is that something we want to lean in on or so do we want to pivot to something else? Winning on easy. We know there are customers, we have tremendous opportunity to make their lives easier. We're going to do that. And then finally, you heard Ann talk about how this will result in seeing some of the service revenue growth start to outpace the GTV growth rate. So that's Ritchie Bros. 2.0. It's an exciting time for -- to be here. It's exciting time if you're a technologist because this is just going to be an amazing journey for the company. So with that, I'm going to open it up to Q&A.

Yes. So for those of you who want to ask a question, just you can use the mic that we've set up. Or -- there's a mic right there, Michael, if you want to...

Never really had to go up in front of everyone. I'm not a Ritchie Bros. employee either. My name is Mike Feniger. I'm from Bank of America Merrill Lynch. I guess just broadly to everyone who just presented, I'm just curious, when you look at that TAM and what you guys are going after, you mentioned the long tail, is the long tail getting those dealers with 5 pieces of equipment aren't as sophisticated, is that really the opportunity we see the TAM? Or is it with those large rental houses and those large dealers, which, based on your conversations, they seem like they're trying to do their own thing? They don't want to pay the commission rate. So we kind of look at that TAM, and a lot of the initiatives you guys are bringing together. Is it really to try to go after and attack that longer tail? Or is it to try to get with the -- the big elephants, let's say.

And that was -- all right, that was a great question. So the short answer is yes and yes. But I think the magic is actually Jim's comments about what the big houses need is not what the long tail needs. So our goal through the technology is to make it very easy for the different constituents to get what they need. So for example, I'll just do 3 flavors, right? So United Rentals, huge rental health. Obviously, a SmartEquip customer, a Rouse customer, those are the pieces within the Ritchie Bros. ecosystem that, to Jim's point, they exist today, they're users of. They don't need many of our other services, good luck and god bless. We're just happy to make those better and deliver more and more in the future. When you think about dealers, think about our space. If it's a new piece of equipment, they don't need our help. Maybe even with a second owner. They don't really need our help. By the time it's the third and fourth owner, they've really lost the connectivity and please understand what we're saying, our goal is not to usurp that owner, Jim's words, our goal is to facilitate transitioning that owner because they're buying in a Ritchie Bros. platform, something that the dealers provide, and then we push that owner right to the dealer. So it's a value added. And it's one of these that's going to be in the eye of the beholder. If it's valuable and incremental to the dealers and OEMs, they'll embrace it. If not, no fuss no muss. For the long tail, exactly as the comments that were made, they just don't have access to these things, right? Like -- and to Jim's point, if they're going to buy a single piece of equipment, they don't have transportation at the ready. They don't have financing at the ready. These are the things we offer today, but imagine making them, Baron's words, more intuitive, easier, earlier in the process, a lot more of them, as you're going to hear from Kari. So the answer is all of the above when you think about our ecosystem, but we want to be Switzerland. We're going to be offering it. The TAM is ginormous. They're going to be the LEGO blocks. And the customers are going to kind of vote with their dollars, whatever is valuable to them, they'll partake in. And if it's not, no problem at all.

Cherilyn Radbourne with TD Securities. So the vision is very exciting. I think what I'm struggling with a little bit sitting here is just how much of it exists today. How long is it going to take to get all of the way there? And what are some of the increments that we can watch for to sort of judge progress along the way?

So a lot of the work right now is what I just call foundational, right? Like it's getting the new technologies up, the infrastructure in the cloud and all those kinds of things. And really, we know as part of a marketplace, there's common things we have to build like an account, customer account, a checkout, item pages and things like that. So that's underway. What you saw me talk about with the thin wedge and the bootstrapping approach is really where technology companies have evolved. There's really us as a leadership team, deciding like month-to-month, what we're going to go after, right? And there's criteria that go into that, whether it's like is it a growth opportunity? Is it an efficiency? And we're going to make that decision. You heard me say we're going after first to be able to buy a service, something we don't offer today, and that's going to go live real soon. And so -- but what we're going to work on next, the input of our strategy team, our marketing team, ops teams, sales teams. We're going to have a laundry list of things that we have a choice to go after. And every month, we're going to be making that decision. So I don't want anyone to think I'm not answering the question because I got this question a lot yesterday, when will it be done? But -- and you heard Ann talk about that earlier, it's like when is any technology done? The answer is never, right? It's just -- it goes on and on, you decide, but we're going to have that ability to pivot and choose to work on what we want to work on and deliver quickly. So -- Jim, yes.

No, no, no. It's a great question, Baron. And I appreciate the way you answered. But I think the way I would answer it is we're not going to allow the technology, how quick or how slow we go to the tariffs from being able to see double-digit growth consistently quarter-over-quarter. So what you're going to hear from Kari are things we're doing without technology. When she comes up next, how do we build these sales relationships? What are we doing with the local yards, all that are things in our control that we can take market share without the technology. And when I think about what Baron talked -- when I think about what Baron talks about are the accelerators to go even beyond that. So I think for us is when you see us quarter-over-quarter growing, I like Ann's single digits to double digits, but in my mind, double digits consistently, no matter what environment we're in, is going to know we got all the pieces covered and ready to go. And again, I see the technology as accelerators, intuitive and easy that retain our customers for the rest, hopefully, of their life. But we're not going to allow the speed of that to deter us from -- because we do have all the pieces of the marketplace in place now is the way we look at. Now, it's manual, it's not intuitive, but we do have a manual way with our relationships to get the numbers that we need to over the next period of time until the technology comes up.

I was curious on the slide of all the kind of technology acquisitions or platform acquisitions you've made over the years, is it fair to assume that -- like they're all different technologies and some will be upgraded, modernized, and some will be, I don't want to say, like just left because they're not value-add? Like how do you...

Yes. I think -- okay, you hear me? I think that as with all things, when you make a lot of acquisitions, you have a little bit of everything, right? And that's kind of where we are. But what I think we're evaluating, I think to me, it's more about getting to a singular experience for our customers, one place they're going to go and be able to do whatever they want to do. But to answer your question, it's all over the board. There are some things we're going to replace, some things we're going to enhance and some things we'll upgrade.

Okay. Yes, because I saw like something called TruckPlanet on there. I didn't even know if that existed. And so is that something where -- if I take that example, there's people who are using it today, but you want to maybe try and get them do you think something else or -- yes, I don't know. It just seems -- never heard of it, but it doesn't seem like something that might -- you might be like, oh, this has got to be in the marketplace or maybe I'm wrong and this an amazing [indiscernible].

Yes, Matt, our Chief Marketing Officer, wants to take that.

I'm Matt Ackley, Chief Marketing Officer. So when you think about the marketplace today, one of the things you talked about these acquisitions we've made over the years. Just to answer your question on TruckPlanet. TruckPlanet Is a website that sits on the IronPlanet stack. It was developed in days of [ your ] to assess or approach a specific truck buying audience. As we think about the marketplace going forward, right? What we want to do is we want to consolidate all that into a single user experience. So instead of having a separate website for truck buyers, truck becomes a category on a bigger marketplace. So there's 2 elements to that transition. One is more of a brand and user experience transition and one is the back-end technology. Both of those will be coming together in parallel as we start to roll out those new architectures because from a marketing standpoint, as Jim said before, we don't want to be sending users 15 different websites. We want to basically consolidate that traffic into a single marketplace experience where there's commonalities and opportunities to upsell and cross-sell various services.

And Nick, one thing for you to think about is we might have -- like we sell government surplus. So what we have here what we call GovPlanet and that brand's phase because it's not to, Matt's point, these are other auction things that make sense to kind of put together. But with GovPlanet because it's something that's different than construction equipment and transportation equipment, but the technology behind it, that invoice that gets created for GovPlanet or for an auction is the same technology. It's not a -- like today, RB has a different invoice, IronPlanet has a different -- like different systems create and like that technology Baron knows -- foundational pieces of how we invoice, how we settle there are going to be common things. Now we might -- Matt will make decisions about how do we bring different things that we do as we get into different verticals. But the common things of how to invoice, how to settle, how to create a receipt, how to collect payment they're all going to be shared in the infrastructure. First, we bought all these things and they have their own separate things, right, in the acquisition.

Oh. One more question.

Just a follow-up on that and maybe this is known, but when you talk about the different marketplaces, private listing, IronPlanet, Marketplace-E, growing classifieds. Help us understand like where are you seeing the biggest shifts since over the last 12 months? Like what area is gaining share? Years ago, people were concerned that maybe some of your channels would cannibalize others. It doesn't seem like that's playing out with some of your growth that you guys have been reporting. But what shares -- what channels are gaining the most share? And how agnostic are you to that? Like are you -- do you make more money? You get more fees, commission rates if it's starting to go through IronPlanet or to the private listings? Any clarity there would be helpful.

Yes, perfect. I'll take that. So the answer is we want to be Switzerland, right? We want to be Switzerland. But the analogy I'll use for you guys is Amazon. And depending on who you are, it's a dirty word, and I only use it as an example. Our goal is not this. But you're online and you order a tube of toothpaste. It's a digital experience, but boy, an actual physical tube of toothpaste better show up your house. Amazon makes the most money if that comes out of their warehouse. But if it doesn't, they're selling on behalf of third parties, they make less money but, boy, they still make money. That's really the vision here. Look, the idea of channels cannibalizing, that's an idea from decades ago. If you don't cannibalize yourself, this is like part of being a modern company, somebody else will cannibalize you. So we never talk about cannibalization. We only talk about customer need. Customers can self -- if they want to transact, they can list their own item they do it today. Why not do it with Ritchie Bros. That way, we have them. We can monitor -- I'm looking over at Matt, our Chief Marketing Officer, who was like yayy. When we -- we had a listing service in Europe, Mascus, one of the circles that was on the page, we just really underleveraged that for the globe. We have them. We can monitor other services that we can offer buyers on that piece of equipment or sellers. So for example, if it's a peer-to-peer transaction, do they need to inspect it. What if Baron's lying to me? I don't know who he is. Let me have Ritchie Bros. inspect it. I need financing. All of those things, even if it's a listed item. So imagine if we're not in listings, we don't have access to that. Then we monitor, and I'm just going to use this one kind of waterfall example, we call it. We monitor and we see, it's been sitting in listings for 90 days, 100 days, 110 days. We can contact the seller. Today, much of that would have to be done manually, to Jim's point, we can. In the technology world, it's automatically, we say, hey, listen, it's been sitting around for about 100 days. Do you actually want to sell this thing? If so, but you're concerned about unreserved auctions like this thing sell for $1, we can transact it for use in the Marketplace-E. Here's the results, but it takes a little bit longer. Would you like us to transact it for you and unleash the global buyer base of Ritchie Bros. at your disposal? 30 more days and -- when do you need the money and all the way through. So when we say Switzerland, please understand we're not being altruistic. We are meeting customers where they are. The difference is we're going to monetize every step of the way. Some pieces we do today, some more tomorrow. But at the end, we're going to make money across and now we're back to the TAM slide, I love it. All roads lead back. We're going to play in the entire $300 billion, which we have not played in before and then more importantly be -- or equally offer all of the services on the full $300 billion, staggering.

And, Ann, I think the one thing that we're really set up to take advantage of -- and this is why the share, I don't know -- buy platform doesn't really matter. It's what environment are you in? Supply and demand, I need liquidity or I can wait for liquidity. And that helps us, okay, where do you need to be and what platform, right? So for us, it's where is the equipment? Who has it? How do I get it, right? And then the platform is going to be dictated by, in this market right now, when supply is low and demand's high, people, okay, I want the highest price, I'm willing to wait a little bit more. So that might mean NPE takes off, right? But interest rates go up and someone needs liquidity, live auction, and I want it now, and I need my cash, right? And like so the environment is going to help us. But we have all the platforms to be successful. And no matter what -- my comment, I'm getting back to, no matter what environment, we should be able to take share.

Right now, as you look at some of these things you want to monetize, what is your attach rate at this point to the GTV? And is the KPI that we should be looking at is growth of service revenue to GTV?

So yes, so let me be clear. Think about the numbers this way. We're $6 billion in the $300 billion. So we're low single digits. And then on the services side, even lower than that. So it's infinitesimal. Historically, the way we've treated services, they were tied to the underlying GTV. So they are, like, for example, an inspection service. Well, when you list with IronPlanet, you need to have this inspected, is that really a monetized service? Or is that really a fee that's part of the transaction of an IronPlanet disposition? So even internally, and Jim is really driving us there, as we think about services revenue, it's the stuff that's not tied to the underlying GTV. That way, we can push into the full $300 billion. So the answer is, yes. You should be looking at GTV growth. You should be looking at services revenue growth and holding us to 2 KPIs there over time. It should be higher than the underlying GTV, and the pace of that growth should be outpacing. That's how you know we're dipping into much further upstream and much more into the right-hand side.

So the other thing is just an observation. It seems to me that this is kind of a 2-part thing. You've got to build the architecture to automate everything, right? And then the other thing is you've got to get your customers on the IMS system, right? So firstly is what are you doing to get these customers on the IMS system? I mean which is first, the chicken or the egg or whatever, yes?

That's actually the perfect setup for our next speaker. So how about this? We are going to introduce Kari Taylor because she and her organization are driving customers to the IMS system. We'll let her go through her presentation, introduce yourself and then answer your question as maybe the first Q&A item for Kari.

Deal. So first of all, it was so good to have you at our site yesterday. And you can imagine as the leader of the sales organization, how happy that makes me when we bring any customers in for any capacity. So Kari Taylor, Chief Revenue Officer. This June marks my third year, hard to believe. I came to Ritchie Bros. for the transformational opportunity. And why? My whole career has been defined by transformational growth. Those funky assignments, those stretch things, those -- where do we push for the new frontier, all took place in my time when working for Sun Microsystems, now Oracle; Office Depot; W. W. Grainger and even the private dental distributor Benco Dental. So this is where I get fired up. Why do I get fired up? To solve the execution, putting the points on the board and watching teams do and deliver what they didn't think was possible. And I literally will parlay that into my presentation today. Now before I jump into my content, I'm really honored to ask Ryan Eacrett to stand up. So Ryan is our Vice President of Texas and Alberta, and he's been absolutely instrumental in bringing to life test and learn for our sales coverage model. And guys, we've had the same sales coverage model for decades. Very comfortable, why change it? Well, transformational growth. But I know Ryan well enough that he's going to go, yes, don't make it all about me, Kari. It's true, isn't it, Ryan? It's the team. And what this team has been through in 5 quarters of change management, I don't think we can imagine. We've really shaken the trees. They've shown resilience, they've learned new things. They're making progress. And just yesterday, Ryan and I sat down with the 2 local leaders. And they said, Kari the account managers are now surprising themselves. What a good segue into this comment. So thank you, Ryan. It really is this exciting. Okay. I bet a few of you remember this slide. This slide was presented at our investor meeting back in 2020. And we said, okay, we're going to change up and test a new sales coverage model. We left the meeting and off and running in Texas we were intentionally picking Texas, appropriately, we're here today, too. Okay. It went like this. We used to have a generalist, one-size-fits-all salesperson. We called it a territory manager. They had a geography, and were responsible to go after business, maintain business, everything, soup to nuts. And we put out this premise of, yes, let's define an account manager who works our existing customers and really grow them. Let's go hunt for new business. We're always looking for new. And this long tail, we need to go swing and we need to swing hard. So that's how the story went. Our hypothesis was, through focus, we will drive growth. Really, we were saying by putting constraints in places, people will create ways to grow, and that's been our mantra. We've also said, okay, through this focus, we'd create capacity. Let me give you an example. This territory manager had been responsible for 500 to 600 accounts, tried to keep it straight and drive double-digit growth. The new account manager has between 100 to 150, and we said you can grow. Now you just got to get creative. There is more from the customers you have. Now I'm giving you time to go figure it out. see that premise of focus? We also believed our long-tail customer was underserved, not underserved because we didn't like them, but the territory manager's time was diluted. So where do they go? We also knew that this was a volume play in the long tail, so we were solving for dedicated volume-based coverage, and we were committed to parley a digital reach to maximize how we touch those customers. So what have we learned in 5 quarters? I'll tell you it's been a heck of a ride, hasn't it, Ryan? Some bumps, some glory days, but overall, I am absolutely fired up that this is taking us forward. Our progress is going, and I like the results we're seeing. Now remember, I said focus was the primary thesis. Boy, is that powerful. That constraint to the account manager having 100 to 150 accounts means now you need to solve for, and I'm giving you time to be proactive in your selling activity, and they're seeing fruits of the labor in existing business. Customer response in the long tail. Well, first of all, I believe there are 3 things all of our sellers look for. Solid price recovery. They want the best return on their assets, no-brainer, clear. But we have to solve for that every day. Number two, as easy as possible to do business with and they want to trust who they're doing business with. Fair. Same is true of this long-tail customer. So it's been we know how to approach and talk that dialogue. We've hired a bunch of new folks. It's astounding to me to see over 5 quarters, we have an e-mail open rate with the long-tail customers 39%. And in our outbound phone call, when we're calling a customer with a Ritchie Bros. caller ID, the call pickup rate is 50%. I don't know about you, but I take that all day long. We've also been studying very carefully what market density means to our coverage strategy. And the distinction between metro and rural is becoming very real, and we're continuing to fine-tune that. I think, Ryan, you would agree, we've landed metro, and we're just doing a few more iterative tests on how are we looking at rural with the dimension of drive time and how we go faster. And we've had the good fortune over these 5 quarters of having purchased Rouse, and they built for us a sales tool. So remember, a number of our new hires are from outside the industry. So they have an app that they can look at products and see pricing to help navigate the customer conversations, and it's given them credibility pretty quickly. So 4 outstanding points of progress we've made thus far. So you're going to ask great, what's next? This long tail has my attention. It really has my attention. So we've started cascading and accelerating what we're doing. We took 37 territories in the U.S., all in the proximity of our local yards, and we said we're going to add more long tail to it. And then I'm bullish about these results, I can't really answer. Kari, how do you know this is the absolute right way to cover the long tail? So what we've done in the most recent group of hirings, which were just made at the end of Q1 is we've divided the group between long tail phone-based and long tail field-based, still with a volume mindset. Now we've come out of training. Some of these folks are weeks into selling. Some of these folks are days into selling, and I'm extremely pleased at the pace of their pipeline. And also what it's teaching us about how bringing new folks to Ritchie Bros. is. We're exploring more ways to hunt in the question. We're still fine-tuning. It's hunting in the rural geographies. So Ryan is going to continue to kick some more tests off in Q3 and Q4. Training has been a really cool outcome. When I came to the business everybody said, oh, Kari, I'm so scared to hire in new reps. It takes 3 years for them to come up to speed. I have inside territory managers definitely delivering their budget numbers 2 quarters in. That's a nice pace. And what this whole endeavor has taught us is that we really needed to stare down what are we training for and onboarding to, it's discover the new Ritchie Bros. It's not just sale at a live site. We're selling different things, and we're bringing people in different ways. So we overhauled our content, and we put together now a 4-week boot camp. We literally go have them hide and put them through a pretty intense stack rank training, some don't make it through the end, and then we have a mountain running. So the question that's as big as the question for you, Baron, about when is IT, when do you globalize this Kari? Next month, my direct reports are coming together. And Ryan's packaging a pitch and the question is going to become where do we go next? How fast and who? And we're pretty confident we have a good model. Sums up, Ryan? Okay. So my last slide connects together, what does this mean to local yards. Let's first start with the positioning of local yards. Convenience and ease for our sellers. I want to attract new sellers through local yards. And you'll see on this page all of our incremental new yards and Australia and France were way out front in this. And Australia has been inspiring for what this can be. So as we think about local yards and convenience, let's first take a step back. What are you talking? We're talking about 5-acre properties. We put 2 ops personnel on the ground. Rent is in the neighborhood of $10,000 a month. And we've signed 1-year leases with options. So we have flexibility, but we're not tied in. Pretty good setup for test and learn, which we're really carrying forth in this whole effort. Now I just told you we parlayed the additional long-tail hires in these geographies. So as we're attracting new sellers, my goal is to get these new sellers to ingest all of Ritchie Bros. And what better way than to tie the sales team to it. You may ask, what about results. We're very pleased at focusing on new sellers and what they're going to deliver. And the end game really is a function of accretive margin dollars. There's plenty of real estate to go after to create yards, but as long as we keep pumping up that line, I'm bullish on this strategy. Okay. Those were my slides. None of my slides were about IMS yet, but I know I owe a question back on IMS. And as in all things within the sales team, you get fired up about execution, you go, and you go, and you go. And initially, we were telling the story to many of our customers about the marketplace. And quickly, we saw in the eyes of our long tail, their eyes kind of glazed over and it was quite overwhelming and it was like, what are you asking me? I thought that was fair feedback. So we simply changed our tune of executing on a contract. And we said our next contract we do with you, let's go from a stand-alone contract to an annual contract and let's upload your assets to IMS. So we weren't selling the big story of IMS yet. We were getting them in the universe to start understanding it, and that's where our momentum started and really pumped up in Q1. It actually started in Q4, but Q1 it fired up because we made it about the transaction. Ann, anything you'd like to add?

No, that was beautifully stated. And Kari is being modest because her brainchild, the test and learn -- the whole key is to learn, right? People test lots of things. What's incredible about Kari and what she's been able to do with the team is then take that learning and then mobilize it a different way. So we had one vision of IMS when we started. And it was like, okay, this is going to be too difficult to bring customers along. Let's break it down. Let's make it about an annual contract, let's not boil the ocean for them. And boom, you saw it in Q4, you saw a lot in Q1, and it is but the beginning.

Okay. Are there any other -- oh I'm passing this slide to you before we go to Q&A.

Correct. So the only thing on this slide -- this is the kind of after each section, we do how does it come together, but we're back to our KPI of growth. Everything you're hearing here is GTV, right, local yards, coverage model, long tail, focus, one easy, easy GTV. And that is easy KPI, GTV growth, mid-single digit, high single digit, double digit. In case any of you have a question, though, about wait a minute, what's to stop a salesperson from giving away the store to just drive GTV, the compensation of our salespeople is actually tied to revenue, so they can't just give this stuff away. We're focused on GTV, they're equally focused on revenue because that's how they get paid, which has to do with not giving away the store. And with that, questions.

Just on that, just a follow-up. I mean, if it is about GTV and trying to add more people to the flywheel, Ritchie has done an incredible job over the years, the take rate keeps going up. You guys add more fees, the rate goes up, which is a complement to the business and to the moat of business model, yet is there any thought or analysis done saying, actually, if we cut back these 500 basis points, this could unlock a lot more of the tail to join in. I mean, if you speak to dealers, they all love your services, but they all complain about the commission rates, of course. Sure everyone hears that feedback. So is there any thought process of saying, hey, why don't we take this back and just really open up the flywheel, let more people add? How do you think of that?

Yes. So the short answer is this is a topic of discussion that we certainly have. So which is another reason why we want to bolster the services because if and when the market bodes the appropriate way, we still love the margin rates and the cash. I'm going to answer it this way. Much like every other industry, we have taken our fees up to kind of stay at or a little below, a little ahead of the costs that have been coming in. And so we've been measuring it the other way, which is what has been the effect on take rate as the pricing has increased as of the other side of the measure. And the answer is, it hasn't been affected at all. Now Jim's point in the beginning, it could be a sign of the times, an incredibly tight supply environment and a demand that allows us to do that. If and when it turns, and please hear me, we've talked before. pricing doesn't just go north. Pricing can go south, right? It's something we evaluate every quarter. It's something we act on a couple of times a year. If and when we sense the market cooling. The demand is not there. Imagine that we will take actions, we will measure, we will see what's happening. But thus far, it could be a sign of the times, but it seems fairly inelastic to geek out, counterintuitive and -- but certainly something we're focused on and watching very, very closely.

Ann, I'm going to add a comment about the long tail to that point. Those were pretty impressive e-mail open rates and phone calls. And some of the dialogue behind it startled us. So we've done business with the long tail before, but I can't say we were heavily penetrated. And what we are hearing is we didn't realize you do business with companies our size. We thought you did business with a longer company -- the larger customers. And I think that's been very eye-opening to say, wow, we really have a space to go play in and play in hard.

So I want to play devil's advocate a little bit here. All of this is very interesting. But at the end of the day, the trailing 12-month growth rate on GTV is 3% and the trailing 12-month growth rate on organic service revenue growth is 4%. So I'm just struggling to understand how we should look at the numbers and sort of see that this is working because we are in a very unprecedented market where used equipment is incredibly tight. But the flip side of that is that used equipment pricing is also exceptionally strong. And that helps, especially when your commission rates are percentage-based. So is it a case where your strategic accounts have been sort of most affected by the supply chain constraints with the OEMs and you're sort of backfilling with some of this penetration of the long tail? Or how should we think about that?

You start, I'll add.

Yes. Let me start. So the answer is yes, and there's a lot more to the story, which is what gives us confidence. So there's actually not just 2 things we look at, which is volume and price, but there's also mix and understand that has been an even bigger hurdle than volume. Let me just say it again. it's not just that there's a supply chain issue, that's hurting volume. It's not proportionate, meaning that the mix, the expensive stuff, the yellow iron that has really hurt. So when you think about it, price and mix offset and then you have the volume and the backfill that Kari and her team are doing. So we have been really not shy. She and her team have been delivering double digits for many, many quarters. We don't publish that. The strategic accounts, the big ones, they really have had -- they cannot part with the equipment because they've had challenges. And then for the little that they sell, they can sell on their own, they don't need us. And again, we want to be Switzerland when they need us, we're going to be here. So understand what those numbers share, number one. Number two, when the volume hits, it's not just the volume whammy. Yes, it hurts on the transaction, but understand we can't sell multiple services. So let me use an example. If the volume drops by 50%, but the price doubles, on the surface, it's like you're agnostic, not really, because if we have 2 pieces to sell for half the price, we would sell 2 inspections. You can't sell 2 inspections on 1 piece. So the services revenue growth that is tied to that underlying GTV has actually had an incredible -- so if you take a look at our lot contraction, you actually have to start with GTV big accounts, double -- down double digit. Then you say volume down -- all of that services revenue associated with that volume down double digits. And then you start stacking up, that's what gives us confidence that we're actually on the kind of double-digit growth rate. It's just hard to see given this incredible backdrop. That's the math of it.

I'll add a couple of things. First of all, in a supply-constrained environment, we've gotten pretty fierce at focus throughout all of the regional sales teams. And what's carrying a lot of our growth in this time is we have end-user customers. And when you talk about they have plenty work or there's supply constraints, you start challenging yourself what space is open. We have absolutely gone to tone after retirements in this time, right? So best price time, we have end users, it's great time to get out So as Ann spoke to, we've been outpacing growth? Yes. On top of that, Texas has outpaced the U.S. regions. And in general, we've seen lots down. In Texas in Q1, we saw lots up and performance up and price up, heavily driven by the long tail. Yes, please?

I have 2 separate questions. One, could you just elaborate on the change in strategy in IMS from transactional to annual contract, which seems to have happened recently? And just talk about what that's doing to assets getting into IMS as the key KPI to observe and understand the potential that IML -- IMS will unleash to your service revenue growth?

Okay. So I'll go backwards a little bit. So first of all, our key KPI in IMS right now is number of organizations on. We see the next step later, as assets. And so previously to this phase of the rollout, every transaction I did with you, I had an individual contract for. So imagine I'm constantly chasing for a signature. I want to make your life easier. So I'm presenting an annual contract and using that as a hook to say no, let's load, through transactions, your stuff in IMS. My positioning is simplification and ease my action is redirection to IMS.

And the second question is just around local yards and sales team growth, which seems to be also tied together. Curious on how we think of cadence of the growth of your sales team, 2 days, I guess, in Texas and how we see that progress over the coming years is clearly direct progress. What limits you from going from 23 to 150 yards over a course of the year? And how does that tie into your sales team and the growth associated with that. Would just love some color on that?

Jim is just smiling as you're talking, you're just fueling him to say, go, go, go. True, Jim?

Very true. We actually had our local yard call yesterday with the sales team in operations. So a great question.

It is a great question. So I just want to bring back a point I made about pairing the sales team with the local yards. That hiring started at the end of this Q1. So that's just weeks ago, we are in super early innings. I'm bullish about it because what we thought of Texas with the long tail. What I also know -- and Jim, you know this, too, is we didn't pick all the right geographies for the local yards. We picked a good number in the U.S. Some are really taking shape and some need some help. So as we watch the sellers, the sales team pair with the local yards, we're going to see that acceleration and help determine how fast. But we can stand up yards and hire sales folks at a pretty good clip. And so that's why the measurement of growth outpacing historic growth and delivering accretive margin dollars is so important. Anything you'd add?

No. I think, Kari, you ended it. For us, the pilot is all about, is this accretive. The last thing we want to do is open up Tallahassee and that goes up $13 million, Orlando goes down $13 million. So what we're doing in the pilot and what we're learning is, is this accretive? And to Kari's point, we are finding, in the majority, yes, but we have found a couple of locations that we will shut down. We have a year lease, and we'll stop it and move on to the right location, but we want this to be accretive and when we feel really confident it is, we'll rapidly accelerate the model.

[indiscernible]

Ritchie Bros. Yes, comment -- like we want to take share from someone else, not from ourselves and just have it go from one platform to another, a site to another site. We really want it to be accretive to us, which ultimately means we're taking share.

And remember, yards are about local convenience. They're not, per se, about selling platform. All the selling platforms are open.

And the one thing with the yards that's interesting for us now is when you open one, you didn't have one before, the first year, it's new, new, new, and now you get to a year old and you're comp in, that customer, are we retaining that customer? Is it incremental? So we're just like you think about any kind of retail kind of comp, how do we manage it. And as you can imagine, we opened a lot in -- well, we started in the third and fourth of last year. So we do have plans of -- we have a comp that starts to come up, right? And how do we manage that?

So I just wanted to pick up again on this kind of price mix volume relationship. And so as the cycle progresses, at some point, supply chain constraints are going to loosen and the volume's going to start to pick up. The pricing should cool at that point because new equipment is available, but the mix is not necessarily going to get better because what's happening during this period of time, if people are aging their rental fleets, people are holding on to equipment because they can't get new. And so is the thesis that so long as volume picks up, we now have the opportunity to sell services on 2 pieces of equipment, not one. And so all of that is net positive?

Yes, and mix is still going to be a positive. Understand there's 2 elements of mix. The age of the equipment is, for sure, one, but an even bigger one is the categories. So imagine the really expensive yellow iron people cannot get. When they can, even though it's going to go from our typical 7-year to 10-year exactly to this point, that's actually the smaller impact of our mix impact. So I mean, look, we promised ourselves, our Board of Directors, our investors, all of you, that no excuses from this team. To Jim's point, I mean this is an environment unprecedented. Has that deterred us from saying this is the growth on GTV? This is the services revenue, this is the hand we've been dealt. We're going to play it the best way we can. But when the supply chain turns, the pieces that we're putting in place, to Jim's point, we've tested, we've learned not all tests go well. We told you guys that on every call, right? The things -- but we are so poised to take advantage when it turns. Right now, a huge amount of that effort is overcoming the environment, imagine when the environment is with us what that means.

And I think one thing -- and this might seem like a small piece, but coming new into the industry and you come in, in this environment, you start to think, okay, supply and demand, how does this work, having the playbooks to understand, okay, when you're in a recession, this is what we need to do to drive that number, right? Here goes your playbook across the organization. When you're in this type of environment, so as we're doing all this, building the playbooks of this is how we have to attack this. And it could be buying inventory less, more consigned -- like what is the playbook and how do we attack this, what's it going to mean to RBFS. Interest rates go up or people finance them, what type of buyers do we get? So what we're building behind the scenes is playbooks of how to attack different environments from the seller and buyer side so we can execute rapidly against it. Coming in, like I had no -- like coming in year 1, like, okay, supply is what it is, demand is high, what do I do, right? So we had to figure all this out as coming new into the industry to -- but having those playbooks now, we're already prepared for what does the recession mean to Ritchie Bros., and how do I drive results in that environment.

Along those lines, obviously, supply chain presumably gets better at some point. But over the next cycle, it's also probable that OEMs get much more disciplined with their production, reduce right to retail demand and manage inventory of dealers, especially much better. What does the playbook look like for that environment? And how do you outgrow -- or does that take your growth rates down?

Yes. No, this is where now just the incredible runway is what rears its head. So even if the environment tightens up, let's say. So what does that mean? Perfect. So we're in a $300 billion market of used equipment. Let's say, they tighten up and steady-state apples-to-apples that shrinks a little. Well, first, there's an underlying expansion, right, that's kind of significantly higher than population growth, the stimulus, that's kind of the offsetting. But also, I just remind us, I can't help it, the TAM slide. We're $6 billion in a $300 billion. Does that really change if you're $6 billion in a $280 billion? The right-hand side were even a smaller percentage of today than what the right-hand side is, and it's bigger than the $300 billion. So the runway is literally infinite. And by the way, 80% of it sits in that long tail. And so how high is high, no excuses at all. The headwind we're facing now, we're fairly confident, never say never. This will be the biggest headwind we have to overcome with the mix and the volume and the growth that's coming despite all of it should give a lot of confidence to the folks that are on the table. And with that, okay. So transaction solutions -- there's a break. Okay. Okay. We're going to stop torturing you.

Yes. So we'll take a 5-minute break. We'll start back at 10:30. [Break]

Okay. So I hope everybody had a good break. Welcome back. My name is Gary McArdle. I'm the President for Rouse Services. Just a little bit of background. So let's see, I started out my career in the auction liquidation and appraisal business, spent about 15 years in that business, ended up running the industrial division for a company called Great American Auctioneers & Liquidators. 20 years ago, I met my now former business partner, Scott Rouse. And we set off to build what's really become sort of the leader in information services around the construction and rental sector for equipment. Go ahead and hit a couple of slides, yes. So Rouse is really three businesses: Rouse Appraisals, used equipment sales and rental analytics. And collectively, those three businesses set Rouse apart as the global leader in construction and rental data-driven information services and performance benchmarking solutions. Click to the next slide. Talk about our coverage. So first, geographically, today, Rouse operates in the U.S., Canada and in the United Kingdom. Across that client base, from a client perspective, we're dealing with everybody from national rental companies to dealers that represent every one of the major equipment OEMs, smaller- and medium-sized independent rental companies. And then we get into specialty, lift trucks, cranes, portable storage and accommodation, et cetera. As we talk about those clients -- so moving to that next slide, if you would. Yes, so across that client base, we set up ERP connections. And every night, we ingest data directly from these ERP systems. So first, on over $70 billion worth of equipment at a row level, we take in 40 fields of data for every piece of equipment that our customers own, every rental invoice and used equipment sale transaction that they generate. Now we bring all that data in, as I said, on a nightly basis. We aggregate it, we standardize it, we anonymize it and then we play it back in the form of insights that help our customers drive better decisions around for their business and better business outcomes. Now from a Ritchie Bros. standpoint, once we did the acquisition, we treat Ritchie Bros. in a very similar way to the way we treat just like one of our customers. So to give you an example, about 6 months after we were purchased, we built an app that Kari was describing earlier that has been deployed to the entire sales force that plays -- that provides very similar information like what we do for our Rouse sales customers around used equipment pricing, so auction and Marketplace-E pricing. We're going to talk a little bit more about that app in just a minute. But if you would move to the next slide. So before we do that, let me just talk about the data that we collect, right, the breadth and the depth, if you will. So as I mentioned, $70 billion worth of fleet data we ingest every night at a row level. The information we get for each piece of equipment is really powerful, so acquisition date, make, model, year, spec. How much did that first piece that piece of equipment cost when it was first purchased? What's the current net book value? What's the age? What's the current meter reading? How much rental revenue has it accumulated both month-to-date, life-to-date? How much maintenance is done on that? And what's the current location for that piece of equipment? Now that $70 billion worth of fleet across our customer base generates $29 billion worth of rental revenue year in and year out. And so we get a detailed invoice file that provides really powerful information. What's the -- when did it get sent out on rent? When did it come in off of rent? What was the customer? What is the job site address? What's the rental rate, ancillary fees? Going back to that $70 billion worth of equipment, on an annual basis, it generates around $23 billion worth of used equipment sales transactions. So on that, we get things like sold price, sold date, who is the purchase customer, what was the asking price, what were the included attachments. And then to help with our appraisal business, we also get really highly detailed branch-level rental company P&Ls that help us performance benchmark, things like revenue, expenses, EBITDA, net income, all again at a monthly detail by branch. So it's a really powerful and rich data set. Let me talk about some of the things that we can do with that. So in the case of Ritchie Bros., and I mentioned this app just a minute ago, so about 6 months after we purchased, we deployed an app that's very similar to the one that we provide to our customers. It's been distributed to the entire sales team. And what it does is it gives -- allows them to have a good conversation with their customer. They can look up any piece of equipment and they can have a great conversation with that customer about what's the current auction value and what's on offer if they decide to take that channel. Or it can help guide them to an alternative channel like MPE, which we're going to talk about a little bit more in a few minutes. Before I do that, a little bit about some of the Rouse businesses. So first, Rouse Analytics. Our Rouse Analytics division provides rate utilization and growth or market share performance benchmarking solutions to rental companies. And the way you can think about the value proposition for this division is at a high level for management strategically, it helps rental company management determine how their pricing compares to their competitors at a market level, how their utilization compares and how their year-over-year growth compares. At a tactical level to a salesperson in the field, they can actually look up through an app what the current utilization is for a piece of equipment they're quoting to a customer, both as of last night for the market that they're in and for themselves. And it can help guide a good discussion with their customer about what the rate should be for that piece of equipment. So with that, let me just turn it over to Phil Mause, Managing Director for Rouse Analytics, and let him introduce himself and then a quick demo of one of our products.

Thanks, Gary. My name is Phil Mause. I'm the Managing Director for Rouse Analytics. I joined Rouse in 2010. And really what got me excited about the Rouse business was the potential that I saw. I've worked in consulting prior to that and done some work in the hotel space and saw the power that market insights could have to professionalize an industry and change the way that it did business and saw this really big, capital-intensive construction equipment rental industry that didn't have good market data. So we set out to really change the way the industry operates in 2010. There were a lot of challenges along the way, product challenges, normalizing the data, all the other things we had to solve to make it work. But we really hit our stride in 2015 and 3x the business from '15 to '19. And we've accomplished what we set out to do, which is to enable better decision-making by the stakeholders that we serve. Now as part of Ritchie Bros., we're really excited to leverage their footprint to expand into international markets and also offer additional products and services into that Rouse customer base that we've built great relationships with as a trusted provider of market insights. So with that, we'll show a short demo of our mobile app. [Presentation]

Thanks, Phil. So second business, Rouse Sales. So very similar to what Phil was describing, right, so performance benchmarking for rates and utilization is what Rouse Analytics does. Performance benchmarking around the used equipment disposition part of a business is what Rouse Sales does. So first, we provide updated, on a nightly basis, benchmarks for retail price, wholesale price and auction price for used equipment at a market level across over 70,000 makes and models. In addition to that, we can integrate marketing support and service tools like white label websites, photo tools and applications that help drive it. Again, the whole goal for this service is to deliver for our clients better used equipment disposition outcomes and help them maximize their recovery at the final disposition for their used equipment. And with that, I'll just turn it over to Doug for a short introduction. And then I think we'll demo the pricing app, yes?

Yes. Thanks, Gary. So good morning, everybody. My name is Doug Rusch. Nice to be with you today, enjoyed getting to meet many of you last night, obviously our first on the Rouse side. Investor events are really enjoying getting to know many of you. A quick snapshot on my background. I joined Rouse about 10 years ago. I started my career in management consulting, took a brief hiatus to go to business school at the Kellogg School of Management. And coming out of business school, I was really looking for an opportunity to try my hand at an operating role rather than a consulting role. And if you think about my consulting career was built on growth companies. If you've spent time in business school, you like data. I was looking for a growth business tilted towards data. And that really led me to Rouse. I actually worked with Phil in our prior consulting career. And that's what led me to Rouse. So over the past 10 years, the journey that we've been on has been turning what, if we just cycle back the clock a little bit, what at the time was a fairly small business. Rouse Sales just had a handful of large enterprise clients. And our vision was to take the capabilities, the intelligence, the data we were providing to them and sharing it with a broader array of customers, different segments, different sizes, different asset classes, as Gary was talking about. And yes, there were some bumps in that road. But we're really pleased that, number one, those large enterprise clients are still with us. We spend a lot of time thinking about retention because our business is our subscription businesses. And that's really critical to us. But not only are they still with us, we've taken what was a handful of clients, turned it into 100-some-odd clients. And as we look forward and we think about the marketplace, we're very enthusiastic about moving it into the multiple hundreds and into the thousands of clients as part of the Ritchie marketplace. So I think what we're going to do here is there's two videos actually. Again, Gary talked a little bit about the Marketplace-E price app, the Ritchie Bros. Pricing App. And this is one of the places where we've taken the insights that Rouse develops, package it up in a way that it can add value for our sales organization. So we'll take a quick tour of that app. And then I think on the back -- no, just one. I beg your pardon, okay, we'll play that. [Presentation]

Cool. Thanks, Doug. So perfect segue because you talked about MPE. So that's really where we're most excited to have had an impact. When I say we, Rouse, are most excited to have had an impact with Ritchie Bros. thus far. So yes, if you're a customer looking for speed and efficiency and quick cash with liquidity, the auction is a fantastic transaction solution. It's a very good transaction solution. But if you have perhaps a little bit more time, let's say, 30 to 60, even 90 days and you're open to the possibility of putting a buy-now price on, what we've been able to do since Rouse came onboard is to help customers calibrate where they price that piece of equipment on MPE. And what we've discovered is that when you calibrate the price appropriately, you're twice as likely to sell in this 40 -- 30- to 45-day time frame. And again, I'll just mention that the -- that on offer are recoveries that are 20% to 25% higher than what's transacting today at the auction. So with the benefit of that 30 to 45 additional days, if you price within the band that we're providing for you through the app, you have the opportunity to get this 20% to 25% premium over auction. So from our perspective, there's no greater opportunity for us to get a bigger share of wallet from customers we're already doing business with and to attract customers that we don't have an opportunity to do business with because they're not as interested in the auction transaction. That's really something we're incredibly excited about. So last, I'll just pivot to Rouse Appraisals. So very quickly, Rouse Appraisals division is truly the global leader in appraisals to support asset-based loans across the construction and transportation industry. We've raised over $50 billion worth of equipment year in and year out. And what we're excited about now is being part of Ritchie Bros. is that in addition to offering appraisal services for those lender clients that might have a borrower, who either needs to go through a partial or complete disposition, we can now offer them those services. And so it's a great way for us to combine with Ritchie Bros. and offer more to those lender clients that we're dealing with. And so with that, I'll turn it over to Ann.

Perfect. Gary, thank you. So incredible story of Rouse, and I remind us of our KPIs when we acquire a company. It's an incredible business. I think their growth trajectory and the stickiness of their customer base speaks for itself. It's an incredible team, Gary, Phil, Doug. I mean, imagine our first session with this group, just it's awe-inspiring. And then there is the -- what impact to our ecosystem. And just two things just to kind of hammer home the points that Gary made. When you think about IMS fancy language or insights for our vertical, really think of the model that exists in cars. As Jim said, he and I both share a background of cars. You have a used car, you want to know what it's worth, you go to Kelley Blue Book. You have a used car, you want to know how well it's been maintained, you go to CARFAX. Those things do not exist in our industry. So imagine when we learned about Rouse and how the data comes in. So when you think about IMS, as Jim talked about, it's about the data coming in. It's about it being properly categorized. It's about being able to glean insights of your customer. We moved all of the IMS and all of those data resources under the Rouse team in order to kind of drive that trajectory. So that's on the one side. On the other side, they're part of this leadership team. And so they understand where we're headed. So Kari was talking about her plans to drive double digit. And the #1 problem for her organization is onboarding new people. As you guys heard in the past, it's taken us 3 years to get a salesperson up and running. Gary and Doug said, "No need for that. How about we give you an app so that if you have a new person that onboards, they don't have to be equipment experts in our space, they're going to have that expertise in the palm of their hands?" They turned it around in months. And I would -- this is the way to make friends, where I think we could really credit how quickly the newest hires are onboarded because they have access to all of that information. I mean, it's just an incredible value. So I just shared those examples with you to say 100% of the businesses we acquire are going to have all of those three things going forward, great business, incredible team and a benefit to the ecosystem that's incredible. We're about to move to services. But any questions to Rouse or that team?

Yes. One is just on the appraisal side and kind of the data, obviously that's helping you all kind of have amazing insights. Obviously, Ritchie Bros. was doing appraisals separately, usually at auction. And is there a way that, that works together now? Or how do you see that working together in the future in terms of -- I don't know if that gives you incremental data as you think about that and also just as organizations work together from an appraisal aspect?

Great. Good question. So within, I think, the first 3 months of the acquisition, we integrated the entire appraisal team. So that's now actually run by Raffi Aharonian, the Managing Director for Rouse Appraisals. But more importantly, to your point, we're trying to have a single -- instead of just the valuation and appraisal thinking being scattered independently, we're trying to have a common way of going to market with that, right? So there's a single valuation methodology that will come out of all this work that we're doing, right, one source of truth for what equipment is worth. Yes, incrementally a small bit of data, what's true is we actually collected every bit of Ritchie Bros. auction data before we were acquired. So it was -- that was sort of around the margins. But I think more importantly, we're trying to approach -- all the places where we need to think about valuation of equipment, we're trying to approach that at an enterprise level and make sure it's centralized and that there's a single source of truth for where our people, our customers and the products that we put out think about what equipment is worth, right?

Just wondering if you can speak a little bit about the beginning and acquiring all the data. And maybe is that something Ritchie can also learn from in terms of IMS and making sure the data is accurate and up-to-date and all?

Yes. So I'll try to answer this briefly because we could really drill -- go down the rabbit hole with this. But I think -- so as you can imagine, we talked about the sort of data that Rouse collects today. You don't walk up to somebody and say, "Oh, by the way, will you give me all of that information?" You've got to do that over years, building trust, right? The way we built that trust was really two things. First, we proved to be good stewards of the information that we received. But more importantly than that, the only reason somebody gives you that information, if you can provide value back to them when they do, right? So that's been our core single focus for the 20 years that I've been doing this is how do we make sure that with the customer in mind, we are providing something of value back to them, right, "Give us this information, and I'm going to do something with it that gives you value back." And so I think the short answer -- I don't want to speak for Ann, but I think the short answer is absolutely, right? That's the trick. You want to get people into IMS, make sure that when they give you their fleet information, you're giving them something of value back in exchange for that.

That was beautiful. But I also want to make sure that the following is not lost. Ritchie Bros. does not have a history of monetizing data. That's not how we go to market. That is how Rouse goes to market. We moved all of IMS and insights under Rouse, right? Their job is to protect it from confidentiality and then extract the value for their customers, of which effectively Ritchie becomes one. But I want to be clear, this isn't us learning from Rouse, this is Rouse doing for the enterprise what they've already done in their ecosystem.

I may have missed this, but do your consignors get the app for free? Do you give it to them?

You're talking -- the seller, does the seller get the app. Great question. So let me just move out of the way of the speaker. So the short answer is no. If you're just a consignor to Ritchie Bros., you're not getting the app. There's a salesperson who's having a conversation with you and they've got the app in front of them. Now there are -- we have shared customers, right? So Rouse has customers in their ecosystem that are Ritchie Bros. customers. And from a used equipment perspective, a Rouse client, a Rouse sales client, absolutely for every piece of equipment that they have, they know what the current auction value is. They know that before they call up the Ritchie Bros. salesperson and say, "Hey, I'd like to put this in an auction." They know what the current retail pricing is. And they're either using that retail pricing to decide what they want to list on Ritchie list or they're using that to list on their own private label websites. And the opportunity is to be able to provide things like an MPE suggested price for them and make it easy for them to connect to those services. That's where the opportunity is. But back to your question, there are not consignors today who are not otherwise customers of Rouse that have that app. It's a field sales tool that the Ritchie Bros. sales force has.

And if the question that raises is should they, now we're full circle to the marketplace and the architecture and how do you monetize. So again, think about today, a salesperson has the app and has a conversation with the customer. In the future, how do you monetize? How do you give access? How do you make it easy? How do you unleash the marketplace in order to make that possible? That's just one of the kind of efficiency plays as we move on.

I was just curious, you've talked in the past, Ann, about kind of this idea of having kind of a VIN to track equipment. But has Rouse effectively been tracking for the 20 years, so to speak, the equipment that is in your system, so you know at least for the equipment that's in your system already where it's been, how it's been used, et cetera, over this 20-year period, so to speak?

That's my favorite topic.

Yes, you had to mention VIN. So here's what's true. Yes, we have -- we're already tracking serial numbers, gives us a great insight. We could say, "All right, so I've seen this serial number go from this customer to this customer to this customer," maybe pass through Ritchie Bros. auction on the way. Serial number can be -- because it's not always entered correctly, it can be a little bit limiting. So one of the first things we talked about when we got acquired was -- and I think it was actually Ann's idea. She's like, "Well, why is there not a VIN system in this construction equipment sector?" So we absolutely see real value in, and there's no reason that we can't take this on ourselves, in creating a VIN-like system for the construction and -- for the construction sector, right? Because there's no reason we can't do that. We've actually already begun to undertake what that looks like. We've got a model for what the different sequences are. We've got conversations with manufacturers about how that would work. And it's really exciting. Here's the point I want to make. It's something that we should do. It's something that the industry will benefit from. I will say this, it's not limiting our ability to execute on growth. We can do that without this VIN. We're going to do the VIN, but it's not -- that's not a sort of a limiter or a gating item for us to monetize our insight solutions or the connection of the different customers that own fleet with the transactions and transaction solutions and services that we have.

Bryan Fast with Raymond James. Has your at-risk model improved, you're able to gather more data, especially with Rouse under the umbrella?

No question. So yes, in fact, Jim, I don't know if you want to take the question, was about our at-risk model. I'm going to -- Jim is going to answer, but that lives and dies by the quality of the data, full stop. And we utilize Rouse incredibly, especially in this very dynamic environment. Do you want to talk about our evolution of that risk?

Yes. So one thing that [indiscernible] when had the chance to look at Euro Auctions as we're going through due diligence, the one thing that we noticed that they did a very good job at is having a sourcing team and how do you source inventory, so source and valuation and then where should you sell it? Where's the highest profitable place you should sell it? So the one thing that we're very good at is I have an event, I need to get inventory, how do we go get it and we build events as we go through it. But when you really think about at-risk, buying inventory, how do you source inventory and have a team that can source inventory, value it and then where should it go, right? And that could be international, that could be in North America, it could be anywhere, right? Where is the supply and demand and where should you send it? So one of the big learnings that we had from Euro is putting a team together. So we're right in the middle right now of designing what would a sourcing team look like that handles going out, buying inventory, looking at inventory, valuing inventory, which would be part of Gary's team, and then where should it sell as we go through it. So we're right in early. So you see we buy inventory today, but it's very event-focused and opportunistic, when we have a chance to do it.

If I could just add two small points to this. So to your immediate question, yes, I think within 2 months of us getting acquired, we were piping Rouse data into the system that the valuation teams were using to assess at-risk packages, right? So at a tactical level, that helped. But at a strategic level, here's the more important piece. So we talked about this MPE transaction solution that offers a 20% to 25% higher return. We're in a better position now competitively when we bid on these at-risk packages. Because we're not just leveraging the auction transaction for that at-risk package. We can think about, right, well, if we can first cascade this package, just take a number, let's say, we've taken a $10 million package from a strategic customer and we know we're going to be bidding competitively on that, we know we can leverage the MPE solution first, pass that through, take advantage of the higher recoveries that are available. That allows us to be more competitive around those and win a higher percentage of those deals.

And so one thing for me coming in to Ritchie Bros., I have a hard time understanding why there is a deal we should lose. Like we have every platform. We have every capability. We have the sites. Like why are we losing any deals, right? And the one thing that came to me is speed. So why did brokers succeed in this model is their ability to make quick decisions. And with our sourcing team, that's where we start to really change, right? We have all the data. We have all the pieces. We know equipment. We know what to pay for it. We have to make quicker decisions to make that happen, so -- and when I think about the sourcing team, speed is a big component of how we have to go to market.

All right. I think we are -- so we have heard from -- thank you so much, Gary. So global trusted marketplace for insight, services and transaction solutions. You just heard from Gary leading the insights portion. You heard from Kari leading the transaction solutions and now let's talk about services. And that's really kind of the vast majority of the right side of that TAM slide. We're going to hear from two services today. We're going to talk to Ritchie Bros. Financial Services. And the one thing that you should listen for when Blake speaks, besides the fact that they are driving the business incredibly, it is the first test for us decoupling our even internal services that we have provided away from the underlying GTV transaction. So again, just as a reminder, GTV is $6 billion in the $300 billion. The whole game on the right side of the TAM slide is how do you decouple those traditional services away from the underlying GTV and really accelerate their growth. So that's one piece. And then he'll be followed by SmartEquip, our latest acquisition, which offers a unique set of services. We'll hear from them next. So Blake, and congratulations in advance for how you guys are doing.

Thanks very much, Ann. Good morning, everybody. Blake Macaskill, Managing Director of Ritchie Bros. Financial Services. I've been with the company for about 5 years now. Previously, I spent the better part of 25 years working for and leading financial services organizations across North America and Europe. And I think I'm going to walk through the model, the Ritchie Bros. Financial Services model. But I think having that experience working as a lender, because the lenders are really the lifeline of the Ritchie Bros. Financial Services model, and having that experience working as a lender for 25 years, I really think that, that brings a lot of value. Because I understand what's efficient from a lender perspective and how that improves the economics. And if it improves the economics, it's passed along to the Ritchie Bros. customers. So with that, I'll walk you through the model here. The business was established about 10 years ago. And it was really -- it was established as a value add to provide Ritchie Bros. customers with an opportunity for financing. And the hypothesis was if they have financing in place, they'll bid and they'll bid higher. And the value prop, you've heard a lot about it today, is all around speed and convenience. With us, it's speed using convenience. And that's really how we've grown the business over the years, is really making the customer experience a great experience from start to finish. So much like Kari is doing, she's developing an inside sales team, our model was built on an inside sales team for the entire 10 years. So we have many, many different sources of lead generation. People can be on the website. They're poking around the website. They'll see opportunities for financing. They'll fill in an application that comes to our inside sales team. The inside sales team reaches out to them, get some more information. And then they fill out an application and hopefully get an approval and then ultimately find a deal. But the main source of origination is an outbound strategy. So every day, our inside sales team will get leads from people that buy in an auction, people that are runner-up at an auction, watch listing on the website and more recently, registering for an auction. The idea there is getting upstream in the sales process. So again, our team prioritizes those leads. We do it automated now in the last couple of years. And then they'll prioritize who they call on. They'll call the customer. They'll get as much information from the customers as they can in order to then determine which lenders to send this to. So we don't use our own balance sheet. It's all -- the risk is all with the lenders. And we put it into a model called lender preference. And from that, we determine which just has the highest probability of conversion when we send that to the proper lender. So that's efficient for the lender and also for the customer. Maybe just back for one sec, just one thing. So once the deal funds, the billing and collecting and servicing is all done by the lenders. But the journey, the customer journey is all managed by our team, the Ritchie Bros. Financial Services team. So that's really important to us because we're reaching out to them on kind of a 3- to 6-month basis to say, "Hey, do you need any more financing? Can we help you with anything you're purchasing?" But now my team is really excited about the evolution in the marketplace. Because instead of just talking about financing, we can talk to them about insights with Rouse or other services like SmartEquip. So that's continuing to evolve. The team is really excited. Maybe next slide. So you can see here the growth over the last 10 years, significant growth and significant opportunity ahead. A couple of reasons for this growth is we're constantly looking to improve the experience for the customer by offering different products, different services from a financing perspective. A couple of highlights here, back in 2016, we introduced something called PurchaseFlex. And this was a real differentiator for us in the marketplace. And what it's all about is a customer can get an approval with us. And they can go to the auction, thinking they're going to buy a tractor and they might leave with a reloader. And our lenders honor that approval. Whereas if they were dealing with their bank, they have an approval for a tractor, then they have to go back to the bank. They have to get a new application filled out based on the dollar, the age, the type of equipment and it's not efficient. So the customers really like the efficiency and the flexibility that this PurchaseFlex product is offering. The second thing that's really important, you see the difference in the orange and the gray lines here. The orange lines represent what's financed within the Ritchie Bros. ecosystem and the gray lines are what's represented outside of Ritchie Bros. And you can see that growth happening. And what drove that growth is what we call follow the customer. So if you think about a customer going to an auction, there's a lot that they're bidding on. There might be 10 people bidding on that lot, 4 or 5 of those people bidding have Ritchie Bros. Financial Services approvals in place, but only one is successful. And what we learned about 5 or 6 years ago is why don't we honor that approval if they find that equipment somewhere else, whether it be privately or through a dealer? And so you can see here the lenders all got onboard because they've already done the work to do the approval and they're all Ritchie Bros. customers and so they honor that approval. And so we follow that customer. And you can see how that's grown over the years. A lot of that is private sales. And the lenders were not really comfortable at first financing private sales. So we introduced something called PurchaseSafe. And PurchaseSafe really cleanses the deal for the customer. So when a buyer and a seller are interacting, we'll take care of clearing all the liens and making sure that it's a cleanse deal, not only for the buyer but for our lenders. So the lender feels really comfortable financing those private sales. The other piece here, because of that speed and convenience and why the gray area is growing so much, is we're getting smarter as a business, thanks to Ritchie Bros., in some of the automation that they're kind of putting in place. So now we're -- let's say we get 1,000 leads every day and we can only get to 500 of them, we want to make sure that we're getting to the right 500. And because of the data that we're getting from Ritchie Bros. now, we're seeing that -- we're calling the right leads and our penetration and conversions are going up. The other thing that's important to point out here is the growth in the last couple of years is really coming from the retention of our people. We measure everything at RBFS. And the one major thing we measure is the contribution people make in all parts of -- all departments of the company, but primarily in sales, as their tenure grows. So you can see here, from 2021 and '22, we had very little retention issues. And it's because we spend a lot of time on the culture, rewards, recognition. If somebody is coming into the business, the first year they might contribute maybe $100,000 in revenue. If we can keep them to year 4 or 5, they're contributing kind of $1 million-plus. So it's something we spend a considerable amount of time on. And we think that the opportunity is grand if we can keep those people longer. Next slide. So for those familiar with NPS, this is extremely important to us. This is the likelihood of people referring RBFS to a friend or colleague. These are extremely high numbers. And we know that because we have 20 lenders in our supply chain, and they all measure NPS with their direct business. I'd say best-in-class there is kind of in the mid-40s. So this is a real indicator to us of second, third, fourth deal and continuing to do more financing with these lenders or with these customers over time within Ritchie Bros., hopefully, and also for buying equipment somewhere else. Okay. This slide, I've talked a lot about kind of what we're doing with all the customer outside of Ritchie Bros. What this is illustrating is what the opportunity is within Ritchie Bros. It's grand. You can see here, what this is saying is we penetrate about 14.5% of the GTV sold, the addressable GTV, really what the auction sales are. And we think that there's a tremendous opportunity to grow this. There's a number of reasons for that. One is, again, I'd say, because we're leveraging other services now within Ritchie Bros., we're bringing more value to the RBFS customers. So they see more value in financing the equipment upfront because then they can take advantage of other things with us. The other thing is our lenders becoming way more efficient. So with this lender model that we've built, instead of it cascading from one lender to the next to the next to the next, they're only getting the deals that really fit their strike zone. And they really appreciate that. And so that way, they're able to provide better economics, better rates to our customers, longer terms, better structure. And that will be something that will drive the penetration into GTV going forward as well. I think that kind of covers most of it.

You did great. So I think the important thing here is you're going to get two flavors of services. Ritchie Bros. Financial Services, a homegrown solution, but one that we are unleashing on the broader marketplace. And when you see that growth rate when you actually say, "Okay, orange bars were constrained by the Ritchie Bros. GTV, gray bars, unconstrained and then unleash the data, have a great team, they go, just an incredible potential." And again, when you see the numbers, still drop in a bucket, rounding error compared to what's ultimately available. So incredibly inspirational, congratulations to you and the team. Before we let him go, any specific questions for RBFS before we bring in the SmartEquip team? All right. Yes?

How do you see RBFS working with the IMS software as it goes forward and kind of the increased kind of attach potential, if you will, outside of the auction?

Absolutely. Do you want to...

Yes. Let me start and then Blake can add. So this is back to, I think, Jim's words. RBFS is doing its thing and growing just incredible leaps and bounds without relying or being constrained. When the architecture comes, think of that as more the automation and moving that way up, right? So imagine an environment -- we're not in that environment today, but as soon as somebody hits the website, they instantly get financing for anything you need in the next 12 months. Those are the kinds of things that make the growth rates which were even that much more staggering. So think about an efficiency, an ease of use that just takes everything Blake and his team do, accelerates it and makes it wildly efficient because today, it's dollar-for-dollar head. Do you want to...

And just also being able to attach in transportation costs, getting everything bundled into the financing that a buyer might want. So we had to get out earlier in the process to make it happen. Blake and his team do a great job when we know this information. But really, the marketplace will help get us farther up to help make those decisions.

And that is actually the perfect intro to SmartEquip. Blake, congratulations. Let me start the SmartEquip story. So the story has the catchphrase, "Would you like fries with that," okay? So we're in a strategy session. And our vision for the marketplace is the checkout, right? So imagine a scenario, somebody wins a piece of equipment at auction or on MPE, they're successful. And today, we're done. It's like, "Congratulations, Ann. How would you like to do the financing?" Where this all comes together is imagine the pieces, to Jim's point, that are already in place. We've inspected 100% of that equipment. We know what it needs financing. We know the parts it needs. It's used. We know if there's a service contract available on behalf of our dealer and OEM partners. We know all of these things. So imagine a world where instead of each of these -- it's freezing here, by the way. It's like is it me? I'm always cold. Imagine instead of a world where these things are discrete, financing, transportation, parts, service contracts, imagine where, and again, I bring you to the analogy of the car world, you're buying a car and somebody tells you, "You want a sunroof," and somebody says, "That's $4,000." And you're like, "Well, I live in Philadelphia, it's kind of overcast. Like Is it worth it?" And then somebody says, "It's $7 a month." You're like, "$7 a month? Like put the sunroof." That's the idea with, "Do you want fries for that," right, where it's all bundled, as Jim said, into the financing. So you get all of your pieces where you say, "Look, congratulations, you won the piece of equipment based on the financing. Here's your monthly payment. Would you like to add transportation? Would you like to add these parts, the service contract, the monthly payment goes from X to Y and it completely recalibrates." And this is back to the question that was asked around, is there value from the dealers? Or again, imagine you're trying to sell thousands, tens of thousands of dollars of value and you have a customer that's discretely processing that transaction. And obviously, as the equipment ages, those penetration rates get lower and lower because that's a lot of money. We turned that completely on its head using the kind of the leasing model from cars, if you will, rolling all of that into the financing and part of the transaction. It's incredible. So that was the vision. In comes -- but in our minds, that's the vision for where we're headed. But how do you get it done and put the pieces in place? And then we find out about a business called SmartEquip. So without stealing the thunder because we're going to hear about it from the incredible team. Today, we're going to hear from Alex, who is the founder and the genius, literally college professor, behind it. Fern is the CEO that's scaling the business. The day we heard about it, we were excited. The day we heard it was for sale, we were more excited. And then we sat down with the team you're going to hear from in Connecticut. Jim and I went out and we were done. So with that, please join us.

Thank you, Ann. My name is Alex Schuessler. As Ann mentioned, I'm the founder of SmartEquip. And I started the company back in January of 2010. And it was really an outgrowth of -- it was a weird coincidence how we came up with the concept. There were two -- I had two jobs at the same time right up to then. I was a -- I usually hide this part, but I was a college professor, young at NYU. And I've been hired because previously for my doctoral work, I had set up data centers at Harvard and MIT and then came over to do the same thing for them infrastructure-wise and also teach what nowadays turned into big data kind of stuff. We didn't call it back then and we didn't have data sciences, but it was basically statistic. At the same time, through a very strange coincidence, I was invited alongside to become a co-founder of a company called Caterpillar Rental Services Network. Needless to say that opportunity didn't come through the political science department at NYU. But it was somebody that had been asked to come back to Caterpillar and open the rental business. So I was doing both things at the same time because I couldn't decide between them. And we discovered that -- what happened -- and it became -- and I became very obsessive about the equipment life cycle and noticed that one of the things that's really killing the life cycle by 1 million cuts is getting the right part to the right equipment at the right time. And then I would go and do my daytime teaching job. And I would realize, "Wait a minute, there's a lot of methods here that would fit." So I finally sort of took the plunge and we started SmartEquip. We took a long time. This thing would only work if we really became the industry standard in the rental industry, which was a big task. And then came 2008, 2009, which presented both challenges through the financial crisis but with it also, a lot of opportunities. And the opportunity was that, all of a sudden, companies were really serious. We need to be able to scale. We need this technology. We were, at the time, not built to that. But one of the people that had been sort of in the background for a very long time with us is Bryan Rich, who is here. And he was here as Executive Chairman. And it was a great opportunity. Because then we said, "Look, let's restructure the company." Bryan came onboard fully. We've been working closely until then. And one of the things was we brought Fern in, who's been our CEO. And jointly, we worked very closely together. We've been scaling the company. And so there are two passions. One of them is the equipment life cycle. And the other thing, which is what I've been doing for the last 10 years or so is really focused on the international growth, which we'll touch on as well. So let me hand it over to Fern. He's going to give you an overview. And then I'll touch base on some of the international stuff.

Thanks, Alex. I'm excited to be here as well. I joined SmartEquip in 2010, as Alex mentioned, as part of the team to reshape the way the company was structured and really take it to the next level of scale. Prior to that, I spent 20 years in the construction equipment industry. I was -- I could say I was a customer of Ritchie Bros, I was a customer of Rouse and a customer of SmartEquip. So Alex brought his -- the product, before it was really a full product suite, to NationsRent, where I was an operator in my region. And we were using the product. And so it's exciting to be able to see the businesses from both sides, as a customer of our great company now and then also as an operator now. So what do we do at SmartEquip? We basically provide complex equipment parts procurement, cataloging and commerce technology services worldwide. And we've been doing it for -- since 2000, since Alex had the idea. Next slide, please. Okay. And what does that mean as the SmartEquip platform and the network that we've created, right? So we, in essence, connect equipment owners to manufacturers and distributors and provide access to critical parts and service information, okay? And with that information, we drive efficiencies and profitabilities through these businesses by allowing them to proceed with accurate orders can be processed digitally and delivered and really eliminating all areas in that. And as we grow our networks between equipment owners and sellers, it provides an increasing network effect of being able to connect providers. The value we create for the equipment owner firsthand is increased wrench time and equipment uptime, right? And what does that mean? So we literally leveraging our platform and delivering asset-specific content to a technician are able to shorten the diagnostic and procurement cycle from an example of 45 minutes that we've done in a case study down to 7 minutes, giving that technician the ability to work on more machines, which, in essence, creates and make that machine available for rent or for production. We also reduce orders -- errors in orders, making sure because we're creating the purchase order on the equipment owner side and delivering the sales order to the seller, it really eliminates all the errors within an order and facilitates an easy P2P process, right, purchase-to-payment process. And lastly, which is one of the unintended results of the application, was really improving the administrative capabilities, right, through maintaining item master file, updating work orders and creating and making sure that the whole process is digitized for that fleet and are really driving down the cost of processing a transaction. On the seller side of the network, what we've found is by embedding the content of those manufacturers, their IT into the sales process and into the equipment owners' workflow, it became significantly more sticky to buy the part from the manufacturer as opposed to going out and trying to shop it around. So they see -- they saw a true benefit from the point Blake added to the cart and checkout process as opposed to being shopped. The other thing is that we deliver the content when the customer needs it. The site is up and running. The platform is there. They can access the parts books, the schematics, the repair manuals, the diagnostics information 24/7 at their fingertips for the technician. And the last benefit to the suppliers that I want to highlight here today is it really dropped their customer support costs and the amount of inbound calls, "Hey, I'm looking at this part. Can you help me find what it is for this piece of equipment?" So it really increased customer satisfaction. Next slide. So what does our network look like today? So we're processing -- have about 1,000 suppliers, of which 600 of those contract directly with SmartEquip with OEM and brands. We're operating in 20 countries. We're processing about $1.2 billion of order value through our network and, which is one of my favorite statistics, is we have a 109% net retention rate of our customers. So once they check in, they don't check out. Next slide. Alex, do you want to take this?

Yes. So just briefly, people ask us, "Why do you work in North America, Europe and the Pacific Rim?" And the very simple answer is again, we often see the market by looking at the rental industry. And if you look at the rental industry as the size of it sort of trending towards about $150 billion, half of that is in North America, the other half is split between Europe and the Pacific Rim. And so as of 10 years ago, we've been really focused on growth in Europe. And that's going very well. We're about to announce another new dominant fleet owner going live there very shortly. And in Japan, through partnerships, we have 2 of the 4 largest rental companies that we focus on. So we're in 20 countries. We now have 7 owners. AKTIO is not counted on this one yet. AKTIO is the largest company in Japan, second-largest in the world by some accounts. And there are about 125 suppliers that are outside of North America supporting that rapidly growing network there. Next slide.

So how do we go to market? We -- in essence, is going to market with three products. The first product is the -- actually gives the sellers and OEM manufacturers specifically access to the network, right? And that's our catalog product sitting in the middle of the ecosystem. What that means is that they subscribe to the network. They're -- we're taking their intellectual property and converting it into our format and being able now to present it and onboard to either their own e-commerce site that we may power that gives them full transactional capabilities or to an equipment owner's procurement site, which is the third product that we go to market with. And with that, I'm going to hand it back to Alex to take us through the demo of the product.

Yes. And I want to connect that slide that was just up there with what you'll see in the demo. Typically, in technology, you have a procurement platform for buying or you have a service support platform. And if you look at people who run fleets, typically you have a procurement department and a fleet management department, very vertical types of presentation. What we've done from the very, very beginning is we said, "Well, wait, if I'm a service guy, I need to know what I'm buying, but I can't do that unless my service side is also being supported." So we have a horizontal view that we track the equipment life cycle. So what you're about to see in the demo -- bear in mind, it has a procurement -- a sourcing platform in it. But that is really embedded in the workflow that a service technician has to support the equipment. [Presentation]

So what you saw here is the catalog technology that Fern mentioned earlier. And embedded within that is a sourcing technology. And as it says in the demo, sourcing is both from your shelf as well as from the supplier. So it's really the integration of the two wrapped around each and every asset. What has happened, and let's go to next slide. And so here, again you see we get the product information. And if you think about this from the manufacturers' perspective, it's a huge step forward for them. Instead of hoping that you'll come to their website and know to navigate it, you're now taking all of this information and injecting it directly into the workflow of your customer service technicians. So that's all there. And there, again you see that we look at the product information inventory, and we're able to automatically submit the purchase order. And on the last slide, which is the next one here, one thing that's been fascinating for us is over the last several years, many of the manufacturers, including the ones that were highly reluctant initially to participate in this, they came to us and said, "We are now offering a level of efficiency to those customers running SmartEquip on their side. We'd like to open this up more." So don't just check that into United Rentals, Sunbelt Rentals, Herc and so forth. Also, we would like to power our own e-commerce suite in the same way. So what we see quite a bit now, and there's a lot of growth in that, both here as well as in Europe and hopefully soon in the Pacific Rim as well, is our new e-commerce offering, which is really using the same platform using the same document standards, the same transactional logic with additional payment capabilities and so forth so that people can come in, whether it's by credit card or otherwise, and really have a one-stop architecture that they can utilize from their suppliers. Let us stop here and see if there are any questions.

Perfect. Before questions for these guys, just a piece of context. So we're just full circle. We buy great businesses with great management teams, shout-out to Bryan in the back, hiding, and a system that can pipe in an incredible value to our ecosystem. So just I want to take what just happened and think about what does, "Do you want fries with that," practically mean? We are not ready for this yet until that thin slice, that bootstrap that Fern spoke about is ready. But imagine a world where Jim's team is inspecting the equipment anyway but has a mirror app open that is this, that as they're inspecting, they're pre-populating the cart effectively. So I'm just going to use an example. I'm going to do Eastern Canada and Toromont because we don't do business with them because they have a great sales -- used equipment network of their own. However, we do transact quite a bit of Caterpillar equipment in Eastern Canada. So imagine a world where Jim's people have inspected, they've pre-populated the cart with the parts, we have a part number for the service contract for Toromont, somebody wins an auction and then we say, "Congratulations. Would you like fries with that?" That order automatically pipes to Toromont in this example, into their parts bin, turning over that customer relationship. Again, to the extent that they're able to do that on their own and they don't need us, great. To the extent that it's accretive and value added to them, we do it seamlessly. We roll it into the financing. The customer gets passed to them as it should. And we move on with life. That's the vision for how this fits into the ecosystem and the incredible business that SmartEquip is that has all of those pipes built over decades of work. So with that, questions for SmartEquip and then we'll go from there up to a broader Q&A that Jim will host.

Nada. Well, in that -- so in that example, and I did cover Toromont, so what happens if in that example, they're piped, the parts order, and they say, "Aha, customer A has just bought an 8-year-old piece of Caterpillar equipment, and once we fulfill that parts order, we're now going to co-op that relationship and any future parts needs that they have are going to come through our e-commerce site?" No problem at all. And we have been very, very clear. The value added for the dealer, our value is not to serve the customer relationships from the dealers. It's actually to pass those. So think of us as we are a transaction solution, right? So the idea is for customers for whom the ease of use of the SmartEquip model just makes it easier. Really, the way to think about it is in the rental industry, which is how they see their business, they have so many brands under one roof, but they don't want to reach out to one dealer at a time. They just want to click right through the platform that makes sense. But if somebody has just a single piece of equipment, and what we want to be is customer-facing, both for our partners and for our customers and not usurp relationships but promote them. And so it's our best day that we can facilitate passing that customer to Toromont, facilitating the transaction that they otherwise wouldn't have had or they would have had to chase down. They don't have visibility into that customer. And to the extent we can add value, great. And to the extent that we can't, we're not going to worry about it. And again, what gives us a lot of confidence, $6 billion in $300 billion and then all of that services revenue on the right that is even bigger. So as long as we can keep our true north of adding value, we don't have to worry about cannibalization, protectionism. All we have to worry about is ease of use and partnerships and the money just comes rolling in. All right. In that case, thank you so much to the SmartEquip group incredible. And Jim, do you want to take us into the broader Q&A?

We know we kind of did Q&A after each section. But if there's something you would like us to tie together, talk about anything in more detail, we're more than happy to answer anything that's on your mind. Or to my left, we'll answer anything you have.

Curious, I know we're doing hybrid auctions, et cetera, and you're getting back to more full time, but -- and with the gavel dropping, when and why or how would we think about just moving strictly to TAL? And if you did, what would kind of the impact be to the margins? In other words, what's the friction of doing it the way you do it now? And if you move to TAL, how much beneficial would that be?

Yes. So I'll just start. The biggest thing we're trying to figure out right now is there is a level of social engagement the customer wants and also a level of education we need to do to the customer about the services that you heard about. So part of our events in the future, think about an Apple-ish type of event, launching services and things and educating the customers. But they also get a chance to engage with each other, right? Kari and her team get a chance to keep that relationship going from a sales. So kind of think about instead of sales day being about, "I need to see a piece of equipment," that's happening -- because that's all digital today, right? To your point, it could be TAL, it could be all that stuff. But think about there is a level of social engagement that's going to happen. Now how many events? What's a premier event like Orlando? Do you do 4 or 6 globally of how do we educate and do all this stuff? That's kind of where we're thinking and where we're headed with this. And now to your point, look, we've done a lot of analysis between TAL, live auctioneers, what's the benefit of one versus the other, but we do have customers that, "I want a live auctioneer, right?" I feel like this is how you get the benefit. We have education we have to do, right? Because when you look at the data, we don't see a real variance between a digital TAL event and a live auctioneer, right? But that's work we have to do culturally, internally, customers to get everyone there. And now the one thing we've already taken advantage of, we don't ramp anymore. So even Orlando, we didn't ramp so that expense has been gone as we went through it. So there's pieces that are happening. But we're working with the sales team and operational team to bring the organization and our customers along on this journey to make sure we can transition into a true digital experience.

And the way to think about it, just to keep going with Jim's commentary about the P&L, this isn't about, at the end, saving money. Yes, we're going to get more efficient. Please don't -- as we scale, it's going to flow right through. It's the beauty of a marketplace, and we're going to get efficient in lots of ways. The idea of TAL or auctioneers or anything else, it's not about the -- because we're spending money into -- as less and less buyers are coming, we want them to have videos, 3D. I mean, we're spending money on all of this. So make no mistake about it. And Orlando, if you think of that as a premier event, the cost of that versus having a couple of bid catchers and an auctioneer, it's orders of magnitude higher. But it's about the customer engagement, and I'll just share one story. So we did Orlando. For those that attended, it was a blowout event. We had a live concert. We had fireworks. We had -- and it was incredible. Like literally, the words heard most often from customers is, "Only from Ritchie Bros." As Jim said though, that also gave us an opportunity not only to interact with them but to showcase all of the new services that we bring to bear. We then did a smaller version in Edmonton. And I'll just share, I had COVID, so I couldn't go. Dave Ritchie went and said, and I quote, "He never thought he'd lived to the day where the auditorium was empty, but the parking lot was full." We had more customers than we've ever had before. They were in the yard. They were kicking the tires. We had food trucks set up, Wi-Fi, so they could bid. They had no need for the actual transaction. They had a need to be there to look at the equipment, to interact with us, to learn about the services. They interact with each other, they create that social interaction. So for us, the KPI of the -- and we're going to be testing as we go. Do we have 6? Do we have 16 of these? Do we have 4? At the end, we're going to let the customer interest dictate us. But we want to make it, as Jim said, much more interactive, much more fun, much more of educational and bring the customers in and less and less and less about sales. They don't need us to do that for sales day.

I wonder if you can dive a little bit deeper into the first thin wedge that you'll be launching around inspection. Because that alone, at $2 billion to $4 billion TAM versus your revenue base and some penetration, will drive a lot of service growth. So could you just talk about what else you need to do on the operational side rather than technology side? Do you need to double the size of inspection? Do you need to do an acquisition? Just to understand how we can start to see that service revenue come -- unwind. And in a related note, just talk about the cadence of other thin wedges. Is it yearly basis? Is it every 6 months? Just so we can understand.

It's great. And it sounds like I'm doing my one-on-one with Ann each week of asking this question. So it's fun, so -- but no, to your point, look, for inspections, we're already touching the equipment, right? We have to take pictures of it. We have to list it. We have to get make/model. That's already happened at the yards. And if you kind of -- whoever went to the site yesterday, when Dolan took you around, you saw those lanes, right? That stuff are taking place. So for us, it's really taking that inspection work we're doing, how do you make it visible, right, to the customer. So we're already doing it now. Are there a handful of other steps we have to do that take us 5 more minutes than what we do today because we're going to go a little bit deeper? Yes, right? So you're talking a person making $22 an hour, 5 more minutes. And it's not going to be every category that we touch, right? There's going to be certain categories for inspections that makes sense. So kind of operationally, it's already there to be had, right? And if you even saw Orlando, we did something called 360 videos, where we're now also, for certain categories, taking videos. If you've ever seen a car where you can spin it, you can look underneath it, you can go inside of it, you can look at hours instead of odometer, right, so that's already taking place. So infrastructure is there as we do it. Now what I would think about for the thin wedge -- and I'll pass how often and all that to Baron because I want to say tomorrow and the next day, but I'll let him do a realistic answer. For me, what's most important, yes, we're picking inspections and, yes, it gives us monetization and it gives us -- but the core foundational thing that we're going to get out of it is how can I invoice someone? How can I give them a receipt? How can I collect payment? That's the first foundational piece that I can use across all my platforms. Now for an inspection at $300, the first piece is I take a credit card. Then when it gets bigger, ACH, bank wire, we add to the collection process. So for me, what I'm excited about, about inspections, I love the chance to monetize because we're already touching equipment and it just fits right in. But the key foundational piece of the marketplace, I now can create an invoice. I can now have a receipt that goes into your account. I can now collect money and then I think the next piece is, okay, a buyer and a seller. Now I need to settle in this process. Another foundational marketplace creates an invoice, have a settlement take place. So that's what I'm really excited about these foundational pieces I can use across all my platforms. And then it makes us so much more efficient on the back end. Because remember, today, I have people doing all these things on different platforms. This becomes one source of how do we do it, which streamlines the rest of the process. And then I'll pass it over to Baron for how often.

And just to answer your question, I mean, obviously, it depends on the thin wedge, right? As you brought up the question, how do you operationalize it? If it's a lot of work, then obviously it takes longer to come to life. But in general, our goal is to be delivering business value every quarter. right? So every 6 to 12 weeks, there's a thin wedge that we're working on. Some of it clearly is going to be along the lines of buying an inspection. And some of it, to Jim's point, is going to be stuff that's more back-end foundational, where it's going to come to life. But the goal is every single quarter, we're delivering business value.

And then just the last piece is the scoping of it. So just to be clear, IronPlanet has always "monetized" inspections. But it's really been kind of a shroud. I want to make sure folks understand, it's been part of their fee structure, right? Like you want to list something with IronPlanet, we dispatch remote inspectors, we charge for the inspection. But again, you have to do that. So it's really a seller fee. What we're talking about here for that first thin wedge -- so about 20% of our business is IronPlanet, 80% is kind of in the yards. That 80%, we don't monetize at all. That's just within our four walls, just to give you a sense. And then there's all of the other stuff, the listing services, where folks can order inspections. And again, to Jim's point, we have the pieces. That's the way IronPlanet has always done it, which is it's a remote location. And what percentage of the inspectors are full time versus a flex force?

Say it's 30-70, 40-60. Yes, and the lower number, full time and contractors for the second part that we kind of flex, dependent on volume.

So now you can understand full circle where Baron started, which is we want to pick a thin wedge that will drive value immediately that will build the foundational pieces Jim was talking about. And that's where the -- if there is a piece of the leadership team to play outside of the functional areas is to take those pieces very smartly so that they can build the most foundational pieces but can also drive the P&L of the business almost tomorrow.

All right. What else is on your mind? I was waiting for one of the Ritchie Bros. to ask a question and raise their hands.

They're waiting. They're coming.

Good.

So maybe I can ask another one then. And Jim and Ann, now without Euro Auctions, you're kind of sitting in a different path going forward. You have a great balance sheet. You said you have a solid line of acquisitions. You've laid out a map of where you don't have acquisitions maybe to feed the services of where you're looking. So could you maybe just elaborate on how you think of capital allocation and acquisitions going forward? Do you now accelerate your SG&A as a different way of capital allocation, it reduces your cash from ops because you don't need CapEx? And so I'm just kind of conceptually trying to understand how you're going to apply capital allocation and how we should think of the acquisitions of the path forward for your growth.

Yes. So I'll start and then pass it to Ann. So the one thing, when I think about the businesses that we've acquired in RBFS, the one thing I like about the businesses is they can take full advantage of our transactions that we have on the transactional side of the business. But they also have a way to generate revenue without that transaction. So the businesses, as we think about future acquisitions, are similar in that nature that they can generate revenue outside of our transactions, but they can take advantage when those transactions are there to have it. So when you're thinking about future acquisitions and what's missing in the marketplace, think about businesses that fit that scenario, that take full advantage of what we provide, which is awesome, but then you can also get a revenue stream when it's not going through an auction for us as we go through it. So really excited to use capital on that. Now I look at SG&A a little bit differently, right? In the short term, we might have to add a little bit to get the growth that we're talking about because we're doing it manual, right, so as we've talked about on the quarters. So that might happen. But I do believe when we get the marketplace up and you're doing one invoice, one settlement process, one back end, self-service my account, that helps us streamline the back end. So I do think there's this curve that's going to happen, right? Yes, in the short term, as we go through this process, we've got to build it a little bit to be able to manually produce what we're talking about. And then we get efficient on the back end after that. And I know Sameer is looking at me because I usually say a lot more than what I'm supposed to. So I'm going to pass it to Ann before I get in trouble.

Before you get in trouble.

Yes.

Before you get in trouble. So let's talk Euro Auctions and then kind of our learning and then how we think about our incredible balance sheet. So just cards on the table, again we've said the exact same thing. We look at businesses that are doing very well. We look at great leadership teams. And we look what it can do for the ecosystem. So let's talk about Europe, right? It's a business that's doing very well. They are higher growth rate than we are in Europe. They're still kind of mid- to lower single digits but higher growth rate than we've been in Europe. We really appreciated the Keys brothers management team. I thought we thought they built something really great. And then the impact to our ecosystem was the fact that they approach sourcing exactly what Jim said, a very different way. And so we had a choice. We could buy that. And that's what we chose to do because that would speed it up. And then given what happened with the CMA, we can't, so we're going to be forming our own sourcing group that will have an SG&A impact to it, of course, because it's going to be a homegrown solution versus not. So the way to think about our balance sheet, which is enviable and stealing Sharon's words, it's about optionality. And where the breakage comes is speed. So think about the businesses you've heard today. Could we build a Rouse? Okay. Do we have 20 years to do so? Hell, no. Could we build a SmartEquip? Probably. I don't know if we're smart enough. We don't have a college professor in our midst. But do we have 20 years to do so? Hell, no. So as we think about our pipeline, the #1 KPI is speed, And with a balance sheet like we have, we have the optionality to do it organically, but it's going to be slower or speed everything up and unleash it. And Kevin Geisner, who you haven't heard from, but runs our strategy organization and is the keeper of our pipeline, it's healthy. And when you think about a marketplace and that kind of TAM potential, there is really no end. But again, every time you see us expanding capital, you should hold us to task to say, "Are you buying something healthy? Are you buying a great team? And is it fast-forwarding you?" If the answer to any of that is no, you should call us out.

So Ann, obviously, this is the toughest environment it's been, right? We all know that. At the same time, none of your competitors really seemed to go out of business, which maybe we would have thought happened. But perhaps it's because the software providers out there that are independent allows them to pivot their businesses. So I guess the question is the software providers have had a really rapid growth in excess of GTV. Have you thought about where there is a specific reason why you're not, being this independent software provider to your competitors really to get that growth?

Yes. It's -- for sure, it's on the spectrum. But this is where we have to be very honest about. So we have a business called Xcira, which is a software provider to the auction space and we can certainly leverage that for other auctioneers. So for us, it's just purely a priority of really understanding the value we bring. And I'm going to take a page out of Matt's book, which is, is our value the demand? Like what is it we're offering to these third parties? So candidly speaking, yes, we can offer that Xcira white label auction platform. But if we offer our global demand, which is where we make the impressive fees that we all love, like are we going to be actually shooting ourselves in the foot and it's going to be a chase to the bottom? So this is where we really peel down what is the offering, what is the unintended consequence and what is it getting us. And Xcira, much like all the other businesses, is free to run their business. They're free to offer their auction technology to others. But we feel like if what -- instead of just offering the auction technology, we actually offer our global demand base at a much lower fee structure, no one's going to like that answer. But that's kind of how we weigh it.

And I think just for me, when I think about what Kari took the team through and the market share that we can grow, for me, the value in growing our market share and to be able to utilize the infrastructure that we have, I would rather compete against those brands that you're talking about and go get that business with our ability, with our relationships and our team. I think in the short term, but to Ann's point, I think we have the optionality to attack it whatever way we want. And my preference is I can get more money and profitability and flow-through if I can leverage what we talked about in Kari's section versus that part of it. I think we have the ability to go get market share.

Yes. But just please make no mistake about it. If we see a business much like Euro that is in our sweet spot but has a unique set of capabilities and can fast-forward something for us, we certainly have a balance sheet where we don't have to be shy about acquiring that business.

Okay. With that, we'll conclude investor -- our investor event. Lunch is set up outside. I encourage all the Ritchie folks to spread out and eat lunch with our valued analysts and our investors. Let me know if you have any questions. Thank you for coming. I know some of you are headed to there after this.

Well, thank you so much for taking your time. We appreciate it. Thank you.

Thank you.