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Welcome to the First Health 2021 Trading Update for Auto One Group. I'm Philipp Reikersdorfer, Director of Corporate Finance and IR. Today I'm joined by Christian Bertelmann, our CEO and co-founder, as well as Markus Boser, our CFO. I'm also very happy to be joined today by Alexander Enger, who joined us at the beginning of the week as Senior Manager in Investor Relations. I'm sure that you will soon hear much more from him and work with him. Today we plan to have about a 20-minute presentation followed by an opportunity for Q&A. Hopefully we'll be able to keep the call to an hour or so. Before we start, some housekeeping points. If you want to ask questions, please use the Q&A tool via the webinar and Zoom to submit your questions. We will then call on you after the presentation to ask a question in person. Please also note that this call will be recorded. Please also on the next page note the disclaimer and safe harbour statement. And with that, I will hand over to Christian after a brief video.

Yeah, hi everyone, and welcome to our first half 2021 trading update. So this video just showed you the brand new jerseys from our first football sponsoring activity in the first Bundesliga, and how this is tuning up the volume on the Auto Hero brand across Germany. I have to say, we're extremely proud to be HETA BSC's main club sponsor in the Bundesliga, a club with nationwide reach. And I think their jerseys just look absolutely fantastic with our AutoHero logo on them. So as you know, at AutoOne, we're building the best way to buy and sell cars online. Where are we on that mission today? The answer is simple. We are the industry leader. We are the fastest growing online seller in the European Union. We are the largest buyer from private consumers. and our platform is aggregating the used car trade across 30 markets in the European Union. And this way we have assembled the leading automotive data set for any trade. We fully control our used car production centers and we're rapidly building out our own production capacities. On top of that, we have created our own consumer financing and inventory financing facilities. In addition, Auto One is run by an extremely experienced and proven management team in this market. Together, all of those key skills enable us to grow Auto One as one company, running on one homegrown platform with one technology setup and one management philosophy. At the same time, we have built the strongest platform effects in the industry. You can see that on the next slide. Everything that we do while scaling any part of our platform has immediate positive effects on our other business units. You can see in the Auto One flywheel that as we're getting more inventory, we can provide a larger selection of cars to our auto hero consumers. This leads to directly more buyers and more buyers allow us to benefit from economies of scale. And this enables us to, again, of the higher purchase prices for our sellers. Those higher purchase prices then lead again to more sellers, and this means more cars and more inventory. And here we start again. As you can see, our unique platform effects make us stronger every single day. Together, our key skills and the flywheel that I just described also allowed us to make incredible progress with our mission in the second quarter of this year. We are very proud to announce that we have achieved more than 1 billion Euro in revenue in our second quarter of this year for the first time ever. We increased our revenue by more than 18% quarter on quarter and achieved thereby our strongest performance in history. At the same time, we achieved 99 million Euro of gross profit which is also our highest quarterly gross profit ever, growing 15% quarter on quarter. And now, looking back, we are accelerating this growth momentum even further. Based on our extremely strong performance in the first two quarters and our hyper-growth trajectory, we are raising our 2021 revenue guidance to 4 to 4.4 billion euro of annual revenue. We have worked, again, incredibly hard in Q2 and delivered on all of our key objectives that you see on the next slide. So we scaled Autohero deliveries much further. We increased the Autohero brand awareness across all markets. And at the same time, we controlled our Autohero GPU to the upside. You will see that later. C2B and remarketing units grew strongly despite the ongoing COVID environment to vast parts of Q2 across Europe. And we did this while controlling nicely, also here a little bit to the upside, our merchant cross-profit unit. So let's get into the details and let us deep dive into AutoHero. Atahiro is on a very strong growth track with 7x year-on-year unit growth leading to 8,400 units delivered for Q2 coming from just 1,200 units last year. While our Q2 deliveries were fully on plan, we're today seeing more demand for Atahiro than we initially expected. We're attributing this additional demand to the success of our branding activities so far. We are therefore as a result of this, increasing our 21 guidance for auto hero deliveries as well. We previously stated that we will deliver 32 to 38,000 units in 2021. We're now raising this target to 38 to 43,000 units in 21. Our customers love our value proposition and the benefit of ordering their car completely online. On this slide, let me show you for some of you again, why we are building the best online-only used car dealer in Europe. As we have the broadest inventory online, customers don't need to travel anymore to find their dream car, and we maximize customer demand. Our easy online checkout provides customers a haggle-free experience and enables us to have highly efficient processes. Our fully controlled production ensures high-quality cars and enables us to benefit from economies of scale. The home delivery with our unique hero truck is a true highlight in the customer journey and gives customers maximum comfort. At the same time, we're able to increase our brand awareness without costly showrooms. And our long-time money-back guarantee gives our customers maximum safety and us maximum customer trust. And with our seamless trade-in, only a net payment is required. And that maximizes our conversion. Now on the next side, the best thing, we are sourcing more cars from consumers than anyone. For example, and this is just a random pick, in June, we were buying more than 10,500 cars from consumers per week. And this is a true competitive advantage. that enables us to create a fantastic variety of cars for customers to choose from. Now to another topic, refurbishment and used car production. We were from now on call it used car production because that's what it is. We're massively ramping up our own used car production capacities. For this year, we estimate to have a total own production capacity of round about 50,000 cars. We will increase that production capacity to approximately 150 to 200,000 cars in 2022. So this is a capacity that we are creating and then has to be utilized by a staffing and more and more cars being produced in those facilities. In order to reach this target, we are currently screening capacities across nine markets with a total capacity of more than 500,000 cars. We're expecting that the target capacity of 150 to 200,000 cars will be built across six to eight sites in Germany, France, Spain, and Poland. So with the ramp up of our in-house production capacity on the next slide, we're expecting our own production to be equivalent to 20% of delivered cars by December, 2021. And from there on, this share to be growing from 22 and beyond. We're expecting that those in-house production capacity investments will bring down our total refurbishment costs per car in the midterm to roughly 50% of what it is today. So this is why we're doing it. Next to our strong expansion of our production capacity, We're bringing even more of our unique glass trucks on the road to deliver the best customer experience to more customers faster. We will rapidly ramp up our fleet because our customers simply love the glass trucks and we see it being a clear NPS driver. By the end of next year, we expect to have 267 glass trucks on the road. In comparison to our last earnings call, we increase our projection for 21 by more than 28% to having 143 trucks on the road by the end of the year. Now to NPS. As you know, we're laser focused on our net promoter score. We've seen a strong increase in our Auto Hero NPS scores across all markets this year. One of the key drivers of our NPS increasing is the growing glass truck delivery share that you can see on this chart. From just 7% in February, we were able to grow it to 25% in June for the overall group. The average NPS score of 63 across all of our markets for June is just 17 points away from our target of 80. With the continuous increase of our glass truck delivery share and our strong focus on customer satisfaction, we are on an excellent track to further increase customer happiness. Now on branding. in the next slide. As already mentioned at the beginning, we closed in Q2 our Hertha BSC sponsorship deal for Germany. With our presence on the jerseys, the boards, and through a wide range of joint promotions in the club environment, we will strongly increase our brand awareness in Germany. Next to Hertha, we closed another very exciting sponsorship deal with European reach. So we're extremely proud to support Paris Saint-Germain PSG as premium partner with strong presence during all their home games and access to the players' collective image rights to promote the Auto Hero brand. So that was Jorginho Wijnaldum, the newest addition to the PSG team enjoying the Autohero shopping experience in France. So as you just saw, we further intensified our Autohero brand buildup. We increased our web sessions in Germany by more than 33% quarter on quarter to over 2.3 million sessions for the quarter. And this impressive growth shows you that AutoHero is really becoming the leading online-only used car brand. So let's switch to the merchant segment and its Q2 numbers. We know that our customers love our superior sell-from-home solution, and thanks to it, we are on an excellent growth track. With 116,000 units sold, we sold more than 10% more units in Q2 over Q1. And with nearly 800 million Euro of revenue, we increased our Q2 revenue by more than 19% compared to Q1. And also in our remarketing segment, we continue to show strong growth as well. We sold 18,000 units in Q2 with a revenue of 152 million. If you look at this on a year-on-year basis, our marketing is growing 2.3 times per year and in units. And if you look at it in revenue, it's even 3.3 times year on year. At the same time, we more than doubled the number of active remarketing dealers to 2,195 in Q2, coming from just 912 in Q2 last year. So this is one of the key KPIs. Sorry, I'll switch back to the video here. This is one of the key KPIs that we watch for remarketing as the active dealer base is a strong driver of future business growth in that segment. Let me now hand over to Markus for an update on financial performance during Q2.

Great. Thanks, Christian. If we go to the next page, We're very proud of what we've achieved this quarter, having hit both a billion euros in revenue and our highest ever gross profit of almost 100 million euros at 99 million euros. On the top line of the merchant segment, this was driven by queue on queue growth in merchant units of just under 10% and an ASP growth of circa 8% due to ongoing release of Corona lockups and continued improvement in our sell from home product. As noted, Autohero revenue grew almost 20% on a quarterly basis and over 600% on a yearly basis as our investments in inventory, marketing and refurbishment have paid off. Gross profit increase was driven by both by higher GPUs in both our merchant and retail segment per car. Our gross margin was at 9.3%, down as a result of higher ASPs on the one hand, as well as the dilutive effect of faster auto hero growth. Adjusted EBITDA landed at minus 23 million as a result of 21 million euros increase in OPEX, primarily as a result of an increase in marketing in Autohero and an increase in personnel expenses, primarily related again to Autohero, including refurbishment. If we turn the page, as Christian mentioned, our GPUs improved in both our merchant and Autohero businesses. In merchant, we saw GPUs increase relative to both quarter one and our guidance. Relative to the guidance of 650 euros per card IPO, we saw the improvement as a result of consistent sales speeds since last year. higher quality cars as a result of our sell from home initiative, where we can choose more of the cars we want with a higher GPU, to some degree, higher logistics attach rates, and also fewer remarketing cars in the mix than expected. On the retail GPU, our retail GPU of 363 euros per car was primarily the result of an improved trading margin driven both by faster sales speeds, notably in Germany, where we've invested significantly in marketing, but also across all of our markets, an improved pricing strategy in terms of deciding how we price our cars up, down and so forth. If we turn the page onto inventory, We continue to invest in building our inventory, particularly for retail, which represents more than 100% of the growth in inventory quarter on quarter. At the same time, we see sales speeds improving, both in merchant, but also in retail, as a result of a lot of that marketing, so that even with increased inventory, our inventory turns continue to remain best in class at 25 days of sales. If we turn the page, we've maintained a disciplined approach to cash management. And while we'll be providing more detail on the 15th of September with our half-year report, we wanted to provide an indication of our cash investments over the past quarter. Starting with our Q1 opening balance, after the adjusted EBITDA loss of 23 million, we paid out 9 million euros in IPO expenses, which are a one-off. We invested further 30 million euros in inventory to grow our business and additionally 12 million euros in consumer finance receivables. These consumer finance receivables represent consumer loans from consumers purchasing our cars, which today is exclusively happening in Germany and Austria. All the cars that we financed in those markets are through our own platform. And you can see how quickly we've been able to build up a pretty substantial book of assets, which we then intend to refinance going forward. Lastly, we spent around 7 million euros in capex, primarily in this quarter, a result of our investment into delivery trucks and to a lesser degree of refurbishment equipment, leading to an ending balance of 789 million euros. Note importantly that there was no incremental drawdown of our 500 million Euro ABS facility this quarter. Other than the already existing 20 million Euro drawn amount, the rest of that remains undrawn. We made that decision really just due to the negative interest rate environment in order to really to maximize the cash on our balance sheet. But that facility continues to remain open for us. If we then move to guidance, as we approach the second half of the year, we are narrowing our guidance relative to what we provided at the beginning of the year. Overall unit guidance has been narrowed to 592 to 623,000 units, with more units from Autohero and fewer units coming from the merchant business. As always, the assumption is that we have the current level of COVID restrictions. In merchant units, we are increasingly optimizing out of our lower end units to improve GPU and see that the ongoing shortage of new car leads to fuel remarketing business leads resulting in our guidance towards the lower end of the merchant unit range. Nonetheless, merchant revenue continues to be strong and in fact has been driving our revenue upgrade. In Autohero, we see more demand than expected and investing further in marketing, refurbishment and delivery capacity, which has led us to increase our unit guidance to 38,000 to 43,000 units this year. Now, before going to the revenue guidance, I'd like to provide a little bit of color to Christian's comments on our refurbishment plans and the impact on CapEx and cash flow. As noted, we are currently in discussions with a number of potential sites to accelerate the in-house build-out of production sites. The capacity that we've presented represents the maximum capacity at full utilization, and this generally takes around two years from signing a site to reaching that maximum capacity level. For modeling purposes, we estimate around a 750 Euro investment per car of maximum production capacity. The majority of that is real estate, which we will then be renting or leasing. To move on to the financial guidance, for revenue, we're bringing up our guidance primarily as a result of the strength in our merchant business to 4 to 4.4 billion euros for 2021. Likewise, on gross profit, we see the ongoing GPU trends in both the merchant business and the retail business as sustainable and therefore bringing us to the higher end of gross profit guidance for the full year. we are bringing our adjusted EBITDA guidance down to minus 2.5% to minus 3%, mainly reflecting our decision to accelerate marketing in light of the positive operating impacts that we're seeing from the German marketing investment that we did in Q2, now continue to expand that over the course of the reign of this year. With that, I'd like to turn it over to Q&A. Thank you.

Thank you. Before we get started, we would like to review a few technical items to make sure that you can interact with us today. At the bottom of your Zoom webinar viewer, you will find three buttons, audio settings, chat, and Q&A. Clicking audio settings will bring up the audio preferences for this webinar. Please make sure that the most appropriate audio device is selected here. As a viewer in this session, your microphone will remain muted, as will your video. please pre-submit your questions via Q&A. Click the Q&A button and a window will appear where you may submit your questions. Once received, Philip will moderate those questions and ask the authors of the questions to ask management the question live. To that end, I will open the line for you, following which you will need to unmute yourself before you will be able to address management. We will address as many questions as possible live. Thank you.

Thank you. And we will start with Will Packer from BNP Exxon. Will?

Hi there, it's Will from Exambio Preparo. Thanks for taking my questions. Free from me, please. Firstly, there's a lot of trade press coverage of the constrained sourcing environment for car dealers, and I'm sure the environment's no different for yourselves. But inventory sourcing is a particular advantage for Auto One. Could you outline what portion of your vehicles sold on Auto Hero in the quarter was sourced through your C2B channel, and how challenging are other channels? Secondly, it sounds like there's some encouraging momentum on the finance product. The slide mentioned 12 million of loans. Should we infer a 10% attachment rate? How can this progress going forward? And then I suppose a bit more of a sort of wider conceptual question. The competitive backdrop is definitely getting noisier, even if the peer group is at a different stage of maturity. So following the period of fundraising, could you talk through your key competitive advantages and disadvantages versus Kazoo, Aramis and Carnext as we approach a period of increased competitive intensity? Thank you.

Sure. Thank you for all those questions. So let's talk about sourcing first. So indeed, the sourcing environment is constrained across Europe. So this means that a lot of car dealers are holding onto their cars. There's fewer trade-ins given to external buyers. And we also see price competition being tough. And I think in light of that, our results are even stronger with over $1 billion. euro of revenue. So we have no sourcing constraints in AutoHero. If you're asking the question how much of the inventory was sourced from external, we have to look at the exact number up. But I would wonder if it's any different than 99% that we stated the last time. So basically, all the cars are coming from internal. And we see our customers receiving the sell-from-home solution that we offer and also the price level that we offer. We see them receive that quite nicely. If we look at external channels that we're experimenting with, because we think in the long term, there will be like 25% to 30% of external sourcing. If we look at those channels, there's really tough competition and prices are rising. on a very, very high side here. So I think also coming to an early answer on the question three, that is a true competitive advantage of us. And yeah, this is what the core of the AutoOne platform is about so far. But maybe we go over to the finance product question. That was the second one. And yeah, before I let Marcus answer that, So the attach rate of 10% is not the right one. So we are only, yeah, we're mainly operating this in Germany so far. And we're seeing already a market standard attach rate in Germany. We are intending to show and give more details on the next earnings call about our internal consumer finance product. But over to you, Markus, if you have anything to add.

No, I think that was exactly the point. I mean, perhaps the only thing I would add is, you know, in Germany, the market standard attach rate is around 35% and we're seeing, you know, that if not even a little bit better. So we're very happy with the product and also wanted to, I think, show really how quickly we can build a very attractive book of assets. Yeah.

Thanks for the call. So the key competitive advantage is sourcing, which I think we've obviously discussed many times before.

No, I was not yet on your question, Will. That's just the beginning of it. So our competitive advantage, I mean, we created those two slides, and we truly believe that those are our competitive advantages. So slide five and slide four. So We have built this company as one company, as one platform that operates on one technology with one management philosophy across all the markets that we're operating in. We cover the full Europe with our 10 to 11 auto hero markets and also buying markets and then 30 selling markets. And the way we have approached this market We're digitally aggregating all the transactions. And that leads to one thing, which is a competitive advantage. And that is higher prices for selling consumers. And higher prices for selling consumers mean that you are able to assemble more interesting inventory. And that more interesting inventory will then translate into very interesting GPUs and positive customer feedback and then lead to cost efficiency. So that's a little bit one of the main flywheels that we have depicted on slide five. There's several flywheels built into the AutoOne platform, but that's one of the most important ones. So every aspect, every business unit is contributing to this data pool. And that data pool lets us then create better decisions for every future and next trade that we're going to do, irrespective of the business unit. And just the sheer growth and the sheer size of the merchant base and the database of card transactions that we have just enable us to learn faster and price cars better than anyone else in this market. At the same time, yeah, we've also mentioned the 500 million ABS facility. That is something where there's a lot of work behind and a lot of progress had to be made to realize that. And now the last skillset that we are learning, if you want so, Gernot Wagner- Is our own use car production, because we really saw I mean it works with external partners it's not very cost efficient, but we don't like this. Gernot Wagner- situation of not having perfect control over the value chain, and this why we're taking the Kavanaugh route and taking this over ourselves and the sites that we're planning will be sites. that will be fully dedicated to us. They will be our own if we rent it or buy it. And this means that they are perfectly suited to what we're doing. And this, again, guarantees the best delivery times, the smoothest processes for the customer, and in the end, the best product for our customers. And then I repeat what I said already a couple of times and keep on saying the best product will win.

That's very helpful, Carla. Thank you, Christine.

Thanks, Will. And with that, Catherine O'Neill from Citi.

Thank you. The first question I got was actually on Autohero on the quarter-on-quarter growth, which slowed down, as it did for a number of platforms. But I just wondered if you could provide a bit more detail on what was behind that. Should I do the questions one by one? Is that easier?

It's easier, otherwise... No, I'm okay with noting them down, but yeah, no, we can talk about the quarter. No, no, I'll do it one by one. So the quarter... Sorry, Philip? Yeah, anyway. So quarter on quarter growth, yes, it looks indeed a little bit reduced. The reason for that is that we were very much over-planned in Q1, and then we actually realized pretty much our business plan number in Q2. So there we were at line again with our business plan. Now your next question would be, why didn't you increase based on the success that you have seen in Q1? And there we have to see the strong ramp up that we did in Q1 was something where we wanted to capture enough data first. So we didn't have a sourcing constraint, but we were in the middle of taking the decision, how much do we front load the external the take in of the external refurbishment, the decision to build out our own refurbishment facilities. And that is something where we looked at a lot of data during Q2 and within Q2 took the decision that we can actually grow faster than we initially planned. Refurbishment needed to have a green check mark there so that it doesn't become a constraint. As you know, And as I just said to Will, we don't have so much of a supply constraint. So we are able to source all the inventory that we wanted. So the decision to go fast on Autohero is mainly based on the early success of the branding activities, especially in Germany that we're seeing, because what we're seeing is that the advanced brand building that we're doing and the advanced awareness that we're generating, why the brand is generating a very positive effect on the business overall. So it leads to higher stock turns and higher stock turns lead them to higher GPU. Or in other words, we can sell more units with the traffic that we have provided that we meet our refurbishment deadlines and standards. And this is why we upped the auto hero guidance even after a Q2 that looks like slower growth if you just look Q2 over Q1.

Okay, that makes sense. And actually on the marketing or branding side of things, are you updating your marketing guidance? I think it was for retail, I think it was 200 million over three years.

We are, I mean, we gave very specific guidance at IPO really to enable people to, you know, build a model going forward. you know, going forward. I think we're not now going to be providing sort of rolling two or three year forward guidance. Having said that, we are looking to spend, you know, significant, you know, significant move forward or invest a large portion of that for this year. So we are looking you know we will be spending around 100 million euros for the second half of the year for between um auto hero and wkda um you know for the for the second half of the year which accounts for the vast majority of the reduced epda guidance okay brilliant um and then on on the refurb where you're adding more capacity um especially into 2022 your plan plan is to do that um what

Gail Levy- percent of units, do you think will refer will be in house by the end of next year if you're at sort of 20% now, how should we think about. Gail Levy- How that increases over the next year, a couple of years.

Gareth J. it's a it's a it's a very good question I think our long term target. would at least be 90%. I think if you look at end of next year, then we estimate or we set our target to be between 30 and 50. So you can expect a continuous increase in the number of refurbished units in-house as a percentage of deliveries.

And then my final question is on gross margin at Autohero. So Aramis has obviously come to market now and has a gross margin in the mid-teens. I just wondered if you could talk about what you think is creating that difference versus Autohero and if there's anything stopping you reaching those levels.

I think that the key difference is that if you sell offline, then you can immediately realize higher gross profits. The problem with that is just that customers don't want it. And they don't like that or they don't enjoy the experience. But if you look at a classic car dealership, I mean, it's not that they have to generate, like they have to raise a hundred million to create a car dealership right offline. So you have your little lot, you sell offline and you're completely bound to the classified of a market. But what you're then building is a legacy business because we know that the market and customer behavior will shift completely offline, will shift completely online and move away from offline. So what it means is that you will not be able to create a brand, that brand that long-term will set you apart from the rest of your competition and will enable you to generate above market cross profits and also above market EBITDA. So I think, yeah, the reason if you compare us with an offline dealership is it's just lots of investment and there's customer behavior that is at the moment kicking in, but already the lift up of cross-profit in Autohero shows you that this is working out quite well. And also the marketing data, traffic data shows you that this is really what customers want, but it will take some time until everybody has adapted their buying behavior.

Brilliant. Thanks very much.

Thank you. And with that, over to Nizla Nizer from Deutsche Bank.

Hi, I hope you can hear me. I have questions as well. Great. Firstly, on return rates, Christian, did they improve in Q2 over Q1? Some color there. And if customers do return a car on Auto Hero, what are the sort of main reasons they do cite for those returns? So just an understanding that would be great. And my second question is on, based on the growth that you are seeing, do you think that the 120,000 cars sold target in 2023 that you initially gave us is now conservative? And could you potentially do more based on the trajectory of improving units sold? Thank you.

Yeah. Yeah. So the return rates are hovering around the same value. So around the 4% that we have been seeing. been seeing. In fact, they slightly improved. But if you compare it with a business like Zalando or so, I think they're negligible. What are main reasons? So main reasons are really that the car is not the one that the customer wanted. So this is mainly the reason for sending a car back. And in fact, this means the other way around, 96% do very well know what they wanted. If you send it back, then it's not an additional scratch or something that we would care for, or the car arrived dirty that we would also care for. So speaking of problems, which could occur at a car delivery, it's really that you dislike what you have, what you have ordered, but not because we didn't provide it in the condition that it should have been. And yeah, so yeah, It's trending down a little bit, but yeah, I think for an online business, this is a very good value still. And on the unit guidance, Marcus is already looking nervous. So maybe I'm handing over to him.

Hi, so we're not changing at this point, our 2023 guidance. I think though, what we are doing is, you know, investing in the platform. And I think it makes us feel much more comfortable about really being able to achieve, you know, that type of growth and that guidance, or sorry, those kinds of units. And right now we're investing really to build a platform whether it's 120,000 units or more, that we know that it can sustain that. And the way we've done it is we decided in Q2 to really invest in marketing substantially for Autohero in Germany. We've seen some very positive outcomes out of that. And most notably, you see that in the GPU, in the retail business. Now we want to expand that for Q3 and Q4, not just for Germany, but also for other markets, because we really see a significant benefit to that, both from a GPU perspective, but also from a sales perspective and gives us far more comfort to be able to to grow at the same time, you know, investing in that refurbishment or accelerating, if you will, kind of the investment in the refurbishment. And we will, you know, definitely providing, you know, more forward guidance, you know, as we get more and more, you know, closer to that and more and more comfortable. But I think for today, we're not changing or giving any changes to guidance beyond this year.

Understood. Thank you very much.

Thank you. And with that, over to Shari Malek at Royal Bank of Canada.

Hi, can you hear me? Yes. Great. I have just two questions on Autohero. The first one's on the truck fleet. And the context of this question is that having been in Spain recently, I did recommend to my in-laws to buy a car on Autohero. And the experience, I have to say, was excellent. I was hoping, though, that the car would turn up in one of the fancy trucks. It didn't understandably. So my question is what? delivery share do you plan to reach by the end of the year? And are you rolling this out across all markets at the same time, or is it a more staggered approach market by market? And then my second question, I was just curious how you're managing the trade-off between the choice offered to the consumer versus the time and the cost to deliver that car to the consumer especially especially given delivery is free so basically is a consumer seeing a more local selection of inventory or is it a whole of country inventory yeah um so first i'm glad that you enjoyed the auto your experience or your your your friend um in spain and uh yes i mean uh it was the

probably right slide for you to understand why you didn't get the truck experience because the likelihood is quite low, which is 25%. We are working as hard as we can to get as many of those trucks on the road. So at the same time, our business is obviously growing and growing. While I think our long-term target of this is definitely 80 and above, I think you can... yeah, just continue the growth trajectory that you see. So as I said, we have, we're working on it as fast as we can, but I don't think that we can promise a certain delivery share towards the end of the year, but I think next year we should definitely be hovering around the 50 or so, at least. So when it comes to your second question, Can you remind me again of the second question? Sorry.

So it was just about the trade-off between the choice offered to the consumer.

Yeah, yeah, yeah. Okay, sorry. So trade-off. No, we're offering every inventory to everyone. And that's really, I think, the beauty of an online car dealership. So that you are able to present the full inventory online. to anybody across the full country. So we're not yet optimizing in any way. I think we would also never restrict any type of inventory unit from being shown to a customer. But what we are working on is that we show you the cars with the fastest delivery date. And that of course, again, is dependent on the size of the truck fleet, which comes back to the first question. But yeah, that's the plan so that you can also optimize in terms of delivery speed to your destination.

Super, thank you.

And with that, over to Andrew Porteus from HSBC.

Yeah. Hi, guys. Three from me, if I may. Obviously, the higher revenue guidance has been helped by some higher ASP trends we're seeing across the used car market at the moment. I'm just wondering whether you expect an element of these to reverse in future quarters or into next year, whether a portion of it is transitory or not. Second question is just, you know, you've obviously seen some quite good GPU trends due to the higher inventory turn and obviously better ASPs. We've also cited a sort of more challenging sourcing environment, and obviously we've seen slightly lower merchant volumes. I'm just wondering whether you'd consider perhaps lowering target GPU, given the favorable conditions there, in order to perhaps accelerate the volume growth and perhaps some of the trade-offs that you've considered there. And then my last question is, And just obviously gross profit looks pretty good, but EBITDA margin guidance is lower, implying that there's some faster investments coming through the P&L this year. I'm just wondering if you're investing more near-term, should we expect that to feed into faster growth in future quarters and what we can expect on that front?

Yeah. Thank you. So how sustainable are these average selling prices that we're seeing at the moment being a little bit higher or quite higher than what we've seen in the past. So we think, but that is very hard to answer the question. We think that roughly 75% or three quarters we consider sustainable and 25% we consider market. So there is this element in the market that there's just strong pressure on the sourcing of cars and This is why the single car itself has been increasing or has stopped or slowed down a lot in devaluing. At the same time, we've changed, and Markus hinted a little bit in his presentation to it, we've changed the mix of cars a little bit towards lower cars. low-end units and more high-end units because they carry more GPU. At the same time, we also see very low-priced units to be a little bit less available in the market as well. And that might be just people with lower incomes holding onto their cars. But we think, yeah, that 75% of that is here to stay and 25% could go. And at the same time, it's a very good question. Should we lower gross profit per unit requirement to actually do more units? We are thinking about this, but we are thinking about it from a unit economics perspective. So what is kind of the minimum car that we want to have? or that we want to operate on. So I think we did the decision last year that anything that is only worth 100 or 150 euros, it's not something that we're super much interested in anymore, but still we're providing customers a solution to sell their car then as a scrap car. But at the same time, yeah, we're thinking at exactly that point about what's the perfect mix for the merchant business. And yeah, EBITDA lower is, of course, investment. It's investment into branding and auto hero. It's investing into our own refurbishment facilities. And it's also investment into the truck delivery and the faster scale up of the truck delivery fleet. And yes, this should lead to faster growth. That's the full idea. We're pulling it forward. But I think we are not yet ready to give detailed guidance on that. Okay, thank you very much. You're welcome.

And with that, over to Simon Bowler at Numis.

Hi, team. Two from myself is okay. One of the ones that I purpose has already been answered, I think. First one was just looking at web session growth for AutoHero, which kind of quarter on quarter is quite a way ahead of unit growth. Gareth J. To mind is that web session growth and reasonable proxy for what you could have done, had you had the the units available for for sale. Gareth J. And then, secondly, and I think it was with reference to the auto here a section you kind of spoke about implementing improved pricing strategy and I just really if you could add a bit of color on what you meant by that.

Gareth J. So. The first one I got completely. And then the second one, I'll have a question back. But could we have sold 33% more because of the web sessions if we had the inventory available? I think yes. But I think we would have had refurbishment constraints. And I think this is why we didn't source that inventory. Could we have sourced that inventory in Q1 to sell it in Q2? I think yes. Would we have had refurbishment constraints? Probably, yes. So I think that's the answer here. So we have more traffic than cars to sell for. And I think this means just a lot of future sale potential. And then on the second one, you have to remind me a little bit again on how exactly you meant this.

I think, Christian, when I had discussed the GPU growth in retail, I think we attributed it really to two things. I think on the one hand, as we discussed the marketing growth, sorry, the marketing investment in Germany and faster sales speeds. I think in addition, see just... As we get more data on the consumer cars, what we are doing is just getting better at our overall pricing strategy in terms of what's the right price when we put it on the website, how long does it stay at, if you will, the initial price, when or if it comes down. And I think just using the data that we are gaining from trading more and more on the consumer side, just becoming smarter and better at maximizing the value there. And I think that's also been a significant contributor to the GPU improvement that you saw.

Yeah, yeah, yeah, yeah, absolutely. I mean, that's maybe why I didn't get it. So it's not a different pricing strategy. It's just filling the algorithms that we have. that are working so well for wholesale with the retail data. And you're absolutely right, Simon. So this is leading to a situation where we are getting more and more comfortable with pricing retail cars. And this means that we're offering the right price for the better cars and a little bit less for the lower quality cars, which need more refurbishment. And at the same time, also then are getting smarter with the data that we have in down pricing the cars at the right a point in time and not down pricing them if they will be immediately sold. But we're very much at the beginning of this. So there will be a lot of smartness that will be built into the system and also into auto pricing because we're pretty advanced already with auto pricing in our wholesale business unit. And we're looking forward to bring this also for retail sourcing.

Okay, great. Makes a lot of sense. Thank you.

And auto pricing is automatic pricing as opposed to car pricing.

Auto pricing is something where the system is not only suggesting the car price and then a human before really touching the balance sheet signs off that price. Auto pricing is... the purchase of a car fully automatic. So there's no human looking at it anymore. And yeah, that's something, yeah, we like it a lot. It's a pretty smart system. Took also years to develop. So now we can go on.

Thanks, Christian. And with that, over to Adam Berlin from UBS.

Hi, good afternoon. Two questions, if I may. The first thing, as you said earlier in the call, a question on finance, I think, and that 99% of the cars are still being sourced C to B. When do you think you will need to start entering alternative models of sourcing to meet your expectations? Is it next couple of years or is there longer to wait until you have to do that? And then the second question is about the flywheel that you presented on page five of the presentation. It's very interesting. Just want to understand, are you currently already in a position where you have enough scale to bid higher for cars than some of your competitors would be? Or is that just a plan that at some point you will have that scale to be able to do that? Just want to understand if you're already in that position or that's what you think is like a target where you'll get to.

Yeah. So on the question, when would we need external sourcing? I think when we would, what we needed, I think is quite far out. I think the question would be more, when do we want it? Because there's a certain set of inventory that you would typically have as a car dealer, which you can rarely buy from a consumer. And that's one to two year old cars. So this is very young inventory. So basically leasing returns or rental returns, which have a good share in the overall market, which have probably a more competitive pricing situation because you need to buy them at auctions or from dealerships and so on. So in other words, from professionals and you cannot source them from consumers. So I think this share will grow, but more out of the rationale that we want to cover a certain part of the market on the very young end of the units. I think if you look at profitability, then those units will always be inferior to the profitability of the little bit older ones that are sourced from consumers. And then on the flywheel, I think we need to distinguish. So on the wholesale, we definitely have this. So on the wholesale, we're definitely able to bid higher than the competition because otherwise we would not be able to purchase 100 or sell 116,000 units for merchant. On the auto hero, I think this flywheel is just starting to fill. And that's something that drives on the one hand, the sourcing volume up, on the other hand, drives also the GPU potential up. And a little bit like Simon's or related to Simon's questions then leads to just smarter pricing intelligence. And I think, yeah, this is just developing for Autohero with a comparable low amount of units so far. So there's lots of potential in that flywheel going forward.

But are you kind of close to being that position or does the business have to scale materially before you're comfortable?

No, it's really like unit. I think it's really unit by unit. So, I mean, let's say if it's 100% flywheel or whale, then I would say we're at like, what, 15%. And then with the next quarter, it will do huge step ups. And then the last 20% or 25% will take a much longer time. Thanks very much.

Thanks. So that actually takes us to the end of the questions that we got from the analysts. We got a handful of other questions we got directly from investors. And just in the interest of time, I will just read those out directly rather than hand over. So the first question is, do we see the risk of an ESG backlash for using trucks to carry cars around Europe?

No, I don't think so, but it's a good point. So we're looking for, of course, alternative drive trains here for the trucks. So I think the availability of an electric truck would be great. At the moment, there's just not anybody to our knowledge that produces this. because it's very heavy loads, right? So they need to carry this 1.5 to 2.2 tons of car. And we could think about having electric trucks on low distance within the city, on low distance deliveries, but it's definitely something that we think about. But I don't think it's a real risk of ESG backslash.

And then there's a question on C2B units, which are still below the first quarter of 2020. Will the C2B units recover above these levels and when?

Yeah, so this is a little bit also a point that Marcus addressed. So we're actually thinking about, so the units that you're not seeing are low value units. So the units that are in that sense, if you want some missing, are units mainly below 1,500 euro purchase price. And we are thinking about to which extent we want to make them part of the funnel again. So as we think that the most important KPI from a financial perspective is the gross profit, the overall gross profit that we're doing, we are thinking about those units in light of that. On the other hand, we also want to make sure that we're providing the best service for anybody. And that's something that, yeah, we currently think about. And if we get them back, those low value units, then I think we are able to grow or outgrow those unit numbers. But if you compare it with the gross profit, then what we're at the moment doing is a far better business.

And then I think there's probably a question to you, Marcus. Do we expect any further share issuance and capital raises or are the current cash holdings sufficient?

We do not. Cash, current cash holdings are sufficient. You know, we not only raised, you know, close to a billion euros of equity, you know, as part of our IPO, but as I noted before, you know, we have not just as a cash management, we have not drawn down at all on our ABS facility, which we have, you up to 500 million euros, and likewise see things such as the consumer finance receivables and the real estate, both of those are very much financeable as assets. So we do not see any need for any kind of capital increase.

And do we have any thoughts on the share price decline, I guess, today?

I mean, I think the only comment I would make is, you know, we had existing shareholders who had a six-month lockup post-IPO. That six months came, I think, due two days ago. And so my only theory, you know, notwithstanding... what seems to have been positively received results is that, you know, some of the smaller shareholders who were very early investors and are in the share at, you know, sub 10 euros a share type of price are just selling out in the market right now and that's creating pressure.

And then Christian, finally, I think to your special knowledge, do you think Messi will go to PSG?

So there were rumors that Ronaldo would think about PSG, but I think he starts training this week. And yeah, it will be interesting to see if Papier will be still part of it. But irrespective of Papier or Ronaldo, the deal is a good deal.

Right. So that actually takes us also to the end of the Q&A. I think as Mark has said, we will publish the full set of financial statements on September 15th. We also then obviously have the Q3 results in the middle of November. And as you've probably seen, we're actually doing a fair amount of mini roadshows and conferences in the meantime, but obviously also feel free to reach out to Max, Alexander and myself if you have any other questions or want to have a chat. And with that, thank you very much. And I wish everybody a very good weekend. Thank you.

Thank you, everyone. Thank you. See you next time. Bye-bye.