Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Auto Trader Group PLC (ATDRF, Financial) reported a revenue growth of 8% and an operating profit increase of 14% for the first half of the year.
- The company achieved record levels of consumer engagement, with cross-platform visits up 7% to 82.6 million per month.
- The average revenue per retailer increased by 6.3% year-on-year, driven by strong pricing and product events.
- Auto Trader's Deal Builder product has seen significant progress, with 1,500 retailers participating and a 10-fold increase in deals compared to the previous year.
- The company returned GBP122.2 million to shareholders through share buybacks and dividends, demonstrating strong cash generation and shareholder returns.
Negative Points
- Despite a 5% increase in unique cars sold, the acceleration in speed of sale has not translated into a meaningful increase in live stock, leading to a negative stock lever expectation for the full year.
- Autorama, a segment of Auto Trader, reported an operating loss of GBP2.8 million, highlighting ongoing challenges in the leasing market.
- The digital services tax, recognized for the first time, impacted Auto Trader's operating margin, which contracted slightly to 70%.
- The OEM advertising product has not performed as expected, with challenges in integration and presentation of new car offers affecting its effectiveness.
- The market dynamics, including faster car sales and supply constraints, have created headwinds on revenue, impacting stock lever guidance.
Q & A Highlights
Q: Is Co-Driver going to be included in the advertising packages for the pricing event next April? How does its value compare to previous modules like Auto Trader Connect?
A: (Catherine Faiers, COO) Co-Driver is seen as an umbrella for multiple features and products, similar to Auto Trader Connect. We aim to include it in advertising packages as it improves consumer experience and delivers value for retailers. The product is expected to be as valuable as previous offerings, though we're still determining its exact positioning.
Q: Can you provide an update on Deal Builder's monetization and its impact on retailers?
A: (Nathan Coe, CEO) We're pleased with Deal Builder's progress, adding retailers consistently. Monetization is underway, and conversion to paid is satisfactory. Retailers are seeing increased consumer engagement, with deals converting at double the rate of other inquiries. We aim to have all retailers monetized or on a trial basis within 6-12 months.
Q: How is the recent court judgment on automotive finance affecting the market and Auto Trader's role?
A: (Catherine Faiers, COO) The market has stabilized after initial dislocation, with lenders resuming operations. We haven't seen a reduction in credit availability. The judgment may lead to more transparency and choice, potentially increasing Auto Trader's role as an aggregator of finance products.
Q: What are the medium-term expectations for the stock lever, given current market dynamics?
A: (Jamie Warner, CFO) The stock lever is impacted by fast speed of sale and supply tightness in certain car categories. While we can't predict exact trends, increased new car registrations should eventually support stock levels. Over the long term, we expect market dynamics to normalize.
Q: How is the What Car partnership contributing to Auto Trader's new car strategy?
A: (Catherine Faiers, COO) The partnership is a source of traffic, bringing unique visitors to Auto Trader. We pay What Car for traffic, leveraging their brand's association with top-of-funnel discovery. The partnership is structured for the long term, focusing on incremental unique users.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
