Auto Trader Group H2 2025 Earnings Report

Auto Trader Group EPS Results

• Actual EPS: GBX 31.66
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Auto Trader Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Auto Trader Group Announcement Details

• Quarter: H2 2025
• Date: 5/29/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 29, 2025
• Conference Call Time: 4:30AM ET

About Auto Trader Auto Trader Group (LON:AUTO) is the UK’s largest automotive platform. It listed on the London Stock Exchange in March 2015 and is a member of the FTSE 100 Index. Auto Trader’s purpose is Driving Change Together. Responsibly. Auto Trader is committed to creating a diverse and inclusive culture, it aims to build stronger partnerships with its customers and use its voice and influence to drive more environmentally friendly vehicle choices. With the largest number of car buyers and the largest choice of trusted stock, Auto Trader’s marketplace sits at the heart of the UK car buying process. That marketplace is built on an industry-leading technology and data platform, which is increasingly used across the automotive industry. Auto Trader is continuing to bring more of the car buying journey online, creating an improved buying experience, whilst enabling all its retailer partners to sell vehicles online. Auto Trader publishes a monthly used car Retail Price Index which is based on pricing analysis of circa 800,000 unique vehicles. The same data that powers the Index is used by the Office for National Statistics to make the UK’s official measures of inflation more robust, as well as the Bank of England to feed the broader UK economic indicators. For more information, please visit: https://plc.autotrader.co.uk/

Auto Trader Group H2 2025 Earnings Call Transcript

Key Takeaways

• Group results showed continued operating leverage with 5% revenue growth, 8% operating profit increase and 12% EPS growth for the year ended March 2025.
• Autotrader’s marketplace is at record scale, with unprecedented buyer and retailer engagement and over 1 billion calls made to its data services by more than 90% of retailers.
• The April launch of the CoDriver AI suite has been successfully monetized, driving strong uptake and showcasing a major new AI-driven product stream.
• Digital retailing traction accelerated, with Deal Builder retailer numbers up 82% to 2,000 and deals tripling to nearly 50,000, and the feature will become part of core packages to boost adoption and revenue.
• Rapid speed of sales and falling used-car prices reduced advertised stock levels (stock lever down 1%), creating a top-line headwind despite strong consumer demand.

Presentation

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Welcome to Autotrader's results for the full year ending the 03/31/2025. I'm joined by our COO, Catherine and our CFO, Jamie, who will both be presenting and joining me for Q and A later on. Overall, we're pleased with the progress that we've made through this financial year. This includes our financial results, although as expected they were impacted by the acceleration in speed of sales during the year. Importantly, we've made good progress on the areas that are within our control and plan on doubling down on these in the year ahead.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Firstly, our market position is strong with record levels of buyers and retailers using AutoTrader. Our platform strategy is operating at scale with more than a billion calls to our data services benefiting over 90% of retailer customers through over a 20 technology partners. Secondly, our event in April has gone well, where we monetized the first features within our co driver AI product suite. We see good potential for future development in this area as we make AI available to dramatically improve the car retailing and buying experience. These first products have seen immediate and strong engagement with both retailers and consumers.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Thirdly, we have continued to make progress on digital retailing, where we have materially increased customers, stock and deals generated. Given the potential of this product to strengthen our core business, we've decided to change our approach, which should result in both accelerated adoption and monetization, which Catherine will cover later on. The combination of these mean we have four rich streams of future product development, including advertising products, AT Connect and our data products, digital retailing, and now CoDriver. When combined with a car market that will grow over the long term and our strong market position, this product pipeline gives us the confidence that we can continue to grow and make meaningful improvements to the buying and retailing of cars in The UK. I'd like to thank all my colleagues at Autotrader, our customers, shareholders and wider stakeholders for their continuing trust and commitment to Autotrader.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Starting with some of the highlights during the year. Group revenue grew 5%, operating profit grew 8%, and basic EPS grew 12%. This demonstrates the operating leverage in our business and the consistent application of our capital policy. In the core Autotrader business, revenue growth was 7% and operating profit excluding the impact of digital services tax, which we incurred for the first time, was also up 7%. Retailer revenue grew in line with expectations at 7%.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Forecourt numbers have also remained strong, which has altered the mix between retailer growth and average revenue per retailer or ARPA. Retailers grew 2% for the year and ARPA increased by 5% or £133 year on year. The majority of ARPA growth this year came from a strong pricing and product event in April 2024, where we launched our third Autotrader Connect module. Consumer engagement on the platform has reached record levels, and our lead over our nearest market's pace competitor remains at over 10 times. Deal Builder customer numbers have grown by just over 80% to 2,000 retailers and consumers generated almost 50,000 deals, which was triple the year before.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

The interaction of market dynamics and our business model has influenced our results, as I mentioned earlier. While Auto Trader revenue growth was healthy at 7%, it would have been higher if it wasn't for the significant increase in the speed with which vehicles were sold during the year. The charts on this page hopefully go some way to explaining this. In the top left, you can see the increase in number of visits on Autotrader, which has reached record levels. This is a proxy for vehicle demand, which has been strong for the past three years and strengthened again in this financial year.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Over the same period against that higher demand, used car prices actually fell, which you can see in the chart on the top right. This was driven by a relatively sudden drop in trade prices during late calendar year twenty twenty three over nervousness about significant depleting activity that was happening at the time. That flowed through to retail prices for used cars, which you can see fell from mid FY24 through to mid FY25. This explains some of the challenging results you may have seen from retailers during that period despite strong consumer demand. These pricing trends, when combined with strong demand, drove the acceleration of speed of sale, which can be seen in the bottom left chart.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

This then flowed through to livestock on Autotrader, which you can see in the chart on the bottom right. Average days to sell was thirty two days last year versus thirty days this year, which is 6% faster. That flows through to our stock based commercial model. So despite having 5% more cars advertised during the year, retailer stock and therefore the stock lever was actually down 1% for the year. As you can see on the charts, in the second half of this financial year, demand continues to be strong and used car prices are slowly adjusting upwards.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

However, we have not yet seen speed of sales slow. We have, however, responded with tactical offers to maximise stock on the platform and we continue to monitor all these metrics very closely both for our own performance and the performance of our customers. I'll briefly cover the financial results, which Jamie will cover in more detail next. Group revenue increased by five percent, with Autotrader revenue increasing by 7%. Group operating profit increased by 8%.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Autotrader operating profit increased by 4% after the impact of The UK digital services tax. In line with expectations, Autorama reduced its operating losses to £4,300,000 and non cash acquisition related costs were £12,900,000 which was £8,200,000 less than in the prior year. Group operating profit margin was 63% and Auto Traders operating profit margin contracted slightly to 70%, again due to the digital services tax. Basic EPS was up 12% and cash generated from operations was up 5%. We returned £275,700,000 of cash to shareholders through £157,300,000 in share buybacks and £88,400,000 in dividends.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Today we are declaring a final dividend of 7.1p per share, making total dividends 10.6p per share for the year, which is up 10% on the previous year. Now on to operational results. The average number of cross platform visits were up 5% to 81,600,000 per month, and we continue to account for over 75% of all time spent across our main competitor set. The average number of retailer forecourts advertising with us was up 2% to 14,013 retailers. Average revenue per retailer, as mentioned earlier, was up five percent to £2,854 mainly due to our product and pricing event that we implemented on the 04/01/2024.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Live car stock was up 1% to £449,000 with that stock growth driven by private listings. And finally, the average number of full time equivalent employees increased to twelve sixty seven during the period. Now for our cultural KPIs, which are a subset of metrics we measure to ensure we are creating an environment that allows us to attract, engage, develop and retain the very best talent. 91% of employees are proud to work at Autotrader and our Glassdoor rating is 4.6 out of five stars. At the March 31, '6 of our nine board members were women and two were ethnically diverse.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

44% of our people are women and 19% are ethnically diverse. 43% of our leaders were women and 10% ethnically diverse. We maintain our aim to achieve net zero carbon emissions across our value chain by 02/1940 and halve emissions by 02/1930. Our carbon emissions for the year across scopes one, two and three reduced 6% to 93.2 tonnes, of which the vast majority are scope three. I'll now hand you over to Jamie to talk us through the financials in more detail.

[Jamie Warner, CFO & Director at Auto Trader Group]

Thanks, Nathan, and good morning, everyone. I'll start by focusing on the core Autotrader financials. Starting with revenue, total Autotrader revenue increased 7% to 564,800,000.0. Trade revenue also increased by 7% with the largest component of this being retailer revenue, which also grew by seven percent. The average number of retailer forecourts on our platform increased just over 14,000, a 2% year on year increase and average revenue per retailer increased by 5% to £2,854 per month, with more detail given on the following slide.

[Jamie Warner, CFO & Director at Auto Trader Group]

Also within trade revenue, we've seen an increase in home trade or pay as you go listings and growth in other trade revenue. Consumer services revenue increased by 7%. Within this, private revenue generated from individual sellers was consistent year on year. Motoring services increased by 22%, largely through finance revenue, where we act as an introducer on private adverts and trade adverts where the retailer does not offer their own finance. Revenue from manufacturing agency customers decreased 8% year on year.

[Jamie Warner, CFO & Director at Auto Trader Group]

Much of this decline was driven by us foregoing a small amount of platform revenue for supporting certain manufacturers' used vehicle locators in exchange for VIN level build data, which is an important dataset and feeds into our full suite of taxonomy, valuations, and vehicle metrics. Now on to ARPA, live car stock and retailers. The chart on the left shows the components that contribute to the movement in ARPA compared to the prior year. As you can see, ARPA growth was driven by the price and product levers with a small decline in stock. ARPA growth in the year has been impacted by the 2% growth in retailer forecourts.

[Jamie Warner, CFO & Director at Auto Trader Group]

This growth came from lower yielding independent and non car customers. There was also the impact from the loss of one very high yielding online retailer. This change in retailer mix has had a dilutive impact of just over 1.5%, giving underlying ARPA growth for this year of just over 6.5%. The impact of that dilution is prorated across the three ARPA levers. Taking each of the levers in turn and what drove their growth, we delivered our annual pricing event for all customers on the 04/01/2024, which included additional products and the like for like price increase, which contributed 78 to ARPA growth.

[Jamie Warner, CFO & Director at Auto Trader Group]

Product contributed 77 Most of this growth was from products included in retailer advertising packages in April 2024, which included trended valuations and enhanced retail check. The remaining product lever growth was driven by growth in new car, where we increased the number of paying customers over the period. Turning now to stock, you'll see on the right hand side of the chart that the number of live cars advertised on Autotrader increased slightly year on year. Used car stock increased by 1%, which was driven by an increase in the number of private listings, which do not impact ARPA. The volume of slots retailers paid for in the year was slightly down, which is reflected in the stock lever.

[Jamie Warner, CFO & Director at Auto Trader Group]

Autotrader costs increased 13% to 174,400,000.0. However, half of this cost increase or 10,200,000.0 relates to the digital services tax, which was recognized for the first time. Excluding the impact of the digital services tax, costs increased 7%. Within this, people costs increased by 14% due to an increase in the average number of full time equivalent employees to eleven forty, an increase in underlying salary costs and share based payments, largely due to the introduction of our new all employee share scheme in November 2023. Marketing spend increased to 24,600,000.0, while other costs, which include data services, property related costs and other overheads decreased by 8%.

[Jamie Warner, CFO & Director at Auto Trader Group]

Depreciation and amortization increased by 7%. As a reminder, we fully expense our research and development costs, hence our low levels of CapEx and depreciation. In addition to our investment in cloud based services, we have around 400 people in product and technology who are continuously improving our platforms and developing new products for consumers and retailers. Operating profit increased by 4% to CHF394 million and operating profit margins contracted slightly due to the impact of digital services tax. Excluding this tax, operating profit increased 7% and margins were stable.

[Jamie Warner, CFO & Director at Auto Trader Group]

Our share of profit generated by Dealer Auction, the group's joint venture, increased 29% to 3,600,000.0. Having covered Autotrader, the main part of the group, we'll briefly cover Autorama results. As a reminder, the Autorama acquisition was and remains part of the strategy to bring attractive new car offers to car buyers on Autotrader and to make new cars a more important part of our proposition. Autorama revenue was $36,300,000 with vehicle and accessory sales contributing $26,100,000 and commission and ancillary revenue of 10,200,000.0 Vehicle and accessory sales relates to vehicles that flow through our balance sheet, where we delivered just under 900 vehicles in the period, the cost of which were taken through cost of goods sold. People costs decreased by 32%, marketing with 2,700,000.0 and other costs were 2,800,000.0.

[Jamie Warner, CFO & Director at Auto Trader Group]

There was 1,500,000.0 of depreciation and amortization, which was largely for developed software capitalized in prior years. Excluding the cost of goods sold, costs of $14,400,000 represent a 34% year on year reduction. Total deliveries amounted to 6,268 units. The leasing market for brokers has been impacted by the broader new car market dynamics, where supply into this channel has been limited. Although, this has improved slightly in recent months.

[Jamie Warner, CFO & Director at Auto Trader Group]

The Autorama segment made an operating loss of £4,300,000 This is a significant reduction on last year through the accelerated integration into the main Autotrader business and platform. With Group revenue up 5%, reduced Group central costs and the reduced Autorama loss, we saw total Group operating profit increase 8% to 376,800,000.0 and group operating profit margins increased to 63%. As we grow, the strong cash generation of our business leaves us well placed to return surplus cash to shareholders. Cash generated from operations was at 399,700,000.0. The statutory income statement outlines areas beyond our revenue and operating costs.

[Jamie Warner, CFO & Director at Auto Trader Group]

Net finance costs decreased to 1,100,000.0, largely due to reducing our gross debt to nil. Our profit before tax was £375,700,000 9 percent higher than last year. The group tax charge of £93,100,000 represents an effective tax rate of 25%. For clarity, digital services tax being a tax on revenue is reported as an operating expense in the Auto Trader segment and is not included in this calculation. The recently announced UK US trade deal has not impacted DST.

[Jamie Warner, CFO & Director at Auto Trader Group]

However, we will continue to monitor the progress of any changes to the application of this tax. Although for the avoidance of doubt, we'd recommend modeling the cost as recurring and growing in line with revenue. Basic EPS increased by 12%, which was slightly higher than the growth in net income due to fewer shares in issue following our share buyback program. Today, we're declaring a final dividend of 7.1p per share, making total dividends for the year 10.6p per share. Now to briefly review net bank debt and capital policy.

[Jamie Warner, CFO & Director at Auto Trader Group]

During the period, the group repaid all of the 30,000,000 drawn of its revolving credit facility and held cash and cash equivalents of $15,300,000 Cash generated from operations was largely used to pay tax or return to shareholders through a combination of dividends and share buybacks. The Group's long term capital allocation policy remains unchanged, continuing to invest in the business, enabling it to grow while returning around one third of net income to shareholders in the form of dividends. Following these activities, any surplus cash will be used to continue our share buyback program. That concludes the financials. I'll now hand over to Catherine to talk through the market dynamics and progress against our strategic priorities.

[Catherine Faiers, COO & Director at Auto Trader Group]

Thank you, Jamie, and good morning, everyone. Over the past twenty years, the size of The UK car park has grown steadily by just over 300,000 cars per year, reaching over 36,000,000 vehicles. The COVID-nineteen pandemic disrupted this trend, causing new car production to fall below levels seen during the global financial crisis of two thousand and eight to 02/2009. Despite these one off shocks, we expect The UK car park to continue to grow over the long term. This growth is driven by GDP growth, population growth and stable car ownership trends.

[Catherine Faiers, COO & Director at Auto Trader Group]

The consistent vehicle change cycle in The UK, typically between three and four years, translates this growth into increasing used car transaction volumes each year. We also expect the value of both new and used cars to rise over time. In 2011, the average price of a used car advertised on Autotrader was £9,000 Today it is over £17,000 reflecting average growth of over 4% per year. This increase is driven by inflation, improved product functionality and the shift towards more expensive electric vehicles. Over the past decade, gross margin percentages have remained relatively consistent, which means that higher vehicle prices typically lead to higher absolute gross profits for retailers.

[Catherine Faiers, COO & Director at Auto Trader Group]

This trend, combined with the growth in transaction volumes, has resulted in an increased gross profit pool, which has enabled us to grow revenues without significantly increasing our take rates. Moving on to slide 17 and looking at both new car registrations and used car transactions. From a new car perspective, supply has continued to improve following the impact of the pandemic in 2020 and 2021, but the growth rate had slowed to 2% over the last twelve months. This can be seen in the chart on the left. The market remained slightly below the levels seen pre pandemic and significantly lower than the highs of 2017.

[Catherine Faiers, COO & Director at Auto Trader Group]

The retail market, on new cars sold directly to consumers, has been more significantly impacted. This market has not been as low as it is today since the global financial crisis. Over the past twelve months, we've seen manufacturers attempt to stimulate private demand with increasing levels of discounts and finance offers. This has been particularly prevalent with electric vehicles, where the zero emission vehicle mandate is in place. This requires a minimum percentage of registrations to be electric, with significant penalties for failing to achieve the target.

[Catherine Faiers, COO & Director at Auto Trader Group]

Despite these discounts, private retail sales were down year on year, with the registration offset coming through stronger fleet volumes. The fleet channel saw very little volume between 2020 and 2022 as manufacturers prioritised higher margin retail volumes. As a result, these players have been replacing what has become a much older fleet. We do expect this trend to ease over the coming months as this replacement cycle is now closer to historical norms. As seen in the chart on the right, used car transactions have continued to grow, with a 4% increase in volumes over the last year.

[Catherine Faiers, COO & Director at Auto Trader Group]

Over the past twelve months, our audience position has remained strong and both the volume and engagement of buyers has increased. The number of cross platform visits increased 5% year on year to reach a record number of 81,600,000 per month. Engagement, which we measure as cross platform minutes, also increased to five and fifty seven point two million on average per month. We also saw increasing use of our mobile app, which has seen total downloads now reach over 22,000,000. The chart on the right hand side shows the total minutes spent across an expanded set of competitors, retailers and manufacturers.

[Catherine Faiers, COO & Director at Auto Trader Group]

On average, over the year, Comscore estimated that consumers spent over 10 times more minutes on Autotrader than our nearest marketplace competitor, the combination of Gumtree, Motors, eBay and Kizoo, and 15 times that of CarGurus and PistonHeads combined. Let's move on to consider progress against our strategic priorities. We've made good progress against each of our three strategic focus areas. These areas are closely interconnected. Our platform and our digital retailing capabilities build on the strength of our marketplace and deepen our relationships with both retailers and car buyers.

[Catherine Faiers, COO & Director at Auto Trader Group]

Our marketplace continues to grow, and we have seen a record number of car buyers and retailers using Autotrader. This means we continue to grow and build our unique data advantages through all of the observations captured. Whether it is consumer behavior and interaction, retailer actions and pricing trends, we continue to extend our lead in this area. We have executed our annual pricing and product events successfully, which included the third module of Trended Valuations and Enhanced Retail Check. We have also significantly enhanced search, including launching a grid view layout, continuous scrolling and redesigned search filters.

[Catherine Faiers, COO & Director at Auto Trader Group]

As part of our platform strategy, we continue to make the technology and data that we have built and scaled to support Autotrader available to our partners. This is a key differentiator and connects our data and services into key business processes for our customers. We have seen strong and growing engagement from retailers with over a billion calls on our data services in the year. We're also leveraging our data capabilities. We launched CoDriver, a suite of AI powered solutions to significantly improve both the retailer and consumer experience.

[Catherine Faiers, COO & Director at Auto Trader Group]

We scaled our Deal Builder trial in the year, enabling consumers to do more of the car buying journey online. We've consistently delivered our pricing and product event in April each year. On the 04/01/2017, we aligned all customers to this annual event, which means our customers are familiar with this cycle and expect both in year product launches and their rents to change on this date. Each year we deliver more value to retailers through products, data and tools made available as part of these advertising packages. For the first five years, the product focus was broadly around core advertising products.

[Catherine Faiers, COO & Director at Auto Trader Group]

This enabled retailers to produce better quality adverts on our platform with videos, additional images, chat and text functionality, and to have their own dedicated customizable store on Altatrader. The inclusion of these products delivered a compound ARPA contribution of 2% per year. Over time, we have moved beyond launching advertising features to embedding our unique data and scalable technology services to power our customers' businesses. Developing our advertising products remains a source of future product development, but driving retailing performance through data and insights is a significant priority for our customers. The three modules of Autotrader Connect we have launched has taken us from an advertising platform to an integral part of our customers' operations, allowing them to make higher quality, faster decisions.

[Catherine Faiers, COO & Director at Auto Trader Group]

Usage of these services has continued to grow over the three year period, with over 90% of retailers now actively engaged with these services. At IPO, we talked about eye control and data products being future growth drivers. By the time we ended financial year 2022, we made £10,000,000 in revenue from just over 3,000 retailers buying these data products. By making these products available to all of our customers as part of their Autotrader subscription, revenue from our data products, including those modules of Autotrader Connect, have been almost £50,000,000 a year. We have shown that we can execute successful events in each financial year, with value to retailers delivered through additional products, as well as underpinning ARPA growth for the year.

[Catherine Faiers, COO & Director at Auto Trader Group]

Given our pipeline of product opportunities, we expect this to continue for many years. Now to talk to this year's event product. Autotrader's data science capabilities, technology platform, and unique data presents new opportunities to create AI powered products. We are already utilizing these capabilities across a range of products and services to benefit both buyers and sellers on our platform. The next step in this journey is the launch of CoDriver, a suite of AI powered tools that will improve both the retailer and consumer experience.

[Catherine Faiers, COO & Director at Auto Trader Group]

The first wave of CoDriver includes three components. The first is smart image management, which categorizes and reorders vehicle imagery based on consumer insights, in addition to identifying any missing imagery needed to improve the advert performance. The second, AI generated descriptions, automatically writes the description for retailers, highlighting the features most important to consumers, reducing a task that took on average over twenty five minutes for some retailers to virtually instant. And finally, key selling points that promote the vehicle's characteristics that buyers value the most. We expect these products to significantly improve both the consumer and retailer experience on Autotrader and have seen high engagement levels since launch, with over 300,000 vehicle descriptions generated and over 35,000,000 consumer interactions with vehicle highlights.

[Catherine Faiers, COO & Director at Auto Trader Group]

Retailers and their physical stores will continue to play a critical role in the car buying and retailing process for many years to come. Most consumers are not comfortable buying a car entirely online. They prefer to inspect, test drive and gain support from people throughout the process. We believe this process can be improved by enabling more of the journey to be done online at a time convenient for the buyer. This benefits our customers, as significant resources are allocated to managing inquiries and processes that do not ultimately result in a sale.

[Catherine Faiers, COO & Director at Auto Trader Group]

We are in a unique position to connect online journeys, which typically start on Autotrader, into retailer systems and processes through both our retailer portal and our API journeys. This is the strategy we have been pursuing with our Deal Builder product. Feedback on the product continues to be positive from both retailers and car buyers, with deals converting twice as effectively as a regular Autotrader lead. Over half of all deals are submitted outside of traditional working hours. At the March 2025, we had increased Deal Builder customer numbers by 82% to 2,000, which made the products available on around 84,000 vehicles, an increase of over 100% on last year.

[Catherine Faiers, COO & Director at Auto Trader Group]

Deals generated were three times higher at almost 50,000. Over half of the customers at year end were either paying for the product or had been onboarded on a try before you buy basis, where they were expecting to roll up to paid after an initial offer period. Given this progress and our experience with previous products at Autotrader, we've decided to accelerate the adoption of Deal Builder. This means we'll be making much, but not all, of the current Deal Builder functionality part of our core advertising proposition. We believe there are significant benefits to this approach.

[Catherine Faiers, COO & Director at Auto Trader Group]

Firstly, we've been onboarding approximately 500 customers every six months. At this rate it would take a number of years to make the functionality available to all of our customers and car buyers. By building it into our core offering, we'll be able to drastically accelerate customer adoption. With significantly more vehicles having a version of Deal Builder, we will materially increase the number of deals being submitted on Autotrader, accelerating the level of buyer engagement on-site. We are confident retailers value the product.

[Catherine Faiers, COO & Director at Auto Trader Group]

While Deal Builder will no longer be monetised separately per transaction, we will be able to accelerate both its adoption and monetisation, which we have a long history of successfully doing. This plays to the strength of our subscription business. Future opportunities remain to monetize different elements of the transaction, such as finance and other ancillary products. Importantly, having this functionality on every advert on Autotrader differentiate differentiates our proposition for both buyers and retailers. This has been no small undertaking in terms of engineering and integration work with retailer systems and processes.

[Catherine Faiers, COO & Director at Auto Trader Group]

Having covered previous event products, it is worth providing some context on the opportunities we have to drive performance of our customers' businesses as we look ahead. ARPA growth each year has been underpinned by well executed events on the April 1 and in year product growth. We expect to continue this cycle, with a range of products we believe will be valuable to retailers as the industry continues to evolve. Firstly, it has been some time since we have supported an event with advertising products. Retailers are always looking for ways to effectively promote their brands, their propositions and their vehicles.

[Catherine Faiers, COO & Director at Auto Trader Group]

While this is a more mature part of our business, there remain areas we have not fully developed and others where we are yet to begin work. This includes involving our packages, developing our pay per click products, improving our messaging capability and the recently launched new car offers product. Our second stream of products is those enabled through our artificial intelligence and data science capabilities. We recently launched CoDriver, a suite of AI powered tools to help retailers create high quality adverts more efficiently. There is significant scope for further AI AI powered products to improve the buying and selling of cars in the years ahead, all built on our unique data.

[Catherine Faiers, COO & Director at Auto Trader Group]

The evolution of our search experience is also being driven by our work on AI enabled tools and will create more opportunities for retailers and better meet buyer needs. Our third product development area is our data and technology products. We have launched data products over the past three events and made them available through both our retailer portal and our Autotrader Connect platform. The data we are able to provide to retailers is unique and most of it proprietary. We have consistently improved this dataset by acquiring key resources for vehicle taxonomy, integrating build level data from manufacturers and aggregating all of the interactions on our platform.

[Catherine Faiers, COO & Director at Auto Trader Group]

More recently, we have directly sourced the granular vehicle data required to provide our own provenance or vehicle history checks. We have significant opportunities to both strengthen our existing data products, to service them more powerfully on Autotrader, and to begin to automate their usage in combination with our AI tools. Finally, we have our digital retailing products. A baseline version of our Deal Builder product will be made available to all retailers as part of our event next year, but this is just the first step. There are further opportunities within digital retailing that will build upon this foundational Deal Builder functionality made available through packages.

[Catherine Faiers, COO & Director at Auto Trader Group]

We believe some of the biggest opportunities in the future will come from combining our Deal Builder product with the data and insight we have to better connect, engage buyers with retailers and to deliver a truly omnichannel buying experience. I'll now hand back to Nathan to summarize our outlook for 2026.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Thank you, Catherine. Moving to the outlook for 2026. Our April 2025 pricing and product event has gone well. Retailer revenue growth in the second half of last year was 5%, which was constrained by the acceleration in speed of sale. This has continued into the new financial year, however we expect retailer revenue growth for FY 2026 to improve to five to 7% for the following reasons: First is that speed of sale does have natural constraints and the acceleration this year was largely driven by a fall in used car prices.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Used car prices in the second half of last year have steadily increased as retailers have sought more normalised margins. Secondly, our pricing and product event has delivered around 6% growth in retailer revenue. Assuming consistent retailer forecourts, the event should add £90 to £100 to the price lever within ARPA and £70 to the product lever. We've responded to market dynamics with offers to stimulate stock and to support retailer margins with our Prominence products. In the second half of FY '20 '20 '5, the stock lever was minus £54 In April 2025, it was minus 42 We expect stock to continue to improve throughout the year, but still be marginally down for full year FY26.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

However, we expect that any marginal decline in the stock lever should be offset by some growth in the product lever from additional Prominence products. Due to the comparative periods, we expect growth to be stronger in the second half, which we expect will benefit the start of FY '20 '20 '7. We expect broadly consistent revenues in Consumer Services and Manufacturing Agency, which account for 9% of Group revenue. Autorama losses are expected to reduce in line with current market expectations. We expect to maintain the current levels of Autotrader operating profit margins, whilst group operating profit margins will increase as a result of reduced Autorama losses.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

That concludes the presentation, we'll now move to questions and answers with analysts in the room. Great. Start start down from here.

[Jamie Warner, CFO & Director at Auto Trader Group]

Market work on my back.

[Andrew Ross, Managing Director at Barclays]

Thanks. Morning all. It's Andrew here from Barclays. I guess I've got a couple about the to clarify about the April 26 pricing event, which I appreciate is some way off, but now feels quite important. So I guess if we're still in the same environment with kind of accelerated stock turn, at what point do you start to get more aggressive on pricing or kind of introduce some limit on how much dealers can spin through inventory through their slots to kind of align the value you're giving with how much dealers are paying you?

[Andrew Ross, Managing Director at Barclays]

And I guess as a follow-up to that, should we be thinking of a product that's getting bundled in as part of the twenty six event is just deal builder, or are there gonna be other things like co driver or something else to go with it? And then I guess as part of that, just to clarify on on Deal Builder, everyone's gonna get it as part of this event, including the big dealers. Is that now kind of doable from a technology perspective? Have I just kind of understood that correctly in terms of how it's going to work? Thanks.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

So I think,

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

I mean, obviously, like you said, the event in April 26 is a way ahead. And when we look at those events, we do factor everything in. So the profitability and health of our retailers, things like Stockton as well, and the strength of the product that we've got in that. Would we consider a higher price increase if Stockton remains fast, or look at limits to the number of changes people can make? I think all those things are in the realm of consideration.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

What we're not thinking about, just to be really clear, is changing our business model wholesale. It's worked for many, many years. You will have good times and bad times, and it doesn't really matter which model you choose. We've looked at all the models. We know a lot about peers around the world, and all of them have puts and takes.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

And certainly the best time to change your business model is not when it's not at its very best, because you do miss the return to more normal times. One thing I would say that's relevant to the event that we've had this year, and is something that we'll consider this year, it's been a little bit unusual this year because stock turn has been fast. Ordinarily, that would be quite good for retailers' profitability, but because of that decrease in prices, we've almost had the worst of both worlds in one sense. There has been pressure on retailer profitability because of the fall in prices, and you've also had stock turn, which means you've got to work, do a lot more work for revenue. So, we'd be hoping that retailer health is better, and it is definitely better now than it was during last year, even though stock turns kind of more or less the same.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

And as we think about the event, there's only so much our retailers, so much operational change our retailers can absorb. So, will it be Deal Builder plus something else, some other large product? No, very, very unlikely. I think just to implement the changes around that we're looking to do with Deal Builder will be a big change, and I suspect that we would only waste the opportunity with another big product. And as Catherine said, we've kind of got a very long pipeline.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

And the last thing you want to do is kind of throw those all in because what you end up seeing is engagement ends up being more limited. The value they get is more limited, and therefore the effectiveness the monetization is a little more limited too.

[Catherine Faiers, COO & Director at Auto Trader Group]

On the final question and Deal Builder and what does all retailers really mean, we're in the process of defining exactly what the baseline version of Deal Builder is that, we make available to everyone, but it it's likely to include many of the components, but not all of the components we currently have live. And part of that will be driven by our ability to onboard and scale rapidly with retailers. The finance is a great example where we might include, you know, an estimate or finance intent in earlier part of the journey rather than the full integration because there are there are different layers of that product, and there are different ways we might still think about monetizing that in the future. So we will define the baseline such that all retailers is is the ambition and is the deliverable ambitions within the time period.

[Jamie Warner, CFO & Director at Auto Trader Group]

It's Will.

[William Packer, Head of European Media & Internet Equity Research, Managing Director at BNP Paribas]

Hi. It's Will Packer from BNP Paribas. Three questions, please. Firstly, on the FY 'twenty six stock ARPA guidance, could you give us a bit of color on your assumptions around the take up of the stock offer? There's been a nice rebound in stock reflecting dealers taking on that stock free of charge.

[William Packer, Head of European Media & Internet Equity Research, Managing Director at BNP Paribas]

What are you assuming is retained? And how does that compare to history of previous stock offers? Secondly, could you articulate a bit further on the medium term deal builder monetization plans? So you've been very clear, FY twenty April twenty six pricing event, deal builder bundled, some iteration of it. Is it how do should we think of it as a kind of eye control too, whereby it's gonna be blocks which go to everybody, or could there be a scenario where, for example, if you take finance products that could be still transacted on a stand alone basis, etcetera? Just a bit more. I realize it's early stage, but a bit more color there would be helpful. And then ex auto trader trade, both h two twenty five and the guidance ahead are a bit underwhelming, display ads, Autorama. Could you just go into more detail as to what's changed there and how we should think about that business reaccelerating? What's the timeframe for that? Thank you.

[Jamie Warner, CFO & Director at Auto Trader Group]

Yeah, sure. Go ahead first, Catherine do second, and then I'll come back to the third. So yes, we have the stock offer running at the moment that was switched on near the beginning of this financial year, or maybe in the March. It's going to convert in the June, so pretty close to that conversion event. It's slightly different to offers that we've run historically.

[Jamie Warner, CFO & Director at Auto Trader Group]

These are more sort of pre COVID offers. We used to often run them where we switched on pre Christmas and there was a conversion to half price and full price. And the historic conversion rate used to be from the offer period going on to what converted to paid was about 25% of the opportunity. And the assumption that we've made is this should convert in line with that. So that's what goes into the guidance.

[Jamie Warner, CFO & Director at Auto Trader Group]

Obviously, we said, you can see the kind of stock leave of pressure in the second half of last year. We've given you the April number of minus 42. That's likely to continue into May. We do think the full year guide will be better for that and the boost conversion should move us better than minus 42. I don't think we think it'll get us to breakeven or positive, but certainly some improvement.

[Jamie Warner, CFO & Director at Auto Trader Group]

And you know, it's an area we don't have huge amounts of visibility on, but there's a huge amount of focus to continue to increase listings over the balance of the year, and that's why it's just a small it's a small negative expected.

[Catherine Faiers, COO & Director at Auto Trader Group]

I think the eye control comparison for Steel Builder is a is a helpful one. We see the baseline version of Steel Builder that will that we will define for this year as very much step one on a series of product steps and journeys that we plan to go on in the coming in the coming years. Finance is an interesting one where there are clearly layers that you can go into and how far you take the consumer and how deep you go with the integrations with the lenders. That's an obvious one where there'll be, I think, a number of stages and ways and absolutely is an area where through both the lender opportunity and the retailer opportunity, where there are opportunities to monetize that differently in the future. In terms of the core product functionality, we still haven't, launched the appointments module.

[Catherine Faiers, COO & Director at Auto Trader Group]

We've still got some integration work to do with the big lenders to deliver on some of that finance opportunity, and there's still work to be done to better connect the different components of the journey and to encourage consumers back into the journey once they've started a deal builder opportunity. There's also we alluded to it in the in the in the presentation, we haven't started really bringing together some of the deal builder thinking with some of our data thinking in terms of how we manifest that in the products. And we know that for many of our retailer sales that we influence, they don't today see a hard lead in email or a phone call, but we know a lot about that buyer and the buyer interaction engagement that we're seeing on Altuschrader. So there's a better job we can do with serving up insights and deals for those retailers to add more value into how they're thinking about stock management, and other decisions. So, yeah, very much step one, wave one of a of a series of product launches and iterations that will follow on Deal Builder.

[Jamie Warner, CFO & Director at Auto Trader Group]

And then just coming back on the, revenue lines outside of retailer. So the biggest being consumer services, manufacturing agency, and Autorama. I think in consumer services and manufacturing agency, there isn't huge amounts of engineering resource, huge amounts of focus. And I'll go into a bit of detail around the kind of second half performance. Consumer private ads, the price of the ad is linked to the price of the vehicle.

[Jamie Warner, CFO & Director at Auto Trader Group]

We've seen a bit of price softening, so a slight mix of lower value vehicles, which hits yields. There's a little bit of volume coming off as well, it is quite, it is a competitive space or area that we are looking at, a bit of a competitive space from the likes of Motorway, Weback, trying to make sure that we're not losing share there. It may be something we do on marketing from that perspective. I think we don't want to over promise that private listings have been on a very good run. We're doing significantly more than we were probably the first seven, eight years of listed history.

[Jamie Warner, CFO & Director at Auto Trader Group]

I think if those are reasonably stable, which is the guidance, we're relatively happy. The manufacturing agency line, as we sort of said in the presentation, we kind of made a decision to give up a little bit of platform revenue where we power, if you go to certain OEM websites, we power what we call a used vehicle locator, which consolidates franchise stock on that manufacturer website in exchange for the kind of VIN build level data, which is hugely valuable for driving taxonomy valuation vehicle metrics. So that was the kind of step down. The rest of the bulk of that revenue line is still display ads. It's not ever a revenue line that we feel is particularly high quality.

[Jamie Warner, CFO & Director at Auto Trader Group]

Again, not a huge amount of focus, not a huge amount or any engineering effort going into it. So, again, having it reasonably stable feels like the right guide. There is new car manufacturer advertising that obviously showed a little bit of growth last financial year. I think it's fair to say we still got to find the right product for those manufacturers. We've still got seven of them advertising.

[Jamie Warner, CFO & Director at Auto Trader Group]

There's about 1,200 cars, but it is around the kind of quality of the product, the value story. We're still working through that. Again, I don't think we want to over promise that that's suddenly going to be something significant. Autorama, I think, is an area where there is more focus. I think we've managed to reduce the losses this year.

[Jamie Warner, CFO & Director at Auto Trader Group]

I think in line with expectations, it's getting pretty close to breakeven for this next year. We said we're not looking to reduce the cost base, so that's growth in volume, growth in commission and ancillary revenue. There is much greater integration with the Autotrader website, And we have seen, it does come in sort of batches at certain deals, but where there is an offer that's made available, we are moving that volume, leveraging the Autotrader platform. So it comes through in kind of batches again. I don't think we want to over promise that it's suddenly going to inflect, but there is signs that actually having these deals can influence new car sales on the platform.

[Jamie Warner, CFO & Director at Auto Trader Group]

That's the area where I know the balance sheet is is reducing consensus, but that just washes through. The actual revenue growth that people should care about is gonna grow next year. Feel pretty confident.

[William Packer, Head of European Media & Internet Equity Research, Managing Director at BNP Paribas]

Thanks,

[William Packer, Head of European Media & Internet Equity Research, Managing Director at BNP Paribas]

Paul. Thanks for the detailed color. Just synthesizing the commentary on the April 26 pricing event, is it fair to say that all three levers are looking better placed than the last or in the preceding eighteen months? Is that a fair comment?

[Jamie Warner, CFO & Director at Auto Trader Group]

You mean for implementing fiscal twenty seven?

[William Packer, Head of European Media & Internet Equity Research, Managing Director at BNP Paribas]

Yes.

[Jamie Warner, CFO & Director at Auto Trader Group]

Yeah. So I think I think if you if you think about how the guide is, say five to seven, we're doing five in the second half and we're saying we've entered this financial year with not a lot of change. So the first half, it'd be unreasonable to think maybe the first half of this year looks a lot like the second half of last year, but to hit five to seven then, your second half has got to be closer to seven.

[Jamie Warner, CFO & Director at Auto Trader Group]

That's where hopefully we're looking to carry a better run rate into fiscal twenty seven with a good event and hopefully sees us growing quicker than what we've guided to for this year.

[William Packer, Head of European Media & Internet Equity Research, Managing Director at BNP Paribas]

Thank you.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Think I should just keep working our way along the front, then work our way back.

[Sean Kealy, VP - Equity Research at Panmure Liberum]

Shaulky from Panulipram. Thank you, everyone. A couple from me, if I can. So first of all, you've had advertising, you've had data, you've now got digital retailing. Is there sort of a a fourth area on the horizon, or should we be thinking about you guys going just deeper within within these existing, sort of sort of areas?

[Sean Kealy, VP - Equity Research at Panmure Liberum]

And I guess what I'm getting at here is particularly, can you do more with nondealer customers? And if if you can, how do you navigate some of the sort of conflicts of interest and that that might exist with with dealer customers in in in those areas as well? Secondly, I just wanna pick up on what you said when you were talking about the M and A line there, Jamie. That VIN data that you have gained access to as part of by dropping some of the sacrificing some of those platform revenues, is that the data which is allowing you to do your own vehicle checks? And do you own this now?

[Sean Kealy, VP - Equity Research at Panmure Liberum]

Is it something that you you need to maintain a feed from from from the OEMs? Or how how does that work in a little bit more detail, that's okay? And then two more as well, if I can. Sorry. Can you give us an idea of where retailer gross margins are relative to history?

[Sean Kealy, VP - Equity Research at Panmure Liberum]

I've I've usually thought thought of it in a sort of an eight to 12% range and maybe from from but but just a guess, really, we're probably towards the lower end of that at the moment. What what do you think is going on there? And then just finally on Autorama, now that new private sales are in growth, it's it's no longer just going into the fleet channel, are you starting to think about maybe taking some of those transactions off balance sheets and and work on a purely commission basis as well? Thank you.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

So there's kind of two questions within your very first question, so you have got to a new record on a number of questions. So just to be really clear, the products that we're having folded Deal Builder digital retailing into what we do in the core, because we think, you know, it's a better way of monetizing, better way of getting adoption. We're left with like four clear streams of product development. Any one of which, to be honest, we feel like you could have confidence that you'd be able to do a good few years of events. We used to just do advertising products, so we never had any of these other areas.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

The four areas are one is advertising, one is co driver and AI, one is the data products that help kind of the data driven retailing that Catherine talked about. And now you've got digital retailing. And digital retailing is a bit of a funny one in a way because as Catherine said, there's a number of ways to iterate that product, but a bit unlike eye control, it's not switch on and all the values there. Over time, we can continue to add more and more people doing more and more deals, which saves more and more money in retailers. So it will kind of accumulate value as time goes on.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

So that feels pretty good and there's plenty to do in there. We've got more ideas than we do people to do them and retailers haven't necessarily got the ability to absorb those all at once. The second bit of that question is, well, what about non retailer customers? That is something that we think about quite a lot. It's also something that we explore.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

So, Autorama is one of those examples. We've talked a little bit around that. We are working OEMs are kind of we're never going to stray too far from our core because we tend to find that returns on capital and success both seem to diminish the further you wade from your call. So, we are pretty core focused people, but manufacturers are really obvious one, where there is a lot of them are starting to sell more direct than they used to and starting to definitely focus a lot more on sales as opposed to brand marketing. And we're quite good for those areas.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

I wouldn't say we've got the silver bullet on that yet. Jamie kind of alluded to it. But we have got quite a few bets in there. We've got new car stock on the platform, which is doing very well with retailers. We've got new car stock with OEMs that we're still a little bit don't feel like we've got it quite right.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

And we've got leasing deals through Autorama. So, we're trying to be focused on the areas outside of retail and they're the main areas. I think as Catherine mentioned, it's obviously a topical conversation, but automotive finance is big. The commission pool there would be as big as what our core used car advertising market is. So, it's another obvious one where it feels like we can play some productive role in helping solve some of the issues the regulators are seeing.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

But it's fair to say unlocking the integration with lenders is not the fastest of things to do. On the data, it's not as linked. The VIN data is less linked to our vehicle check, although it's kind of linked in there. It allows us to get the exact specification on a vehicle. It actually goes much, much deeper than that.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

What the VIN data allows us to do is drive our search much better than any other person can drive their search. And that includes valuations as well, because we know exactly what was on the car when it was built. Now, we don't own that data. That data is very much owned by the OEM, but it's not that easy to get at the data because OEMs are reasonably protective about that. They do it with us because they see a direct influence on residual values and all those sorts of things that matter.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

They don't want spec misdescribed by all their retailers. So, kind of the process of it and building it into our taxonomy, that taxonomy is proprietary. It is just one of many things that we draw into it.

[Jamie Warner, CFO & Director at Auto Trader Group]

Sorry, just two things I'd just add to Nathan's answer. Just on the finance, it still is very much working with retailer customers, trying to help them sell their own finance, which is the current deal builder execution. Asked about the kind of tension point. Yeah. We wanna make it seamless online experience on Autotrader that leverages a really good forecourt experience because the role that they would have been doing at the forecourt has been been better done online. Just to just clarify that one.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Yeah.

[Catherine Faiers, COO & Director at Auto Trader Group]

On, retailers, and I think you asked specifically around gross margin rather than net margin question. I think there's been a few cyclical reasons over the last six, twelve months why gross margins have probably been at the softer end of the spectrum in recent years. The first one that we touched on in the presentation was the gap between retail and trade margins, and we have seen a period over the recent months where that gap has narrowed slightly as we've seen trade prices stabilize and appreciate slightly more strongly than we have on the retail side. Retailers have still been focusing on pushing that speed of sale because of holding costs, supply side and other pressures. It does mean that we've seen a slight narrowing.

[Catherine Faiers, COO & Director at Auto Trader Group]

Now that is that typically there are fluctuations in that over time and we've seen windows where it's traded back and been very strong. We're expecting that to be a relatively short term structural pressure, like trade and retail do typically trend back in line with each other. The other two, smaller trends that have been having an impact was finance commission rates or levels haven't reset post the October 25 when we saw the outcome of the court cases. We have seen a slight dip in finance penetration on on used cars. Typically, we think it's been more driven by movements in APRs and the changes we've seen in interest rates over the couple of last couple of years rather than anything structural.

[Catherine Faiers, COO & Director at Auto Trader Group]

Finance penetration rates have actually been trending up again very slightly in the last few months, but that over the last twelve months or so has been overall used car finance penetration has been a bit softer because of interest rates, so that would have impacted gross margins. And then finally around ancillary revenue streams, some of the FDA rulings around gap insurance and some of those other products, some of those for some cohorts and segments of our customer base were more important revenue lines that have either compressed or for some have have disappeared. So those three pricing being the main one, but the other two have definitely had an impact as well.

[Jamie Warner, CFO & Director at Auto Trader Group]

And then lastly is on the balance sheet. So the balance sheet has always historically been predominantly Vans. Obviously, I think where we believe the growth will come from is more in car leveraging the Autotrader platform. I think certainly I'll tell you that we're not doing any of the balance sheet, but I just think it should be a lower share and there should be less reliance on it. There's still a long term plan that eventually we want to discontinue it altogether because it's not a core part of our business proposition.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Welcome to Alastair.

[Alastair Reid, Equity Research - Media at Investec]

Thanks very much. Alastair Reid from Investec. Maybe I'll balance it out and and just ask one. You mentioned a couple of areas that you sort of mentioned with the VIN data that sort of helping you have better search than others that you mentioned about deal builder being available to everyone and all sort of vehicles that helped differentiate you sort of further.

[Alastair Reid, Equity Research - Media at Investec]

Do you see any sort of changing competitive threats or dynamics in the market that are making you think about that and do things to reinforce your position?

[Catherine Faiers, COO & Director at Auto Trader Group]

I think the competitive landscape, from our, I guess what we would call our marketplace peers, I don't think we've seen any real change, certainly not in our relative position or in any of the actions that they've taken that would make us do anything different when we think about the bigger some of the bigger structural trends, whether that's, what Google might do with their, vehicle listing products or Amazon in The US or where, some of the generative AI apps and things might take it. I think we always come back to the foundations that we have in the areas of differentiation, and they are all around our our brand and our relationship with consumers and how we are investing, maintaining, deepening our relationships with consumers, and they come down to our technology and data. And the foundations of our marketplace having more buyers, having more retailers on the other side means that we just see millions more observations than anyone else will see. And the more we can keep those foundations really, really strong, the more data observations we get, which means our whether it's our data products that we serve up through Autocoder Connect and Portal or whether it's our AI powered products, they will become more powerful.

[Catherine Faiers, COO & Director at Auto Trader Group]

The the depth with which we've gone to within our vertical combined with our our brand is how most people still find us discover it. Those two areas of strategic advantage, I think mean regardless of what happens to how and where consumers navigate themselves into the buying journey, we will have a really important role to play. So I think it's more we feel even more that we should double down on the the areas that make us really different. There's no one threat or no no one competitor that we sit there and think, oh, you know, we should be worrying about them more or focusing on something different as a result.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

The only thing I might add quickly, it might be self evident, but some of the areas, certainly within our traditional marketplace competitors, that's true. We do get a question occasionally from investors around, what about ChatGPT? What about AI? What about Amazon? And actually the best answer to any player that is looking to globally scale, but at a relatively shallow level is to go super deep in your own vertical with data.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

So you can always provide that much, And as it relates to AI, it is all about the data that Catherine spoke about. So, I think it's true of traditional competitors, also some of the bigger questions that we get around how some of these technologies evolve. We're very much adopting those technologies, but doing that with really, really deep data that just is very, very hard to get, as Kathryn said, the vast majority of it is proprietary. It comes to Laura and then Karen.

[Lara Simpson, Equity Research Analyst at JP Morgan]

Thank you. Morning. It's Laura Simpson from JPMorgan. I just wanted to come back mostly to the outlook and the guidance. So stock leave is going to be marginally down, but you have said you'd expect to sort of pick that up with prominence packages.

[Lara Simpson, Equity Research Analyst at JP Morgan]

I just wanted to really understand that dynamic. I suppose my thinking has been with speed of sale quite high, there was maybe less of a need for prominence or pay up from a dealer perspective. So just to try and understand that dynamic this year and how to think about it. And then again, in terms of the retail outlook, you've guided for flat this year, which I think is encouraging. Is there any assumption on mix effect on the ARPU this year?

[Lara Simpson, Equity Research Analyst at JP Morgan]

And then going forward, the narrative used to be that you were guiding for that four quart number to be down in years to come because of consolidation closures. Obviously, we have a lot more dealers post pandemic. Has that changed in terms of sort of the top line algorithm in years to come? Is it more sort of flat retailer numbers now, similar change on ARPA? Just to talk through those dynamics. Thank you.

[Jamie Warner, CFO & Director at Auto Trader Group]

So I can so I can cover cover all of those off. Mean, I think I mean, the stock and prominence, like, we're sort of saying, it's likely be a small negative on stock and a small positive on prominence. They're not actually directly related. It's more just the quantum being relatively similar. I think you are absolutely right that, and we've seen this through the last financial year, that when speed of sale is fast, there isn't as much need for Prominent products.

[Jamie Warner, CFO & Director at Auto Trader Group]

But along the lines of being a bit more proactive around stock, we're also being a bit more proactive around Prominent because we do still believe that Prominence products can still drive better margin improvement even when speed of sale is fast. So there is value in the product set regardless of the market dynamics, probably quite customer specific. That's why it's only sort of steered to be at the smaller end of contribution where historically it's always sort of been maybe a 1% to 2% contributor to that product lever. But hopefully, again, to Will's question around progress through the year, we're exiting in a better position even if speed of sale remains relatively fast. I think the retailer guide is flat for this year is really dictated by what we're seeing right now.

[Jamie Warner, CFO & Director at Auto Trader Group]

The retailer number is very stable. We've gone through the pricing events, very low levels of elasticity. Customer numbers feel good certainly by historic standards. The mix, I don't foresee radically changing through the year. You never quite know, but I think the steer with the guide is flat and consistent.

[Jamie Warner, CFO & Director at Auto Trader Group]

I think long term, sort of notoriously got this wrong. I think I would still say that the market, I would expect it to, at a very slow rate, consolidate if you're looking over a five and ten year period. It certainly was prior to the pandemic. So I think, if you're modeling out '27, '20 '8, '20 '9, I wouldn't have loads of retailer decline, but, you know, half a percent is is is probably what I would what would be my best estimate acknowledging I'm I'm often wrong.

[Ciarán Donnelly, Equity Research Analyst at Berenberg]

Yeah. Thanks. It's, Kieran Donnelly from Berenberg. Three from me. First one, I guess, just clearly, the deal builder monetization, approach is changing.

[Ciarán Donnelly, Equity Research Analyst at Berenberg]

But I guess just going back to the Investor Day a few years back, can you clarify that you think the absolute revenue opportunity hasn't changed? To I guess if we look at user experience and user journey on-site on probably a three to five year view, how dramatically different do you think it will be versus today? I every, I guess, advert automatically default to a deal builder type user journey, or will we still have the, let's say, traditional approach we have today? And thirdly, I guess, just in terms of, stock continuing to be a headwind, Clearly, turnover is is quite quick at the moment. But how much of it do you think is, your average retailers becoming more efficient at determining how many slots they need?

[Ciarán Donnelly, Equity Research Analyst at Berenberg]

Obviously, using products like your own data inventory products, in fact, is they're less fat in terms of what slots are required going forward as dealers become more efficient. Thanks.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Like I said, the first one? Yeah. So, I mean, it's an impossible question in some ways because it's all about forecasting and who actually knows. But if you take the real fundamentals of your question, what we talked about is we felt as though we could increase the take rate essentially on cars that go through Deal Builder because it would save time, be more efficient for retailers. And that was basically then multiplied by some penetration rate well, multiplied by the number of retailers on the product times the percentage of their transactions that go through Auto Trader.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

We're going to make that faster, much, much quicker than what we would have otherwise done. So, we're going to have most of our retailers. The percentage of their transactions, I imagine, will probably hover around where it is. It does depend on how light the Deal Builder product that we launch is and how we define a deal. But for all intents and purposes, let's say that doesn't really change.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Over time, we can grow that. What's different, obviously, is the multiplying by we talked about the 120 or the direct upticks. It was quite neat way of being able to calculate those economics. The reality is they will need to surface through two things. One might be through future events because we'll just be adding a lot more value.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

It's not just talking about audience increasing, we're talking about deals increasing. And then as Catherine mentioned, it is just a base product that we're talking about. So, things like finance, part exchange, there are lots of opportunities within that that might provide opportunities for further event products within that digital retailing stream. They may even have some standalone element to them. To answer your question really directly, I have no reason to believe that the monetization opportunity is any different at all, but the way that we have to go about it or the way that we're choosing to go about it will be different.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

If anything, the near term answer to your question is the monetization is bigger than what we originally were planning for.

[Catherine Faiers, COO & Director at Auto Trader Group]

Terms of the user experience on Autosrader and how the car buying journey feels for consumers. I think the two biggest changes in consumer experience over the coming years will firstly be around our search experience and how we make search more intelligent. Back to the data question, clearly, ability to add filters, enable consumers, and help them refine their search in quite a structured way today is very powerful because of all the data we have. In the future, there's lots more we can do to make the search experience much more intelligent for consumers. So when we see you interacting with Autotrader, we can get much smarter in how we then serve you other vehicles, other content.

[Catherine Faiers, COO & Director at Auto Trader Group]

You've sent us some signals about what you're interested in, what you want to do. And so we think how we how we navigate consumers through the vast choice that we have on Auto Trader, we can make more powerful. And that's a big strand of our search evolution work and making search more intelligent for for buyers. Second big part around deal builder is really all about how we better connect, buyers and sellers in the journey. So today, we deliver 15,000,000 odd leads a year, and now increasingly we're delivering more and more of those leads as highly qualified deals that we know convert much, much better for retailers, save them time to get them out of hours.

[Catherine Faiers, COO & Director at Auto Trader Group]

There's all sorts of reasons why a retali would much rather have a deal than a lead. Today, still, of the leads that we deliver, they still typically only account for about a third of the sales that we influence as Autotrader because many consumers will walk in to the retailer forecourt having spent minutes, hours on Autosrader finding their car. So a lot of what we think we can do through what we know about the buyer and the behavior is better connect earlier in the journey the buyer with the retailer to help them get to a point where they're having more efficient online and more efficient offline interactions to connect the journey more powerfully. So the product page and the experience that a consumer is having on Altusrader will evolve quite significantly in the coming years. Firstly, to meet that baseline deal builder journey so that that is the buying journey on Altatrader, and then in time to build in, you know, whether it's appointments, whether it's more of the insight that we know about the buyer or about the retailer into the journey as well.

[Catherine Faiers, COO & Director at Auto Trader Group]

So both intelligent search and how we navigate search and then a more connected buying journey through the product page, I think there'll be lots of evolution there in the coming years.

[Jamie Warner, CFO & Director at Auto Trader Group]

And the last one just on the on the stock, headwind. I I think it's a great it's a great question. I do think there will be there's definitely some work in the customer base of the products that we've, made available is is naturally helping our customers sell cars quicker and obviously you've got higher finance costs that also incentivize them to do so. But I think it is like a contributor. I still think the market is a big part of it.

[Jamie Warner, CFO & Director at Auto Trader Group]

I only say that through when you triangulate kind of demand with pricing, with speed of sale, they all sort of move in a direction that you can understand why it's accelerated. If demand had really softened and speed of sale was still quick, I'd say I'd lean more on that fact and the kind of efficiency, but the fact that three things kind of triangulate. I'm sure what you say is there is something in it, but I still think there's a big chunk of the market in there as well.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Might as well have something to with Jess.

[Jessica Pok, Equity Research Analyst at Peel Hunt]

Hi. It's Jess Kapok from Peel Hunt. Hopefully, two quick ones. The first is with, deal builder going into the core packages. Are you putting some marketing, incremental marketing behind that?

[Jessica Pok, Equity Research Analyst at Peel Hunt]

And then second one is just on the a the AI functionality you've rolled out so far has been into the core packages. Is there potential for additional products to be built, with you know, around AI, which you could charge separately in the future?

[Catherine Faiers, COO & Director at Auto Trader Group]

Do you want me to take both of Yep. So on marketing, I don't think we'll spend I don't think we'll look to increase the relative share of marketing spend as a percentage of revenue, but I think we will increasingly look to make the deal builder journey more prominent on the platform. To be honest, the biggest marketing lever we have is the ten, eleven million unique users we get each month navigating, finding their way to mostly our app these days. So how we choose to use that app real estate to help consumers navigate through the deal builder journey is probably the most powerful marketing we can do. That said, we may well supplement and increment with some more traditional marketing investment around that, but we don't expect that to be on top of our typical marketing budget that we allocate.

[Catherine Faiers, COO & Director at Auto Trader Group]

In terms of AI and product evolution and whether there might be products we monetize standalone, I think, you know, back to the product conversation, we talked about four different areas where we have product streams, if you like, that we're running with and where we're bringing and evolving products to market. I think within those four streams across advertising, data, or Trader Connect, AI, CodeDriver, and then Deal Builder, there are components within each that we could look to think about targeting a particular segment of the customer base and, you know, whether it's a trial or proof of concept or whether it's actually monetizing early to really validate the value proposition to prove that we can scale the product. That's definitely something we've done in the past and is definitely something we'll look to do again in the future where we feel like the the product that we're trying to bring to market would benefit from that extra layer of either validation or testing or proof of the value proposition.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Okay.

[Nathan Coe, CEO & Executive Director at Auto Trader Group]

Well, thank you, everyone. That brings us to the end of the presentation, and thank you for all those that joined us online as well.

Participants

Executives

• Nathan Coe, CEO & Executive Director
• Jamie Warner, CFO & Director
• Catherine Faiers, COO & Director

Analysts

• Andrew Ross, Managing Director at Barclays
• William Packer, Head of European Media & Internet Equity Research, Managing Director at BNP Paribas
• Sean Kealy, VP - Equity Research at Panmure Liberum
• Alastair Reid, Equity Research - Media at Investec
• Lara Simpson, Equity Research Analyst at JP Morgan
• Ciarán Donnelly, Equity Research Analyst at Berenberg
• Jessica Pok, Equity Research Analyst at Peel Hunt