CAR Group Limited

everyone, and thanks for joining us to discuss Car Group's H1 FY26 results. Over the next 30 minutes, I'll provide a brief summary of our half-year results and our strategic progress, and this will be followed by a Q&A session where I'll be joined by members of our leadership team. Joining me today in Melbourne is Rachel Scully, our Agent of Investor Relations, and dialed in, we also have Craig Fraser, the MD of Car Sales in Australia. FB Kim, the CEO of NCAR in South Korea, David McNim, the CEO of Trader Interactive in the United States, and Eduardo Juscevic, the CEO of WebMotors in Brazil. So we'll start with slide five, which illustrates the continued strength of Carbrook. We've delivered a great result and extended our track record of growth. On a constant currency basis, we delivered 13% growth in revenue, 12% growth in EBITDA, with EBITDA margins remaining strong at 54%. Adjusting net profit after tax increased by 12% in constant currency and need results reflect the high quality of our earnings as well as that disciplined approach to scaling the business. Our long-term financial performance underscores the effectiveness of our strategy to reflection of our commitment to making vehicle transactions faster, simpler and more seamless for our customers. What this trend also demonstrates is the resilience of our business model and by diversifying across geographies, products and verticals, We've built a business that's capable of delivering consistent growth regardless of the macro conditions. Turning to our operational highlights, the core of our business is consumer engagement. And all these metrics, as you can see, are exceptionally strong. We've got healthy levels of inventory with 2.4 million vehicles online. Our dealer base has grown nicely, which proves that our value proposition is resonating with our customer base. And most importantly, our audience metrics are very strong with unique audience, sessions and leads all up strongly on PCP. And whilst the growth was led by Australia, Brazil and South Korea, we've seen a notable improvement in the US market, which is now showing positive momentum against the prior year. Turning to slide eight, which underscores the strength and diversity of our retail brands and our strategy, as many of you will know, is to identify and invest in large, high-growth markets where our proprietary technology and IP deliver long-term, sustainable value for shareholders. And the returns from our international portfolio to date have been incredibly strong and we continue to see significant runway to grow in all of our regions and all segments of our portfolio. Our brands remain the primary destination for buyers and sellers in every market we serve. We've got very strong market leadership positions in each market, and the leadership is underpinned by our commitment to product innovation as well as strong local relevance. And importantly, we're driving excellent growth in unique audiences across every region, which you can see here. This reflects the ongoing success of our investment and customer experience and also marketing, and it drives high value for our sellers, and it also solidifies our market-leading positions. And most importantly, it's great to see the US with double-digit growth. Onto our outlook slide. Based on the strong momentum we've seen in the first half, our full-year guidance remains unchanged. Our diversified portfolio and discipline execution give us a very high degree of confidence in delivering against our FY26 expectations. And as a reminder, for the full year, we expect to deliver pro forma revenue growth of between 12% and 14%, pro forma EDOTAR growth of 10% to 13%, adjusted NPAC growth of 9% to 13%, and all these figures are in constant currency. The outlook is testament to the strength of our global strategy and the operational momentum we've got across every segment. Our strategy is focused on three core pillars. strengthening our core marketplaces through continuing reinvestment, extending our platforms with new products and high-value experiences, and diversifying through innovation and disciplined investment. What makes this possible is operational excellence. And by leveraging advanced technologies, particularly AI, we're lifting performance across the group. We are driving efficiency to enable us to invest in new growth opportunities whilst also sustaining high margins. And ultimately, it's our culture that ensures this execution. We've recently launched our new global AI hub, CG Lab, which is based in Brazil, where there is a strong pipeline of amazing AI talent, including some existing people working in our Brazilian business. CGLab is building shared core agentic AI capabilities once and then deploying them across our marketplaces, which is going to enable speed, efficiency, and economy of scales across all of our businesses. The key areas of focus for CGLab will be developing end-to-end buyer and seller agents and integrating our experiences into generative platforms. Importantly, CGLab won't result in incremental investment for the group. We're innovating within our current investment levels. And this is supported by the efficiencies across the business that we're getting using AI, particularly in the software development. Our AI strategy is built on three unmatched advantages. First is our clear number one brands that customers rely on in increasing numbers. Second is the unique data at scale. And third is the integrations that we have across the entire ecosystem, including with dealers and OEMs. This combination of trust, data and reach allows us to deploy AI in ways that others cannot replicate. And we're already seeing a direct uplift in engagement, conversion and transaction confidence as a result of this. Buyers are finding cars faster through conversational search. Dealers are sourcing vehicles more effectively and creating higher quality listings. And importantly, we're delivering incremental revenue from AI. We see this today through the adoption of premium dealer tools, an increase in high-quality leads and also higher inspection volumes. We also see a significant revenue growth opportunity going forward as we continue to rapidly scale these AI capabilities. A fundamental driver of our competitive advantage is the infrastructure we've built beneath our marketplaces. Over many years, we've developed very deep integrations with CRMs, dealer management systems, finance providers, and a whole heap of other critical platforms in the vehicle industry. And this creates a technical ecosystem that is unique to our marketplaces and incredibly difficult to replicate. Three recent strategic acquisitions represent a natural extension of our strategy here. We've acquired ERP systems that power dealership operations in Brazil and South Korea, as well as a specialised CRM business in the verticals we operate in the United States. By bringing these platforms into our portfolio, we're able to provide even more value to our dealer partners. They give them the operational capabilities and market insights they need to run their businesses more effectively. And critically, these deeper integrations also give us richer data on inventory pricing and vehicle history for our consumers. Overall, this ecosystem for dealers enables us to provide unique market insights on pricing trends, inventory velocity, buyer behavior that no individual dealer could access on their own. And it helps them to make smarter decisions about what to stock, how to price, and when to act. And for consumers, the connected ecosystem translates into a better experience as they benefit from seeing quite real-time inventory accuracy, personalized recommendations, transparent transaction pricing, instant financing decisions, seamless trade-ins, vehicle inspections, and the confidence that comes from transacting on a platform that they trust on and rely on every day. We're transforming how customers discover vehicles on our platform. In Australia on car sales, we've released conversational voice-based search to 100% of our iOS audience with Android to follow shortly. And this makes finding the right car more intuitive and natural. Customers can now search similar to the way they think and talk, rather than filtering through rigid category structures. This is just the beginning in terms of our use of voice-based conversation search, and we see it as a significant opportunity to improve the customer experience going forward. In resilient work motives, we've gone even further with a fully AI-driven search experience, rather than structured search on our home pages. And the early results indicate that buyers are twice as likely to submit a lead if they use this advanced AI search capability, which is a significant improvement. We're also integrating the LLN environments like ChatGP today to ensure we're present wherever customers do their research, just as we've been doing with traditional search engines for many years. AI is also strengthening our dealer value proposition across our entire portfolio. It's making their operations more more efficient, and their inventory more compelling. In Australia, we've embedded AI dealer insights directly into Autodate, our dealer management platform, and it's providing intelligent sourcing recommendations, real-time pricing insights, as well as AI-determined premium ad placements. And this helps dealers make smarter inventory choices with less effort. In Korea, NCAR is using AI in a transformational way with regards to its guaranteed inspection product, We've cut inspection times in half from 30 minutes down to 15 minutes whilst also improving the accuracy of the product. And at Trader Interactive, we've launched AI merchandising tools that help dealers create stronger listings with less effort. We've got the auto stock picker, AI generator descriptions, as well as image enhancements. These capabilities are all deepening our integrations with dealers and reinforce the value we're delivering to them across their entire workflow. Smart inquiry qualification has been rolled out across all of our platforms and is delivering material results on both sides of the marketplace for buyers and sellers. For buyers, we provide always-on 24-7 support that answers questions instantly and also accelerates the path to dealer. On incurring career, our AI home agent has supported a 55% increase in completed transactions, which is amazing. And for dealers, it's about high-quality leads. The AI services high-intent conversations and qualifies buyers before dealers engage. On-web motors lead nurturing automatically warms up early inquiries, and dealers are seeing four times more buyer engagement as a result. Moving on to some country-specific highlights, starting with Australia, we're seeing really strong traction on two key initiatives that deepen our market position. C2C payments have now processed $268 million worth of transactions since launch. Importantly, it's taking away friction in the private seller process, which is going to unlock future growth opportunities. And this is evidence to revise using C2C payments, having a 2.5 times higher net promoter score than those going. And then on the dealer side, we've modernized AutoGate, which I mentioned a little bit about before. And so dealers are getting AI-powered time-to-sell insights, AI call transcriptions, AI systems for our live market option platform, and automated opportunity identification. And it's making Autogate even more of a central tool to dealer hub operations. Two more Australian highlights that underscore our market strength. Instant offer continues to perform very strongly, which has been driven by us spending more on brand awareness and driving better pricing. The launch of trading extends instant offer even furthering by capturing sellers. At the moment, they're buying their next vehicle, which broadens our addressable market. And then on media, our revenue from new OEM entrants is up 49%, which is very important given the dynamics in the Australian market, and it provides us with a much more diversified advertiser base. As you can see from the financial performance in North America, we're seeing excellent momentum. On dealer products, we've just rolled out a tiered packaging offering of Core, Pro, and Ultimate, and that deepens our integration with dealers and creates clear upgrade paths. The new products span things like listing badges, vehicle history reports, AI merchandising. We've got pricing insights, finance integrations, and lead nurturing. And the repackaging has resulted in a circa 6% to 7% uplift in yearly yield, which is really impressive. On media, the growth we're achieving is also very impressive. Direct media revenue up 49%. And NARA, our in-house agency, also performing very well. It's grown its customer base by 300%. And we're now landing major new accounts like BRP, one of the world's largest power sports OEMs, and Winnebago, the leading outdoor recreation manufacturer. Three more North American opportunities, which is showing great traction. As you know, the marine market represents a significant opportunity. It's a $1 billion addressable market and boat market gaining momentum. Average lead per dealer up 110% and site visits are up 30%. Our data business SSI is continuing to accelerate. Great to see revenue growth jumping from 10% to 18% as dealers are increasingly relying on our market share insights to benchmark their performance. across different segments and geographies. And then we've also launched our private concierge product, which expands private seller options in RVs and Marines. It offers end-to-end support for sellers who want premium service and maximized return, complementing our existing self-service listings and cash offer products. In Latin America, WebMotors is strengthening its market lead. National expansion beyond Sao Paulo and Rio is really working. We've got 4.4 times the traffic of our nearest competitor, which is great to see. Our wallet loyalty program is also scaling very rapidly, and it's now used by over 10,600 dealers, and that's our key partnership with Santander. Wallet revenue is up 51% and this deepens dealer engagement by embedding financial services directly into their workflow. Two more Latin American highlights to talk to. Our depth products, Feirao and Accelerador, are also performing very well. Feirao up 151% and Accelerador is up 61%. This surge in premium product adoption demonstrates the value that dealers are getting from our upgraded offerings. and also reflects Webmotor's amazing market leadership. On media, great to see the progress we're making in what is a massive $1.5 billion addressable media market opportunity. OEM revenue is up by 19%. We're also seeing really good adoption of some of the products that we've been able to take out of Australia and put into Brazil, things like sponsored cards, OEM showrooms, pre-order campaigns and direct CRM integrations. In Korea, guaranteed inspections are continuing to scale rapidly. That's our flagship product in Korea, and we're driving great value for both consumers and also dealers. We've tripled our inspection center footprint. It's gone from 22 branches in FY17 to 66 today, and we've got plans to take that to more than 90 Importantly, the launch of our Guarantee++ product adds more comprehensive inspections and it's a premium tier which creates substantial revenue upside moving forward. We're also using AI to really improve our inspection efficiency, which we mentioned earlier. Inspection times have been reduced by 50% while maintaining or improving quality. And this product really does position NCAR as the trusted leader in Korea's used car market. Two more career highlights to call out. Dealer Direct is delivering exceptional growth. Our online trading platform, MeetGo Transactions, are up 102%, driven by increased marketing and also improved product discovery. NCAR Home, our fully digital car buying platform, is also surging. We've got over 46,000 cars now listed for NCAR Home, and that's up 16%. And even more impressive is completed transactions up 50%, which as we mentioned before, is being driven by the 24-7 AI agent that we've integrated into the service. On to financials now, the P&L summary. And before we dive into segment performance, we'll just go through the items below EBITDA, net finance decrease, reflecting stable debt and lower interest rates. The effective tax rate of 20.5% is marginally higher due to the expiry of trader interactive tax losses and the non-controlling interest increased as WebMotors' strong profit growth flows through to our minority shareholder in Santander. This performance across the board enables us to declare an interim dividend of 42.5 cents per share, which is up 10% on PCP and represents an 82% payout ratio. Our adjusted results exclude long cash amortization of intangibles and one-off costs from exiting the Australian tire business, and there's a full reconciliation in the appendix. Then onto the segment summary. We've delivered exceptional performance across all of our segments, revenue and earnings growth in every market. Latin America led this at 23% revenue growth. North America, a great outcome, delivered 13% revenue growth. Asia was up 17% and Australia delivered solid growth at 8%. These four grades of strength and revenue growth demonstrates the resilience of our global portfolio. On to Australia, which delivered 8% growth in both revenue and EBITDA. The automotive market in Australia remains very robust. Consumer intent is still firmly skewed towards used cars at 59% and that supported our strong used car lead volume outcome for the half. Used car prices have stabilised now at 39% above pre-COVID levels, which has enabled dealers to maintain very healthy and strong gross margins. Revenue growth in the Australian business was broad-based. Dealer was up 10%, and that was mainly driven by lead volumes and Jeff's product uptake. Private up 5%, which was driven by an Arison offer product growth. Media, great to see that up double digits, up 10%, which is driven by advertiser and product diversification, as well as a robust new car market. And then data and research was also up 6%, which was largely through new customer acquisition in our Red Hook business. Really pleased with the North American performance. Revenue up 13% and EBITDA up 11%, which is great performance. From a market perspective, RV registration stabilized and are now growing again, which is really pleasing. Power sports market returned to growth after a pretty soft market over the last couple of years, and trucks remain strong with 4% growth in registrations. The revenue growth in America was also broad-based. The key drivers in our dealer business were training and product uptake and yield improvements. We also had very strong growth in our media business, which was supported by car groups, advertising technology, contributions also from the marine business, our recent acquisitions, as well as private value-based pricing. And this demonstrates the diversity of our model in the US. On to Latin America, another outstanding path, revenue up 23% and EBITDA up 29% in constant currency. Brazilian auto market was very strong with 8.7 million vehicles transacted, which was up 13%. And this is despite interest rates still remaining elevated. And it demonstrates the structural strength of the Brazilian market and also our significant growth runway. Growth was driven by multiple factors. National expansion is clearly a major factor and we're adding dealers and more audiences. as that continues to scale. The premium products are delivering great outcomes. Wallet loyalty programs also driving higher revenue. And finance, great to see that up 20%. And that's proven by improved credit access and better loan processes. And actually business also had a great first half. Asia delivered very strong performance with revenue up 17% and EBITDA up 13%. Growth was driven by key strategic initiatives. Guaranty now accounts for 60% of new listings, which is really impressive. And that growth in Guaranty has been supported by our expanded inspection centres, as well as the AI-driven efficiency gains we mentioned earlier. NCAR home transactions up 55%, and great to see our dealers direct product returning to growth, which is failing rapidly due to the strong uptake of our NetGo product there to dealer direct. On to EBITDA margins. Margins remain strong at 54% while we're continuing to invest for growth. Australia's margins were strong at 65%. Latin American margins were up to 38%, which is great to see driven by operating leverage from the amazing revenue growth we're getting there. North America saw a modest decline to 59% as we invest in our marine expansion. And then Asia declined slightly to 44% as we opened new guarantee branches and also scale our dealer-directed products. This margin performance demonstrates our ability to drive growth whilst also maintaining excellent profitability. Balance sheet and cash flow were strong again. We converted 95% of EBITDA to operating cash, reflecting the great working capital profile of marketplace businesses. Leverage is prudent at 1.8 times net debt to EBITDA, which gives us great financial flexibility. CapEx held steady at 10% of revenue. AI is delivering meaningful cost efficiency for us in terms of software development. And we're building features faster and with less engineering resource. And we see that efficiency only increasing as we continue to optimize our AI-assisted development workflows. And right now, we're reinvesting those savings that we're getting back into accelerating our AI roadmap, and that's the right trade-off at this stage because of the direct return on investment and revenue returns that we're getting. But over time, there's optionality as to how we deploy these savings. On to slide 37, which provides context supporting the outlook statement, and nothing has changed here since August, so I won't talk to this slide. And then just to wrap up, it's been really excellent performance in the third half of The car group, we've delivered 13% revenue growth and we're on track for our fifth consecutive year of double-digit growth, which is excellent. Earnings momentum remains strong as we invest in marine scale dealer direct in South Korea. North America, great to see the growth there, demonstrated the strength of our portfolio with robust growth across multiple verticals. Our AI development, as you can see, is really developing rapidly. We're enhancing customer experience across all our platforms while also creating operational efficiencies, which is improving speed, accuracy and scalability across our platforms. We've reaffirmed our FY26 outlook, which reflects the confidence we've got in our strategy and the momentum across the business as we begin H2. We're executing really well. We're investing for the future and we're delivering strong returns for shareholders. Happy now to hand over to questions on the line.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Eric Choi with Baron Joey. Please go ahead.

Morning, guys, and good result, Will and team. Just first question, just on TI. I was wondering if it's on a potentially improving revenue trend now. It delivered 13% growth first half, but in the second half, pricing packages will be on one Jan versus your changes in April last year. And then you mentioned you won that Winnebago contract in media, and it looks like Marine is going to keep ramping. So my first question is, are there potentially more drivers of growth in second half 26 additional to what was in the first half for TI? Sorry, do you want the other questions as well, Will?