Autotrader Group Plc

We anticipated trading this year to be tougher as a result of profitability challenges for retailers, a shortage of stock in some age cohorts and fast speed of sales. Retailer profitability was more challenging than we expected due to a combination of new car profitability in part due to the ZEV mandate and cost increases following the government budget last year. This led to intense scrutiny on every cost in their business with many stories of profit declines, redundancies and store portfolio restructures. The pressure on retailer profitability is most acute in November and December, which combined with feedback on our accelerated rollout of DealBuilder. This was amplified across social media, including some factual inaccuracies which were since clarified for customers. Following this period, we have seen higher cancellation levels than in previous years, which has impacted both FY26 and the run rate into FY27. However, despite these challenges, we have continued to grow revenue, profit and earnings per share. Perhaps more importantly, retail numbers, stock and upsells have all been growing since the end of the financial year, so we are past the low points. Furthermore, the core metrics underpinning AutoTrader are in a strong place. Supply shortages will subside, speed of sales has been stable all year, retailers are returning and now years into a janty KI, we're confident that the core of what we do will remain relevant for the future. It's a confidence that is growing as we continue to build, scale and monetise products incorporating AI. In previous technology transitions, including the internet, mobile, native apps, hyperscalers, big data and AI, we have backed the technology and emerged the other side better for car buyers, for retailers, for our people and shareholders too. Now we'll turn to the core foundations of AutoTrader which, as I mentioned, are in very good health. The most important foundation of any marketplace is its buyers. From an already very high base, our share of time spent versus competitors has increased again. There are 11 times more time spent on AutoTrader compared to our nearest competitor, which is actually four brands added together. We're six times greater than all our main competitors combined. and I've seen little change to how buyers use AutoTrader. Munich visitors have been stable at over 9 million a month and 80% have become direct to AutoTrader, 13% through organic search and 4% through paid web traffic. AI chatbots represent less than 1% which isn't changing significantly despite monthly LLM users reaching almost 4 billion globally. Generative chat interfaces and agents are already being used to research goods and services. However, how people use them depends very much on the category. Vehicle transactions are unique because they are pre-owned, complex, high value with a lot of relevant choice for any one buyer and a process that takes around three months travelling both on and offline processes. Our experience has shown that car buying and is improved meaningfully only when the technology is combined with a deep specialised car buying experience, a massive range of real time vehicles and tools that utilise data, integrations and over 50 AI models that only we have and have developed. This is true for car buyers and also for retailers who have an even higher need for trust, performance and accuracy. This is all underpinned by our sustained investment in our public card, delivery, data and AI technology platforms with our 400-person strong product and technology team. Now for Deal Builder. I want to start by saying this remains a big long-term focus for us because we believe it is one of the single most impactful and difficult-to-replicate experiences we can deliver for car buyers and retailers. is indicated by positive feedback over the three years that it's been live. Car buyers like being able to go deeper into the transaction when and where it suits them. They don't want to wait for return phone calls or dealership opening hours. For retailers, they can sell out of hours and get car buyers that are at least twice as likely to convert to sale. Furthermore, over time, there will be the opportunity to get more car buyers part exchanging and using finance, which are good options for car buyers and important for retailer profitability. While we have had to make some product adjustments and taken more time onboarding some cohorts of retailers, penetration has continued to grow throughout the year. We're also updating our capital allocation policy. We've accelerated our buybacks throughout the second half of the year and intend to continue this into the new financial year. We believe this is a rare opportunity to allocate capital effectively at a price that we don't believe reflects the fundamentals of our business. Over FY26 and FY27 combined, we expect to return over £1 billion to shareholders. As I said earlier, we've continued to grow revenue and earnings. Average retailers for the year declined 0.5% to 13,942. We ended the year with 460 less paying retailers than where we exited the first half. Although, as I mentioned earlier, retailer numbers have been growing since the end of the financial year, which we are very focused on continuing. Average revenue per retailer, or ARPA, was 2,995 pounds per month, which was up 5% from the previous year. Group revenue and operating profit were up 4% year on year, and operating profit margins were stable. Averages can be deceiving so it is worth flagging the group revenue growth with 3% in the second half and lower in the final quarter which has impacted our run rate into financial year 2027. Cash generated from operations was up 5% and earnings per share up 8%, higher than operating profit due to our continued share buybacks which as I mentioned we accelerated in the second half of the year. We have reviewed and changed our capital allocation policy, as I mentioned, reflecting our confidence in the business. This year we're also declaring a final dividend of 7.8 pence a share, which makes dividends for the full year up 9% year on year. Now for our cultural KPIs, which are a subset of measures we use to track progress on a number of cultural and organisational priorities. This year our metrics around the representation on our board, leadership and organisation are relatively stable and generally at good levels. Following Catherine's departure our board is now 50-50 men and women and we're continuing to work to improve ethnicity and leadership but it will take time for the work that we've done in early careers to make its way through into leadership positions within the business. We aim to have net zero carbon emissions. across our value chain by 2040 and halve those emissions by 2030. This year, carbon emissions across scopes one, two and three increased 55% to 144.1,000 tonnes, largely as a result of capital expenditure on our new office and vehicles taken on balance sheet through Autorama. Both of these are scope three or supply chain related. Engagement has fallen from 91% last year to 72% this year. It was literally only a year ago when most cultural measures were at all-time highs. As you have heard, this year has been particularly challenging and has impacted our people. Tougher trading, tighter cost control, reorganising some areas of the business, retailer feedback and a tighter approach to working in the office. However, all other internal measures, such as recruitment and retention, remains largely unchanged. It's fair to say the team have performed exceptionally well in tough conditions and I feel privileged to work with such a talented and committed group of people. I'll now hand over to Jamie to talk us through the financials in more detail.

Thanks Aidan and good morning everyone. I'll start by focusing on the core auto trader financials. Total auto trader revenue increased 4% to $585.3 million. Trade revenue also increased by 4%, with the largest component of this being retailer revenue, which also grew by 4%. Within trade revenue, we've seen an increase in home trader pay-as-you-go listings and growth in other trade revenues. Consumer services revenue decreased by 8%, Within this, private revenue generated from individual sellers decreased by 11% due to a lower volume of listing. Motoring services decreased by 4% due to lower revenue from our insurance product. Revenue from manufacturing agency customers increased 14% year-on-year. Much of this increase was due to manufacturers supporting their franchise network with both new and used car advertising. As mentioned, retailer revenue grew 4% year-on-year. The average number of retailer forecourts on our platform decreased by 71 to 13,942, which was half a percent year-on-year decrease. An average revenue per retailer increased by 5% to 2,995 pounds per month, with more detail given on the following slide. 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 negative contribution from stock. We delivered our annual pricing event for all customers on the 1st of April 2025, which included additional products and a like-for-like price increase, which contributed £117 to ARPA growth. Products contributed £72. Most of this growth was from our co-driver product, which was included in retailer advertising packages in April 2025. Prominence, which is largely the movement up and down our package staircase, was not a contributor to the product lever in the year. We continue to review our packages with changes expected in H1 with the aim of returning prominence to long-term growth. The remaining product lever grace was driven by 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 was broadly flat year-on-year, although there was some positive impact from a stock offer that we ran at the start of the financial year, which did not impact revenues. From November 2025, prompted by the rollout of DealBuilder and reflecting more difficult cost-related trading conditions, a number of retailers reduced the number of vehicles advertised on the platform, contributing to lower paid stock volume. Total costs, Australia costs increased 4% to 181.4 million. People costs increased by 1% to 93.6 million. There was an increase in underlying salary costs, while the average number of employees remained broadly flat, and share-based payments reduced. Marketing spend decreased 11% to $21.9 million, while other costs, which include data services, property-related costs and other overheads, increased by 13%. This year-on-year uplift is mainly driven by higher cloud infrastructure expenditure and increased property costs related to our new head office. Depreciation and amortization increased by 49% to 9.4 million, also due to our new office lease that commenced in July 2025. 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 400 people in product technology who are continuously improving our platform and developing new products for consumers and retailers. Operating profit increased by 4% to $408 million, and operating profit margins remained at 70%. Our share of profit generated by dealer auction, the group's joint venture, increased 14% to $4.1 million. 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 our 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 39 million, with vehicle and accessory sales contributing 29.6 million and commission and ancillary revenue of 9.4 million. Vehicle and accessory sales relates to vehicles that flow through the balance sheet, which is not our primary focus. Stable deliveries amounted to 8,056 units, around two-thirds of these being cars, and within this, deliveries from auto trader increased over three times. Average commission and ancillary revenue per unit delivered is 1,167 pounds. The Autorama segment made an operating loss of £2 million. There's a significant reduction on last year through the accelerated integration into the main auto trader business and platform. From financial year 2027, Autorama will operate and be reported as a single operating segment with the rest of the auto trader group. This is due to more than half of all leasing transactions being delivered through the AutoTrader platform in the second half of financial year 2026. In the appendix, you'll find a breakdown of financial year 25 and 26 in this new format, which will be how we report our FY27 half-year results in November. Total group operating profit increased 4% to 392.7 million. and group operating profit margins remained at 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 up 5% to 418 million. Now to briefly review net bank debt and uses of cash in financial year 2026. During the period, the group drew down 165 million in its revolving credit facility and held cash and cash equivalents of 18.2 million. In the year prompted by the low share price, we accelerated the number of shares we acquired. To put this into context, we acquired three and a half times more shares in H2 than we did in H1, and in aggregate acquired 58.5 million shares 6.6% of issued share capital, for a consideration of £369.1 million. A further £94.1 million was paid in dividends. The Board believes the prevailing share price does not reflect the company's fundamentals or long-term prospects. We're therefore updating our capital allocation policy. We'll continue to focus on investment in the business supporting growth, while continuing to return approximately one-third of net income to shareholders through dividends. We expect to continue the recent acceleration of share buybacks, purchasing around 500 million of shares in the year, and we'll be requesting authority to require up to 15% of issued share capital at our AGM in July. Based on current assumptions, we expect this to increase our debt levels towards one turn of EBITDA. I'll now move on to talk through some of the market dynamics. Moving on to slide 15 and looking at both new car registrations and used car transactions. From a new car perspective, suppliers continue to improve following the impact of the pandemic in 2020 and 21, with five consecutive years of growth. Although the market still remains slightly below the level seen pre-pandemic, and significantly lower than the highs of 2017. The retail market, or new cards sold directly to consumers, continues to remain at lower levels by historic standards. Over the past 12 months, we've seen manufacturers attempt to stimulate private demand with increasing levels of discounts and finance offers, which has had some positive impact, with private retail sales growing for the first time in four years. As seen in the chart on the right, used car transactions have continued their steady recovery, growing at 1% over the last year. Over the past 20 years, the size of the UK car park has grown steadily by just over 300,000 cars per year, reaching 37 million vehicles. We expect this growth to continue over the long term, driven by GDP growth, population growth and stable car ownership trends. 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, which has almost doubled since then, reflecting average growth of over 4% a 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. This trend, combined with the growth in transaction volumes, has resulted in an increased gross profit pool over time. Over the past 12 months, our audience position has remained strong. The number of cross-platform visits continued at record levels at 81.7 million per month. Engagement, which we measure as cross-platform minutes, decreased slightly to 548.3 million on average per month. The chart on the right-hand side shows the total minutes spent across an expanded set of competitors. On average over the year, Comscore estimated that consumers spent 11 times more minutes on AutoTrader than our nearest marketplace competitor. The combination of Gumtree, Motors, eBay and Kazoo, which is an increase versus the prior year. We were 22 times larger than the nearest single brand and six times larger than all of these competitors combined. 67% of our audience was unique to us never visiting these other sites. I'll now hand you back to Nathan to talk through our latest product updates and the outlook.

Thank you Jamie. We wanted to start by providing a timeline including a sample of how our technology has developed over the past decade. There's this sustained investment in the way we deliver software that enables us to deliver at high velocity with stability, to adapt and to scale new technologies quickly and cost effectively without big bang re-platforms which are prone to time and cost overruns. Rather than go through every item on the timeline, there are a few I wanted to point out. Just over 10 years ago, we began building our data science team and supporting technologies. 2017, we started to migrate to the public cloud. by re-architecting and standardising every application so it didn't just work in a cloud environment but was optimised for it. We completed this without pausing development around six years later. Just after 2018, we acquired key resources so we could build our own proprietary vehicle taxonomy for every vehicle on UK roads, something that is even more relevant in a world of AI and requires a team of technologists and people to constantly update and cleanse the data as well as build integrations with manufacturer production systems and other data providers. Our taxonomy underpins pretty much every aspect of AutoTrader. Following the launch of ChatGPT in late 2022, we employed a full-time postdoc from Manchester Met University to work on the LLMs. This capability is now productionised across our data science and engineering team and is made accessible to all our product and technology teams through an AI platform integrated with most foundation models, including hosting, scaling, monitoring and security essentially available to them off the shelf. AI will increasingly surface in our consumer experience, sometimes very obviously and sometimes in the background. We believe the technology is transformative, but not if it is just bolted on the side of existing functionality and tools. As we've built, scaled and monetised AI, we've seen that to be effective in car buying or retailing, the technology needs to be combined with a deep user experience, highly curated real-time vehicle listings, proprietary data, specialised models and distribution to a highly fragmented customer base of car buyers, agents and retailers. We've now built and deployed an MCP server which enabled agents to efficiently interact with AutoTrader. Our initial implementation of this is with a chat GPT app, which you can see in the middle of the slide. However, we've architected it in such a way that it can be used to interact with other agents that arrive either today or in the future. Another example is our new search categories, available under a filter called I'm Looking For on the left-hand side of the screen. On AutoTrader, car buyers had to choose one make or model when searching for vehicles. These filters powered by a specialised AI model enable people to search across makes and models defined by categories in their language such as big boots, all rounders, cheap insurance, cheap to run, birth cars, luxury cars and even an oh my god category. These filters are currently being applied by over 100,000 people every day and will become more and more important given the explosion of new brands selling vehicles in the UK. It's also a very good example of what's required to ensure high quality responses. We could have used a simple LLM to do this task, which would have been less accurate and expensive. Instead we've been machine learning to be much more effective for the task with negligible incremental costs. On the right hand side you can see our current pilot using chat based search, which is integrated with filters. This provides a different entry point to search with even more flexibility in categories. We've experimented with these interfaces using different technologies before and uptake was limited. However, if LLMs become a way in which people want to search for vehicles, then the best such experience for cars will be on AutoTrader. This is because of the specialised models I spoke about earlier that use proprietary consumer and retailer data and an onward experience to navigate enormous choice along with market-leading tools to ensure car buyers get the very best results for all their car buying questions. A CoDriver suite of products will be known to most analysts and investors. For those who are unfamiliar with CoDriver, it is the umbrella brand for a suite of AI products that save retailers time, improve quality and therefore their sales process. The first two products already available optimise the order of a retailer's images and highlight any that are missing using computer vision. The second, which is covered on this slide, writes a description for each unique vehicle, which sounds simple enough but is the perfect example of what it takes to get good results from this technology. If you use the foundational model alone, as is shown at the top of the slide, there will be errors and many of the features of the vehicle will not be known. Furthermore, there will be no data-based understanding of which of those features are the key points of differentiation and of most value to car buyers. You can see how we go around this by utilising both our models, the foundation models, and proprietary data and technology. We've found that every implementation of LLMs to make car buying or selling better has required us to do some version of this. This year we also launched buying signals, which is again powered by AI models. It's been added now to 800,000 inquiries since it's been launched. Buying Signals utilises the model to predict the likelihood of someone buying a car based on signals collected throughout their journey on AutoTrader. If retailers need to prioritise their activity, this gives them the perfect method to do so quickly. It also benefits the ready-to-go car buyer who can be quickly identified, contacted and followed up. Buying Signals also flag whether that buyer is local and their preferences in case the exact vehicle is no longer available. It offers a similar efficiency to DealBuilder with inquiries marked as high intent, typically converting twice as well as an average auto trader inquiry. Now, with over almost 15 million inquiries sent every year to retailers, many of which go unreturned, the benefit to them is reasonably obvious. The new buying journey on AutoTrader, known as DealBuilder, remains a key focus of ours. It delivers a more empowered buying experience whenever people want and inquiries to retailers that convert at least twice as well. For a retailer that's half the work and with almost 50% of deals happening outside of business hours, their stores are essentially now open 24-7 without the staff cost that would normally come with it. We always build products iteratively and with customers, which we have been doing for three years now with DealBuilder. However, as we accelerated the rollout to new cohorts of customers, some were not clear on what we were offering or why. We listened to this, slowed down and made changes to the product, including the ability to choose either full reservations or the ability to request a reservation. The changes were well received and we've continued to roll out the product, retaining the goal of achieving 100% penetration during the course of FY27. You can see from the charts on the slide that penetration has continued to increase throughout the year with more than triple the customer numbers now on DealBuilder and almost triple the number of deals as newer customers tend to be smaller. Now for the outlook for FY27. We remain comfortable with our current levels of investment so we expect group operating excluding vehicle and accessory sales to be at least maintained. In the financial year 2027 we expect group operating profit to be between 395 and 415 million pounds, which with the continued acceleration in buybacks will result in at least high level, high single digit EPS growth. Auto trader revenue was flat year on year in April 2026 due to a lower run rate and package increase. However, retailer forecourts, volume of paid stock and package penetration are now improving and we expect that to flow through to growth in the second half. The contributors to this will be our packaging event, which will grow the price lever within ARPA by £85 to £95. Product growth is expected to contribute £65 to £75. Stock will recover, resulting in improvement from current levels to minus £30 to £40 for the full year. While average retailer forecourts are now growing, we expect the average for the year due to the entry run rate to be down 1% to 2%. Other revenue will be broadly flat and aggregate with a decline in consumer services offset by growth in manufacturer and agency. Our focus in Autorama is on volume growth, however we do expect to make a small profit for the year with commission and ancillary revenue growing 8% to 12% and vehicle and accessory sales of around £40 million. As Jamie mentioned, as the majority of leasing transactions now originate on AutoTrader and due to the extensive integration we've already undertaken, we will move to one reported operating segment in 2027. That's all for the presentation. We'll now take questions from analysts in the room.

Thanks. It's Andrew from . Two from me please. First one is on the stock and the guidance you've given to the year and just trying to kind of unpick what you're seeing in terms of stock in the fiscal year to date on an underlying basis because it's quite hard to observe that on your site there's quite a lot of noise with special offers and that type of thing and then what's kind of baked in in terms of underlying improvement to get to your guidance and if you can kind of unpick that between you know what's a fast stock turn in the market and what is dealers choosing to put their stock on or to trade about would be helpful. And then the second question, I appreciate the FY28 pricing event is still seven months from now until you've communicated to dealers, but is there anything you can give us in terms of how you're thinking about it and what products or what type of products you're going to push to the dealer base next year and how you kind of think about the value of it? And I guess big picture in the last couple of years the headline increase for dealers has been eight.

year it was five and a half what kind of gives us confidence in the value of the products that you have that five and a half isn't going to be normal and it can get better thanks um so i'll take the uh first one so and then i think there's a bit of a theme um you know you all dealt around the stock guidance but i think it could equally be applied to the retailer guidance maybe to a slightly lesser expense as to product and particularly prominence so So I think if you strip the FY26 numbers into third half, second half, you can pretty quickly see that second half, particularly retailers, the stock lever are more negative than they were in the first half. And if you think about the nature of where that sort of softening happened was very much fourth quarter weighted. We talked a fair bit in the presentation. around the sort of cost-related pressure that customers felt and the catalyst being the sort of deal-builder roll-up. That was sort of November. So you feel a lot of that impact in the fourth quarter. Nathan talked about retailers exiting 460 lower than where we ended the first half. Stock, if that's a minus 85 in the second half, you can assume that it's lower than that where we're sort of entering. So to get to minus 30 to 40 needs that sort of steady improvement continuing that we've seen at the beginning of this financial year. I think we're pretty pleased with those signs, particularly retailers and stock that we've seen this year. Obviously, there's offers that we've run alongside price increase, which has maybe created a little bit of a catalyst, particularly for the stock in prominence. I think there's also people that will know that we had a stock boost that ran last year that converted at the beginning of June. So there is a tougher comp in the first half when we lapped that. So again, it gets easier in the second half. So I think to hit that guidance, particularly on stocks, bearing in mind where we're coming in, does need that sort of continued improvement. But pleasingly, we are seeing some of that at this particular point in time. And I think as regards to kind of trading, where it was certainly felt better for customers in November and December, I think generally the sentiment feels as though it's a better January to March certainly, which is also helpful from the stock leader's perspective.

On the pricing event for next year, I mean we haven't made a firm decision. Both the products and the actual size of the event, something that we do, the product we tend to choose quite a bit earlier but the actual size of the event we take into account things that are going on at the time. On the question of how do we feel about our product roadmap and things that could be included in that event or indeed standalone, I think the answer is that we feel good and whether that's the advertising products, Jamie spoke about packages, they've actually been missing over the last few years and that's been driven by very, very fast stop terms. It's actually not only been fast but been accelerating at the same time as well as dealers having pretty acute pressures on their own profitability. So those products still do what they've always done. You get more, you pay more. We know how to do those. We've been doing those for literally decades and we do think we are actually looking at those products, relaunching all recalibrating those products at the moment. So I think as Jamie said, we think they should be contributing to growth, kind of a core part of the business model and goes along with the packaging event. As for the packaging event, I think there's probably three areas that we think about where there's plenty to go up. One is insight data, pricing, inventory management. That is something that any retailer that you speak to will probably talk as much around that when it comes to auto trailers. They would talk about the advertising. Normally actually we talk to them more about that than we do the advertising itself. That feels like a rich stream of product development. You've got the co-driver suite of products. To think of that more generally is things that we can do to help them be more productive and have an easier life. And then there's digital retailing. Now, first to insight and productivity, it's very, very clear that AI extends the runway on that. It allows us to do things that we just weren't able to do before. And we're already showing that, sorting out images, writing descriptions for them. We're sending 15 million their way. That's a lot of human work to be done as an example. So it feels like there's plenty for us to go at. And digital retailing, we're really only at the very early stages of that, rolling it out and getting into the customer base. So there's a lot more potentially for us to do around finance, part exchange. Now, don't ask me next year, why haven't you done all those things, because that's kind of 10 years of work, but there is plenty for us to go at. So that feels good and feels like product ought to be able to support package events and also standalone products in the future. One thing that we did see through some of the feedback we had subsequent to November where we've engaged pre-constructively with retailers is some of them like that thing, they don't need this thing. So actually thinking about how we might provide a bit more choice will probably be something that we do moving forward. I would say for next year we've got quite a few opportunities. If you look at what customers are actually – a lot of the talk is around deal builder and they weren't really happy with deal builder. If you look at the feedback from the customer advisory groups which I go to, I host, actually it was about localised pricing metrics, it was less friction in portals, that they wanted to stand out and be more individualised, better reporting around leads and us to communicate a bit more effectively through channels that they use. don't sound like the most sophisticated products, but they really matter actually to our customer base. So doing some of that stuff is just built into our plan for the whole year. Not to ask you a question around the, you know, we did 5.5% this year. It's been 8.5% in years before. I think the reality is this year we're sensible people. There is feedback. It's not the year to kind of be tin-eared to those sorts of things. And also retailers are under acute profitability pressures. If asked, if retailers are under acute profitability pressure sometime in the future, will you take that into account? The answer is unequivocally yes, we will. We think that's the right thing to do. But that does swing both ways because the 8%, 8.5% that you spoke about over the past few years post-COVID were partly due to the fact that the products were good but profitability was also very good. I think, you know, rewinding back into ancient history to the IPO, we talked about events being pricing product combined should be between 5% to 7%. I kind of feel comfortable that that's still true and I think we've got some interesting product opportunities that might be able to be a bit more standalone.

Hi, it's Will Packer from BNP Paribas. Firstly, the four core metric is something that the market is very focused on. It's encouraging to hear that there's been some improvement in April and May. The numbers you communicate are averages of averages of averages. So it can sometimes be quite difficult for us to distinguish what's really going on. Can you tell us what the trough number of forecourts was at the bottom, which I assume was Feb or March, and how many you've gained in April, maybe March, April or May, to help us understand the cadence there? Secondly, a common question I get from investors is, Can you explain where those who've churned off AutoTrader are getting their digital marketing needs served? I'm sure you've been in dialogue with some of your customers and or former customers. Is it Cargo Resumotors? Is it Google? Is it ChatGPT? Just some kind of that would help us understand. As I suppose your guidance implies that some of those partners will stay off the platform for as long as 12 plus months. And then lastly, alongside, you know, deal builder, AI disruption risk has been a kind of key focus. Could you talk through how NLM originated traffic is developed on your platform?

I suppose what we're hearing from most of your peers is it's pretty limited in terms of its volume and scale and is that the same for you and, you know, how do you think about that? Thank you.

So, yeah, so let's only take the focus on the poor court number. I mean, if you take that sort of, I appreciate the averages and the exits, if you take that for the first half, sort of, let's say the 14,000, Nathan's then talked about the 460, so that's from the end of the first half, to the end of September, to the end of March. That's how many nets have come off. Some of those have the kind of seasonal churn, but also clearly some reaction. So you're coming down there to 13,500, just a little over 13,500. Then we have improved through April and May. The reason why I'm not going to put a number in terms of how much is We always run new business offers and we have had a new business offer running from probably the middle back end of February into March and that's driving some of the upticks. What we don't know yet is how that offer converts but I would say I'm very encouraged with how it's gone. As much as it's winning back customers, we actually seem to be acquiring new customers. Some of it out of our home trader line, but home traders, the guide is relatively flat, so it doesn't feel like that's impacting the revenue. And obviously, we're only seven weeks into the financial year, so we don't want to get ahead of ourselves. But yeah, overall, I think we're encouraged at the trend.

On where have the dealers gone? I mean we kind of said this in the presentation but it shouldn't be missed. The challenge to retailers, some retailers' profitability is pretty acute. So some of those retailers just don't exist anymore. They've come off. If they own their property, maybe residential property development seems to be a common one for many retailers, maybe sold out and being absorbed into other businesses as well or combined. So there's a chunk that have done that. There's a chunk that have come back. So where they went is kind of a bit less of a concern because they're kind of flowing back to auto trader. There's also a chunk that are just using a whole combination of competitors and I wouldn't say that we really honestly, I think we hear a lot less about some. It probably wouldn't be right to comment on individual competitors and more about some others but it is literally a whole mix. You hear and you can see this in the social channels yourself, they're trying to cobble together a whole bunch of the others, put them together. to try and make up that response. Now our 11 times which is independent data from Comscore would suggest that you can probably add it all up and get some leads but whether you get all is yet to be seen and a prominent trade journalist did this experiment, had cards on AutoTrader, had cards on other platforms. You'll tend to get bleed across if you advertise on AutoTrader, you pick up leads on other platforms and found that in terms of cost effectiveness, but that doesn't mean the others just don't work at all. They tend to be technically expensive which is why we've always had more retailers than others. I think I'd echo, given that we spend a lot of time with our peers, we're all seeing pretty much the same thing. It's a line that kind of goes like that, not like that and at the moment it's kind of somewhere between half a percent and a percent. It doesn't look like it's really increasing and that doesn't actually, pardon me, that I don't think that's going to change massively because we've got an app embedded into ChatGPT. For us it was more about building the agentic infrastructure than it was trying to increase that traffic share.

And just as a quick follow-up, the next focus seems to be agentic and how classifieds kind of interact with the future of agentic search engines.

There's lots of uncertainty as we don't quite know how it will look. We've heard quite divergent things from classifieds, some, you know, front-footed, the future is agentic, others a bit more sceptical.

Any kind of quick comments on your initial perspectives on that?

I'll try and give you a third view. So my view is we don't mind. Whether a person comes to us directly or whether they send their agent, we're going to make sure that both of those people, when considering where they go, or agents, sorry, so not both people, whether it's the person, whether it's the agent, that they choose AutoTrader and we have confidence that that will be the case because they'll end up making that decision based on the same parameters. Is it quick? Is it efficient? Does it provide me the most choice? If I'm an agent, will this thing give me the chance to answer the question as well as I possibly can for the user, which is the way any agents can be measured and how they optimise their platforms? We think the answer today is yes, without doing anything other than building an MCP server that they can use, but we'll go even further to make sure that is easier and easier and easier. And if the alternative for the agent is to try and scan 14,000 of our retailer websites, none of who will have... very few of you will have an NCP protocol. You're relying on scraping and unstructured data. We don't charge for our service so we think it'll be okay and it'll be some mix of the two, our CTO being particularly as opposed to human beings would say that he'd probably be quite happy if it was more agents. I suspect we'll still have lots of people coming to AutoTrader and then interacting with the agents in lots of different ways to the extent that they're doing things like within chat interfaces, I suspect AutoTrader will appear in a similar kind of philosophical way as we do in Google today. At some point, we'll appear, we'll help, I'll come off to AutoTrader to come and do the real detailed stuff because the interface doesn't work for that.

Sorry, just to clarify, and I'll insist on the LLM traffic, I think it's actually a little bit less than half a percent rather than seeing half and one. I wasn't talking about less than one, but it's actually less than half, to clarify.

Good morning. It's Lara Simpson from J.P. Morgan. I just wanted to come back to the guidance on Autorama, which feels quite bullish. So just trying to understand what's driving those two-line items. Obviously, on the commission revenue, you're talking about 8% to 12%. It was still down at least in the summer, which is an H2. So what's underpinning that intersection? Is it pricing or volume? And then similarly on the vehicle line, I think your guidance will underpin probably double-digit increase in vehicles, what's driving the confidence in the outlook there, and are you taking more stock on balance sheet as a result of it? And I suppose the last question on Autorama is, are we seeing any change in strategy down the long-term view? Because I saw longer term you've been running down that vehicle line, so just trying to understand the moving parts. And then just one question on the private revenue line, I know getting smaller, but it obviously remains in decline. Can you just talk about what's driving that pressure from a private individual side, is it competition, is it just slow a stock turn and maybe there's a bit of colour on the competitive dynamics and where that traffic is going.

Yes, I can take on both. So the Autorama, as part of the commission and ancillary revenue, what sort of held it back this year is the decline in bands, like cars has actually grown pretty strongly, volumes on Autotrader have grown relatively strongly. And I think that's down to it very much is focused on the auto trader platform, the car journey and there is naturally less focus on Vanorama.com and the volumes that are getting driven through that channel. So I think we're of the belief that that van volume is likely to stabilise and so that's not going to be a headwind and we're going to continue to drive more car growth. as the driver behind the 8% to 12% revenue growth from a condition and ancillary revenue perspective. The vehicle and accessory sales is really just growing in line with that, the sort of volume of units that we think we're going to do. So I think it's more that the share of vehicles that wash through the balance sheet is more likely to be consistent in this year. I think it is still a longer term goal that we're not reliant on that volume, but ultimately we're still, you know, sub 10,000 deliveries in the year and getting access to that inventory is still an important part of the volume. But it's still longer term is something that we want to believe that we will move away from. It's just not at this particular juncture. And I wouldn't read too much into if it's going up or down. It's obviously just washing through and doesn't have a real impact on profitability. From a private revenue perspective, I think we have seen over the last probably two years it's been quite a competitive environment. car buying service, We Buy New Cars, obviously the biggest that we were competing with in that space. And then you've had in this intervening two year window, Motorway have clearly grown their volumes, Carwow have created a similar proposition to Motorway and that's given people more options between the proposition of selling privately, where generally we'll say it takes longer, but you'll get the best value for your vehicle. versus a car buying service where it's very quick and efficient that you're probably getting a lower price. This is something in the middle and I think it's something that we have to navigate our way through competing with. We do now have a proposition that's live where we're leveraging the Steeler Auction Joint Venture to do a similar car buying service and that's what Noteaway and CarWell do. It's small volumes but it's growing. So obviously implied in the guidance is the decline is going to be less in fiscal 27 and a bit like probably all of the guidance where we're entering is probably a bit weaker. The implied sort of exit position for the year is certainly closer to flat if not positive and that would be a combination I think of, we think there's a real power in putting to the seller that choice of what you might get for the vehicle over time and hours and effort, and then people making the decision all in one place on one platform. So I think we're, you know, a little bit more optimistic that we're kind of getting to grips with the competitive challenge. Clearly, we're very fortunate to have the brand, the audience, you know, most people looking for their next car or other car to dispose of. We also want to make sure we're supporting retailer part exchange because that's a big part of their profit pool but we can offer the kind of holistic options to a seller and I think we're just starting to get some traction in terms of that proposition versus maybe where we were 12 months ago.

The only thing I would add to that, agree with everything that Jamie said, but I would not put down the decline this year to competitive. I think we have got, we've on our motorway been out there for years and years and years. The thing I would flag is that we do see private revenue move around. I mean it was only two years ago where it hit the highest levels that it's ever hit and there was still the same competitive environment. So there is a bit of an element that it seems to move around with macros. We've not really been able to work out what that correlates with, whether it's interest costs and people getting out of finance deals and feeling that they should get the extra

Thanks, Will from Brentburg. Firstly, just in terms of new capital allocation policy, in terms of the leverage now going to be at one times per year end, how should we think about that? Is that the new normal, new level? about evolving the package staircase in H1. Just wondering if you could share more detail about that and particularly relation to prominence as well.

Yes, I think we've taken a view on the new capital allocation policy. I mean I think I would expect at one turn based on current assumptions, I don't think we feel as though that is sort of over the top. We'd even say by some company measures, not what we've seen historically, but that's still at the sort of prudent end. So very comfortable with a term of leverage.

So would you go higher?

It's not out of the question. Yeah, we're certainly comfortable at a term based on current assumptions.

And the package staircase change, so on the surface the packages are still named the same and still essentially include the same functional benefits with most of those being in the base package and the only difference between the packages above that is how much response that you get. The way that we deliver that now is heavily driven by the relevance of the vehicle which without saying the two letters too many times, is a model that sits behind that that predicts the likelihood of someone to want to interact with that car. So that's kind of the most purest level that we do that. We then overlay that with a boost. So within a set of relevant results, you can appear higher or lower depending on what package level you have. There's a relationship between that, which is algorithmically driven, So we're looking both at the levels of step-up between the staircase, not going into too much detail. There was one package in particular that wasn't quite a big enough step-up for you to be able to unequivocally see it as a retailer when you came on. It's part of the gig of running marketplaces that a retailer says, well, I spent more, but I didn't sell any more cars. You don't want that. You want it to be a bit clearer than that for packages. Some of the other packages work really well, so they tend to jump right over the top. So evening up the staircase, the height of the stairs is part of it and then tweaking the price that you pay for the uplift in the response. That's kind of the thing that we've been feeding in over time to make sure that people are getting good value wherever you are on the staircase.

Two questions left with me please. First one is actually to follow up on Andrew's original first question relating to understanding the factors that are impacting stocks. So clearly one of the major driving forces on your stock labour is the supply and demand. dynamics at play in the market. I'm wondering to what degree other dynamics impacted stock as well. So, for example, the churn in forecourts flowing through to stock, which is something we haven't really seen before. And also, secondarily, are you seeing retailers listing a lower proportion of their cars on auto trading than you've seen before? So, that's question one, just understanding what's impacting stock. And second one, probably for you, Nathan, you spoke a fair bit about AI product innovation, but less about how you're using it internally. The Scout 24 last week showcased at their CMB that they're already implementing using it quite significantly and seeing headcount reductions as a result. So interested if you see other opportunities, how you expect headcount to move over the next 12 to 24 months, but also perhaps a comment on gross versus net headcount movement, that we're seeing an evolution of your workforce. in the likes of AI, the styles of people that you're employing?

Yeah, so the first one, and sorry I wasn't being deliberately evasive on Andrew's question. Forget your journey. I know. So I think it's fair to say the market dynamics are like speed of sale that was more of a headwind in fiscal 25. It's been pretty flat in fiscal 26. It is running at historically fast levels, but when you think about the kind of year-on-year impact, like the slot utilization is more consistent over those two financial years. So it's certainly not a headwind. It wouldn't go so positively if, say, we're starting to see it slow down and there's a buildup of inventory. Supply I'd say is probably getting marginally better. If you look at the transaction volume, used car transactions are about a percent better. The number of unique cars we've seen on site is around a percent, maybe marginally lower. The amount of live cars advertised on site, appreciating there were offers involved is up about a percent. So a little bit of better supply. You get this funny dynamic though where the kind of supply tightness that existed in the sort of three to five year old category is now just sitting in a slightly older age cohort that sort of works its way through the profile of customers. I'd like to say that I would feel like there should be some very slight but underlying positive dynamics towards stock getting better. So then the reverse of that is the negative stock leader, the worst run rate is down to the fact that, as you say, we've lost some customers who are clearly lifting cars. But then there's also some moderation and I think we've had it in some presentations Yeah, there were some customers that obviously opted to leave in November and December. There were some that opted to moderate the volume of vehicles. There were some that opted to moderate package. So that's ultimately the driver to the entry rate into the year, you know, where the second half stock leaver was. And then, like I say, improving from this point. But, you know, that's sort of where we've entered and the reasons why.

On AI internally, this is definitely not being evasive. I mean we've got a couple of board members in the room and this is something that we spoke about at a board meeting two days ago. So yes, we are using it internally. I'll start with that. I'll come on to the headcount question. We're focusing initially, partly it's just the way that we work on engineering side of things. If you take the general view in life, if you build really good technology, the benefits opposed to having a free-for-all, go and adopt an AI tool and knock yourself out, please make yourself more efficient. I think there is a point in that that is, and this is no comment on Scats business at all, this is very much for us, but people do forget that AI is not free. I mean the latest model that's just come out from one of the big providers is now three times more expensive I think than the previous model. So there are productivity gains but there are also AI costs that I think are not always being factored in. It actually reminds me of the pitch around moving to the cloud, which I think is a great thing to do by the way, but the pitch was always move to the cloud, you'll save money, get rid of those old data centres. We're spending exactly the same money that we were spending when we were in those old data centres, but we can do a lot more and we do it with better quality. So I suspect, I wouldn't be surprised if from an enterprise perspective that's how this plays out. I think there is clearly big productivity gains and you can choose to take those either or greater execution around product innovation. Now, my preference and my belief is that we should be able to do the latter, but you've got to prove that over time. You never lose the opportunity to say, okay, well, actually, let's just take a bit of a bounce of both those things, do more stuff, but also become more efficient over time. We're furthest ahead on engineering. We have an agent development team that you can ask to do jobs. Still those jobs are checked off by an engineer first because not every problem should be solved by an LLM, not least because tokens are very expensive. So we've always been cost conscious. But then once the engineer says yes, go, then the agent will go off, build, it'll do the pull, it'll get signed off and then an engineer will just check in before they send it back. So the agents are doing jobs as we speak. It's very scalable, can utilise multiple models. It understands because we did the cloud work, I talked about standardising our applications, we're able to very easily tell the agents or make sure the agents have the right guardrails and understanding of our state so they can solve, very rarely can you solve a bug or a problem in one application. You tend to need to straddle multiple applications and that's where these So that's some of the hard work that we've done that's really good and we're very, very proud of it. We're a bit behind in some of the other areas of the organisation because they're doing the engineering first but we're starting to see product managers go over to post jobs, release code, make simple changes that used to never generally get done actually. and no one ever gets around to them. We're using it in marketing, both for performance marketing. We've used it a bit for creative development as well, but fair to say our people weren't overly supportive of the AI executed creative, but we'll continue to experiment with that. We use a massive number of... We basically try thousands of creatives when it comes to performance marketing. We're able to very quickly work out which ones are working, which ones aren't and home those further. The other areas where we're focusing is operations and partnerships which are probably the equivalent size of product and technology, so around 400 people. The job that they're doing, the systems are not as good as the systems that our engineers use. We're cleaning up the data models underneath, we're putting in a new CRM system which will then enable us to put artificial intelligence on top of that to make their jobs way more efficient, whether that's diagnosing a customer's problems, whether that's answering the real So yeah, from a headcount perspective, to be really explicit, I think at the moment we're very comfortable with the margin profile. There might be some reinvestment of that productivity over time. You might see it change, but we wouldn't want to make a call on that yet. Measuring engineering productivity is a controversial topic, I think.

Excellent. Thank you very much. Just a couple to finish off. I think what you've tried to do with DealBuilder over the last couple of years is get a bit more into the transaction, maybe start to monetise that a bit more directly. Given the backlash, is that still something you want to do longer term? That sort of made us think about having financing and other bits into that journey, especially given I think you took a few parts out when you put it into the packages. And then sort of linked to that, how do you think about the trade-off for sort of remaining a lead volume platform versus sort of pushing into lead quality more deeply going forwards?

Good final question. So on the first one, we needed to listen to dealers. Don't let me say anything other than that. But the deal builder feedback was actually relatively small part of that. It was pretty challenged profitability. You can go on to our own website, type in auto trader customer advisory groups. You can see what they actually raise. And I did check it this morning. We didn't even have deal builder down as one of the points. And that was something that was curated by the group themselves. So I think we needed to change some things. We needed to ease up on the implementation of it because all of us humans, we're all right to impose change on others but none of us really like to change ourselves and we experienced that in a big way. So I don't think our fundamental views of anything related to deal-builder have changed as a result of what happened on November. Our implementation of it just needed to be different to what it was. In terms of monetisation, finance, I think generally we've put it in the packages because we see that it is much better for consumers. They really like it and retailers once they're on it, they really like it too. That feels like it makes the moat, the business that is auto traders so much stronger and that's worth more of our investment than trying to monetise a standalone revenue line, which was a decision that we took. I think there are still opportunities within like the bucket of digital retailing. Finance, as you've called out, has been the obvious one. Potential different executions of part exchange also being another one. Two of the most profitable elements of a transaction for any retailer. And the truth is, back to the answer on private, Most of the volume they're getting has been from part exchanges, from retailers. The average rate's probably gone from 45% to 50% down towards 35%. to 30% so they could really use help there. Are any of those things at the top of our list at the moment? No, not just at the minute. We're focused on getting deals that are embedded, getting those reservations and deals up and running beyond the, you know, at the moment it's about 10% of their sales. We want to get that up and up and up once we've got it available across everywhere. That's really our focus for now. We've got plenty of other stuff to do around the co-driver products, the advertising products, so we'll kind of prioritise that stuff and focus more on roll-out. Yeah, his second question is actually a really, really good one and it is a debate that we have both internally and with customs as well. It is clear that it would be better not – we sell probably four, four and a half, I think, trade vehicles a year or we go through the platform and we influence the sale but that number's not too important but we send 15 million inquiries and we spend a lot of walk-ins in as well. There's clearly an inefficiency there and anyone you know with a mathematical or economic minded as all of you are would say well hang on if I can not get four things I can get one and I get the same number of sales and that feels like a really good place to be, getting our retailers into that place. Some retailers are definitely there but getting the broad base of retailers into that place is a journey that we have to kind of take them on kind of sequentially because some will say, well it's only me, I've only got five cars and I only get 20 leads and I can make 20 phone calls a week. I'd rather have a go at all of them than I would you just send me the five that buy a car. So it's just working through that over time. And I think our approach to deal board is really helpful like that because they start with getting maybe one in 10 sales coming through a deal, but they start to think, oh, I like that. I'm going to pay more attention to these. And they get to two out of 10 or 20% of their deals are coming through. And they tend to find their way to that conclusion themselves. That's basically the way that we're rolling out deal board. But it's a long one.

Great. I think that's all the questions that we have for the floor. Thank you very much for joining us.