Autotrader Group Plc

Good morning, everyone, and welcome to Autotrader's half-year results for the six months to the 30th of September 2024. As usual, I'm joined by our COO, Catherine, and our CFO, Jamie, who will be both presenting and joining me for Q&A later. Our financial and operational performance in the first half demonstrates both the strength of our position and the strength of the partnerships we've built with our customers. Over this six-month period, we've had record levels of engagement and activity on our platforms. There are more buyers using AutoTrader, more retailers, more cars transacted than last year. While all of these dynamics are incredibly positive, the nature of these market dynamics has not necessarily benefited us in this set of results as much as you might expect. I'll come on to explain this shortly. On top of this growth in our core advertising marketplace metrics, we've made good progress with DealBuilder. With growth in the number of customers, the amount of stock, the number of deals generated, and have commenced monetizing the products. Finally, and perhaps most importantly, I would like to say thank you to our people, customers, shareholders, and wider stakeholders for their continued trust in AutoTrader. Starting with some of the highlights during the year. At a group level, revenue grew 8%, operating profit grew 14%, and basic earnings per share grew 22%. In the core AutoTrader business, revenue growth was 9% and operating profit excluding the impact of digital services tax, which was recognised for the first time this year, was 10%. Retailer revenue growth of 8% was in line with our expectations, although the mix was not as expected. The number of retailer forecourts increased by 2%, largely through smaller independent and non-car customers. This mathematically has a dilutive impact on average revenue per retailer, which increased by 6.3% or £169 year-on-year. The growth in average revenue per retailer was underpinned by a strong pricing and product event in April 2024, where we launched our third Autotrader Connect module. As already touched on, we continue to see very strong levels of activity on Autotrader. We've achieved record levels of consumer engagement in the period, and our lead over our nearest marketplace competitor has increased to over 10 times. Finally, on DealBuilder, we've made great progress over the past six months, and our focus continues to be on scaling the number of customers and stock, increasing consumer engagement and conversion, and continuing to gradually monetize the product. Whilst we've reported a good set of first half results, certain market dynamics have created some headwinds on revenue, which has resulted in a lower stock lever guidance for the full year. Today we want to give everyone a clear understanding of what has driven that trend. The chart in the top left shows the increase in number of visits on AutoTrader which have reached record levels as mentioned earlier. Seeing a further increase over this six month period on an already strong prior year is testament to the strength of our market position and how many people are in market considering a change of vehicle. Demand has gradually outstripped supply which has meant cars are selling faster this year than they did last, which is shown in the chart on the top right. While the move from average days to sell of 31 to 29 sounds small, it has meant that in this six-month period, 5% more vehicles have transacted on AutoTrader, but there has been no increase in average live listings shown in the bottom left chart. Generally, live trade listings correlate to paid-for slots, which is what drives the stock component of ARPA. As a result, for the purposes of guidance, we have assumed that these conditions continue, which, given a stronger second half comparator, drives the negative stock lever expectation for the full year. Finally, for completeness, we have shown used car prices in the bottom right-hand chart. Generally, used car prices have been stable for much of this financial year, having declined through last year. Stable pricing is, of course, generally more supportive of retailer margins

although we continue to monitor all these trends very closely. Now turning to the group financial results.

Group revenue increased by 8%, with auto trader revenue increasing by 9%. Group operating profit increased 14%. The core auto trader business increased operating profit by 7%, and Autorama made an operating loss of 2.8 million pounds. Central costs relating to the acquisition of Autorama were £6.3 million, £8.4 million less than in the prior year. Group operating profit margin was 62%, with auto traders operating margin contracting slightly to 70% due to the impact of digital services tax, as previously mentioned and flagged. Basic earnings per share was up 22%, and cash generated from operations was up 9%. During the year, we returned £122.2 million of cash to shareholders through £64.9 million in share buybacks and £57.3 million in dividends.