Auto1 Group Se

Hello, good afternoon and good morning and good evening to international participants. Welcome to the O2One Group second quarter 2025 results presentation. I'm Philip Reikersdorfer, Group Treasurer. As always, I'm joined today by Christian Bertermann, our co-founder and CEO, and Markus Boser, our CFO. We will start with the presentation, followed by questions and answers. If you would like to ask a question, please raise it via the usual Zoom Q&A tool at the bottom of your screen. We will then call on you to ask a question directly after the presentation. Before I hand over, I must make you aware of the safe harbor provisions at the beginning of this presentation here. These will apply to any forward-looking statements made by management today. And now over to you, Christian.

Hi, everyone. Thank you, Philip, for this introduction. Welcome to this AutoOne Group Q2 earnings call, everyone. Q2 was a very strong quarter for AutoOne. We sold 200,000 vehicles in total. That represents 21% year-on-year growth. Cross-profit surged by 33%. year-on-year to 231 million euro. That is an increase of 58 million euro compared to Q2 of last year. Group gross profit per unit also increased climbing 10% year-on-year to 1148 euro. This is up from 1041 euro in Q2 of last year. We doubled our adjusted EBITDA from 21 million Euro last year to 42 million this year, while our adjusted EBITDA margin increased by 70 basis points to 2.1% year on year. These results are driven by the advantages of our vertically integrated business model, which is fueling sustained growth across both our retail and merchant segments. We have very strong momentum, and we will keep our focus on delivering exceptional value to our customers to drive further market share gains. As some of you might know, we are pursuing a value-first approach for any business we do, ensuring we focus on all the elements that create meaningful value for our customers. Value in our business can mean higher selling prices, lower buy prices, lower processing costs, greater selection, greater convenience, highly motivated staff, increased trust, fast and reliable delivery, and competitive financing. We are convinced that our vertically integrated business model and the power of our digital trading platform uniquely position us to create the best products and solutions in the industry, setting us apart from competition and up for continued success in the European newscom market. Now let's deep dive into the numbers and start with our merchant segment. In merchant, we delivered strong results in the second quarter, achieving double-digit growth across all key metrics. We sold 177,000 units to our merchant partners in total, representing a 19% year-on-year increase. Merchant cross-profit in Q2 was 170 million euro, rising 24% year-on-year. Merchant cross-profit per unit also showed strong growth, reaching 961 euro up from 918 euro in Q2 of last year. For the first six months of 25, total merchant sold units reached 359,000. This is an increase of 64,000 vehicles compared to the same period last year. Gross profit increased by 84 million euro compared to H1 of last year. A record number of 29,800 merchants purchased from us in the second quarter. This is a new quarterly high. This represents an 18% year-on-year increase compared to Q2 of last year when 25,200 partners bought from us. The average basket size slightly increased with merchants purchasing an average of six vehicles in Q2. We continue to be very focused on the key drivers of value creation for our merchant customers. Gathering and acting on partner feedback is fundamental to understanding their needs and identifying ways we can support them even better. In-person events are a vital part of this engagement. In Q2, we hosted events in Germany, Spain, and Portugal, for instance, bringing together over 100 selected dealers to hear their feedback firsthand. We are always very excited to speak with our partners and aim to tailor our product and services perfectly for them, enabling them to continuously grow together with us. On the supply side, We continued our expansion of our purchasing branch network across Europe for the future growth of our business. We opened 40 new branches in the second quarter, growing our sourcing footprint substantially year on year. For our merchants, this means increased vehicle selection and availability, strengthening the quality of our offering. We will continue to invest into the density of our network in the months and quarters ahead. Also on Auto One Merchant Financing, we continue to deliver great results. Created as the most convenient financing solution for used car dealers, we provide eligible partners with an instant credit line integrated directly into our platform. This allows them to finance vehicles with just one click. Auto One Financing is fast, it's transparent, and it's designed to grow the business of our partner dealers significantly. In Q2, we financed a total of 328 million euro of merchant sales. This is an increase of 79% compared to the previous year. The number of units financed grew by 71% year-on-year to 29,000 units in Q2. Our portfolio balance almost doubled from 134 million euro in Q2 of 24 to 264 million euro of this year. We are working on rolling out merchant financing to more markets and more partners constantly. Let's move to retail, where we also had a great quarter. Autohero is gaining more traction faster, and we are happy about the significant and parallel progress we make in units sold, gross profit, and GPU. Archie Hero delivered record 23,800 units compared to 17,700 in Q2 of last year. This is an increase of 35% year-on-year and 1,800 units more than in Q1 of this year. Retail gross profit climbed to a quarterly record of €61 million, growing significantly by 67% year-on-year. Retail GPU was €2,538 in Q2. This represents an increase of 22% compared to Q2 of last year. And it also represents a steady progress towards our long-term retail GPU target of €3,000. For the first half of the year, gross profit increased by €47 million and GPU increased by €535 compared to H1 of last year. Convenience is one of the key drivers of customer satisfaction in retail. So we continue to optimize for speed, aiming to hand over car store customers as fast as possible. And for the first time ever, we achieved an average delivery time of under 10 days. We successfully reduced the average delivery time from 12.3 days in Q2 of last year to 9.4 in Q2 of this year. That is a 24% decrease year on year. And we added eight additional Express Hubs in Q2. Total, we now have 45 Express Hubs across all Autohero markets where cars are available within 72 hours. In late Q2, we successfully rolled out our in-house consumer financing solution for Autohero customers in Spain. This launch underscores our commitment to providing the best financing options to our clients. making car ownership even more accessible and convenient. With Spain now joining Germany and Austria, our best-in-class internal financing is available in three out of nine markets and enables customers to purchase and finance their cars in minutes. By integrating financing directly into the customer journey, we deliver a seamless, a transparent, and highly competitive experience that differentiates us from traditional banks. Early feedback from Spain has been very positive and we're confident this will drive further growth and enhance customer satisfaction across our platform. Let me close with our view on long-term goals. Our unique vertically integrated business model is providing the foundation for our future growth and margin expansion. We aim to capture a market share of 10% of European USECA transactions in the long term and combine this volume with a 5% to 9% adjusted EBITDA margin, depending on the relative size of the merchant and the retail business. In order to steadily grow market share, we are investing into a number of initiatives at the same time. Some of them, like our increased investment into the Auto Euro brand, We present strategic multi-quarter investments that strengthen our market position and drive long-term value and margin expansion. While we're already seeing positive momentum, we expect the full impact of these efforts to become increasingly evident in the months and quarters ahead as our platform continues to scale. I'll now hand over to Markus for a detailed financial update. Thanks, Christian.

Q2 was again a very strong quarter with €1.97 billion of revenues, our highest consolidated quarterly revenue ever achieved, representing 30% growth year-on-year, a consequence of 21% unit growth year-on-year and an 8% ASP growth through a combination of general ASP increases as well as a mixed shift as Autohero becomes a larger part of our business. Through a combination of GPU growth and OpEx leverage in both of our segments, our year-on-year profitability grew faster than the top line, with our gross profit growing 33% and adjusted EBITDA more than doubling to 42.3 million. Our EBITDA margin also grew circa 50% year on year, reflecting a slight increase in our gross profit margin from 11.4 to 11.7%, but mainly a consequence of greater operational leverage through a combination of improved auto hero profitability, as well as increased units over a broadly stable HQ cost base. Let's turn to our usual quarterly bridge to adjusted EBITDA. Gross profit declined by about 5 million euros as the expected consequence of Easter and additional Q2 holidays, many of which fell on a Thursday, meant that we had fewer working day equivalents relative to Q1. Increased OPEX in Q2 is the result of selective investments into growth to exploit the incredible opportunity we see to accelerate market share gains in this massive fragmented market. These increases were partially offset by improved per unit economics and improved leverage of our HQ costs, which are declining as a percentage of total OPEX. Marketing grew 2.8 million quarter-on-quarter, with over 100% of this growth coming from Autohero, as marketing for WKDA, i.e. purchasing our cars, declined slightly quarter-on-quarter, showing both the benefits of scale and the success of our branch opening strategy, where we are able to amortize our marketing costs more effectively by being closer to the customer. We believe that similar dynamics will occur in AutoHero over time as that business scales up. Internal logistics increased by 1.4 million, primarily driven by our increased purchasing of units. Payroll increased by almost 8 million as part of our planned increases to support our ongoing growth. The main areas of staffing growth, as previously communicated, were in purchasing branch staff, refurbishment in AutoHero, and Auto1 sales. We continue to maintain a strong balance sheet with our cash rising circa 17 million euros quarter over quarter. This increase was driven by the strong cash generation of our car trading products before inventory movements. We also successfully managed to refinance almost the full increase in inventory and captive finance assets this quarter, demonstrating the efficiency of our integrated platform. We upsized both our merchant and consumer finance facilities to enable further growth and new market entries in both products. Our inventory growth represents an investment into anticipated continued growth in our auto hero business, where we generally need to build up inventory circa a quarter beforehand, as well as to be prepared for early July sales in our merchant business. Lastly, we also built up our captive finance assets with the merchant finance portfolio growing about 6 million euros and the consumer finance business growing circa 45 million euros. Finally, to guidance. We are increasing our expected 2025 merchant units to 680,000 to 720,000 units from 650,000 to 700,000 units, equalling 14% year-on-year growth at the midpoint, and our expected 2025 retail units to 92,000 to 97,000 units from 85,000 to 95,000 units, equalling 27% year-on-year growth at the midpoint. We expect that we can maintain this increased growth in retail at around the current GPU of slightly above 2,500 euros. So an improvement over the slightly below 2,500 euros that I mentioned in the Q1 earnings call. With respect to merchant GPU, while we continue to be confident in the long-term upside, our 2025 guidance assumes that it will be around the current level for the full year. Together, this leads us to increase our gross profit range to 890 to 940 million euros, up from our 845 to 905 million previous guidance. We increase our adjusted EBITDA range to a full year range of 160 to 190 million euros up from 150 to 180 million, reflecting the increased forecasted units and gross profit while continuing to invest in our growth. This is the second time this year that we have improved our gross profit and adjusted EBITDA guidance. We're very happy with our Q2 results. Our growth and market share gains demonstrate the power of our vertically integrated strategy and believe we are well on track to achieve our long-term market share and margin expectations. I'd now like to open up for questions.

Before we proceed with the Q&A part of our call, let me review a few technical points. If you had not already done so, please submit your question via the Q&A tool at the bottom of your Zoom screen. Philip will then call on you to ask questions. I will then unmute you and hand the call over to you. Please ensure that you have enabled talk on your device.

Thank you, Lisa. And we are starting with Andrew Ross from Barclays.

Great. Can you hear me okay? Yep. Perfect. Good afternoon, everyone. Thanks for taking my questions. I've got three, if that's okay. First one is to ask you about inventory, which has stepped up at the end of Q2 compared to where it was at the end of Q1. So if you could give us a bit of color as to where that step up has come from between merchant and retail, and how you're thinking about kind of units sold into Q3 based on my inventory position, which I understand is quite different in how we extrapolate that between the two divisions. That's the first question. The second question is just to clarify the language you use, Beryl, the GPU guide for the rest of the year in merchant markets. I think you said kind of current trends continuing. Did you mean first half trends or Q2 trends given that Q1 was higher than Q2? I mean, the third question is, you know, one of your peers, Aramis kind of spoke about slower growth and a couple of their markets, particularly in Spain and Austria. Can you just touch on what you've seen in those markets? It's about a kind of market problem or event specific problem. Thanks.

Markus, do you want to start? Thank you, Andrew, for the question. Do you want to start on the inventory and on the merchant GPU question? And I'll take the market one. You asked for specific markets, Andrew. Can you again say which ones? Were they Austria?

I mean, Austria, Spain, I guess France as well. I'm just thinking of markets where you overlap with RMS and trying to compare your trading compared to what they spoke about. Thanks. Yeah.

So yeah, so specifically on the inventory, So the retail inventory is inventory that we tend to hold on to much longer because the selling times for retail are much longer than those for the merchant business. So generally, we hold the inventory about a quarter before kind of the sales in the following quarter. And so I think that's already reflected in our guidance. So obviously our guidance reflects more units being sold in the second half of the year versus the first half of the year. There's also been some build up in the merchant inventory. I would say some of that as well is a bit of cut off and kind of just the purchase and the sale. So while we over time aim for a consistent sales speed. As we kind of see as July purchasing tends to slow down, we purchased a lot of units in June to be able to sell them in July because we have much faster sales speeds there. So I would put that more to a kind of a cutoff timing perspective with the end of June there. um with respect to the gpu guide um for the second half of the year looking more towards um the guidance assumes uh more similar to um q2 uh than than q1 so uh currently for the full yeah exactly christian do you want to talk about the uh yes so i mean overall

Look, we're not seeing it in the same way as Aramis was talking about. So, I mean, we're not seeing the market as a drag in any way. We're seeing the H1 Yuska market in Europe stable year-on-year in volumes. So there's, out of our point of view, no headwind or tailwind. just in our point of view makes our results even stronger because we're growing 20% on total units and the market is not helping us with this. When we're looking at preliminary data, I have to say, on how we track Austria, Spain, and France, then what I said for Europe is what we also see for France, roughly 1% for H1, 3% for Spain, 2% for Austria. A disclaimer, there's different ways of tracking this. Aramis has also a big new car business where maybe the impacts are more negative. I don't know. But when it comes to use cars, yes, market-wise, the Q1 was stronger and the Q2 was more stable. But overall, I mean, we're not seeing the market as a drag and regard the overall situation as stable.

Cool.

Thank you. We're then going to James Tate from Goldman Sachs.

Thanks, Philip. And thank you. And good afternoon, everyone. It's James Tate from Goldman. I've just got two questions, please. I guess, firstly, on auto hero units sold, as you mentioned, I guess it's encouraging to see an acceleration in Q2, both year on year and on an absolute basis quarter on quarter. So could you just give a bit more detail on what were the key drivers of this? In particular, are you able to quantify the impact of the recent incremental OPEX investments you've done over the last few months, especially as you previously talked about a one to two quarter lag? And just given you said the full impact should become increasingly evident over the months and quarters ahead, does this mean that you expect units growth to accelerate further through the rest of the year and into 2026? And secondly, on Autohero GPU, you previously talked about improving inventory turns as a key driver of improved profitability. Have you started to see any progress here? Any details that you could share would be super helpful. Thank you.

Yeah, so indeed Q2 performance in Austria makes us quite happy, as you were saying, like the sequential increase on units, but then also the higher growth rate. Some of the investments that were taken are responsible for that. So we are increasing selection in ArtiHero by assembling a bigger inventory where Markus was already answering some questions for Andrew. We're also investing into our production capacities. We're pretty much investing into every part of the value chain to make it bigger. And we're also started to increase our investments into brand marketing. And apart from the investments in brand marketing, a lot of the investments that were taken are investments that are showing their effects in terms of additional capacity directly, and then the brand marketing will have a further lag. And we're seeing some benefits out of the increased investments that we did so far, but we're expecting more effects to come out the longer, to come through the longer we are holding that increased investment into the brand. And yeah, therefore, overall, we are, seeing AutoHero a bit stronger. That's why we also upgraded the units. And yeah, if we do our job well, then just can't continue. Markus, you want to talk about AutoHero GPU?

Yeah, I think kind of maybe to your second question, I think on the inventory turns, I think it's not so much that we're seeing an improvement in the inventory turns, but what we're seeing is our ability to grow more with the same inventory charts. And so I think in the Q1 results at that point in time, I was talking about slightly below 2,500 Euro GPU, I feel, you know, now feel more comfortable that we're a bit above that 2500 euro GPU, while at the same time actually improving, you know, the growth rate of auto hero, which we've, you know, you know, just just done. So I think, right now we see really improving unit economics across auto hero, but are investing a lot more in marketing. So as I as I highlighted in my prepared comments, almost all of our increased marketing, or more than all of our increased marketing spend was in the Autohero, investing in the Autohero brand. But at the same time, you know, reduce, for example, the marketing in the WKDA as we've been able to do that, of course, also has a reflection in the overall economics in that business and also continue to see incremental improvements across really across the board and refurbishment and logistics and a lot of other things. So I believe that now is now is really the time to invest in that growth. And I think that's reflected in the in the guidance that we're giving.

Thank you, James. And now Nisla from Deutsche Bank.

Hi, I hope you could hear me. I just have a couple of questions from my end as well. The first is on the implied H2 guidance range. Could you tell us, Markus, what needs to happen to reach the upper end of the range and what's factored in maybe the lower end of the range? So some color there would be great. And also on the Auto Hero GPU, a question that we frequently get is the composition of it. So is there any color you can give us as to the contribution of consumer financing in the Auto Hero GPU at present? And if you could dive into the components of that Auto Hero GPU, how much is the metal to metal profit versus the cost of refurbishing the car versus the financing income? that would be fantastic. And linked to that, how are you thinking about expanding the consumer financing business beyond Germany and Austria? And could that then help future Autohero GPU maybe starting 2026? Samkala, that would be great. Thank you.

Sure. So I think with respect to the guidance I think one of the aspects of our business which we've highlighted in the past is that there's always a little bit of uncertainty at the very end of the year, particularly as you head into December and merchants basically start to ramp down their own inventories. And having said that, it also can be a good opportunity to purchase cards. And so I think the range of the guidance reflects some of that uncertainty that inherently the business tends to have in Q4 and specifically end of November and December. And so I think that's reflected in the range that we have on the units and also the profitability. Then moving to the Autohero GPU, I would say our financing GPU continues to improve. And so I think we're in the high 300s for financing GPU, which comes from both internal and external. Our internal finance GPU, which today reflects 99.9%, basically Germany and Austrian portfolio or net interest income, plus some related products around that is already in the mid 500s. If you take that with the internally financed markets, specifically Germany and Austria. As Christian talked about, we want to expand that also now into Spain. We started at the end of Q2, we launched the product in Spain. Initially, that can actually be even a little bit dilutive of GPU because The value is the net present value of the interest that you get as you build up that portfolio. And so the longer you build up that portfolio successfully, then of course, that then flows through as it's currently doing for Germany and Austria. So we're just at the very beginning of that. And I think managing it very carefully to make sure that it also reflects our overall GPU targets. But expect that, of course, to kick in over time as that portfolio grows. And we see Spain as a very interesting market.

Thank you.

And last but not least, Markus from JP Morgan.

Hi, Markus. If you can just follow up on this. What's the plan to roll out finance in other markets? We sort of had these discussions before and I understand that it really takes a lot of time given legal challenges and every market is different. But just to be clear, is the plan to sort of like roll finance out as quickly as possible in all markets and if that's the case what should we sort of like assume in terms of years probably when when you see sort of like high adoption in in all markets just to get a bit more understanding sort of like about the timeline and how to think about it a bit more more longer term that would be great thank you

Yeah, so let me distinguish maybe between merchant finance and consumer finance. So I think there's a very near term plan on the merchant finance to enter into two new markets over the course of this quarter. And so we're pretty active right there and potentially even a third market before the end of the year on the merchant finance side. The merchant finance is a little bit easier regulatorily than consumer finance because, of course, the protection for consumers as you'd expect are going to be greater than they are in the B2B market. On the consumer side, At the moment, we kind of have, I would say, more of a yearly cycle because I think the next market that we would look to enter, I think will probably take another few quarters for us to get the regulatory answers and structure correct. So I would look at it as probably another few quarters before we're able to enter another market in consumer finance. I think Spain's obviously the first market that we've entered in the last few years. And so I think depending on how that goes, maybe we can accelerate that, but right now it'll still be another few quarters before we enter another market.

Okay, perfect. Thank you.

I think we have an additional question from Andrew at Barclays. Andrew Ross, that is, Lisa.

Great. Thanks for squeezing me in. I just want to ask about this kind of debate of drop through of incremental gross profit to EBITDA. Obviously, in Q1, there was some kind of incremental OPEX implied in the guidance change, and then kind of similar this time. And in Q2, we've seen a step up in that OPEX level. Can you just talk a bit about kind of absolute OPEX expectations into Q3 and Q4? Like how much of this incremental OPEX has already happened in the run rate and how much has come? And if we were to continue to see upside in units as you go from balance of the year, Are there more things that you could invest in or would we expect to see a kind of more normal drop through of incremental gross profit to EBITDA return through the rest of the year? Thanks.

I mean, from our guidance, what you can see is that we expect depending on where you take the range. But at the middle of the range, we would expect in total about €375 million or so of OPEX for the rest of the year. And a bit more than that in total at the top end of the range in terms of the OPEX that's needed. uh i do think in in q2 um uh we we you know clearly made um a big a big step up in that investment precisely for the reasons i talked about which is we're actually seeing the underlying unit economics particularly around the auto hero business um uh improving and and so therefore want to uh invest in the the brand that um you know that that christian was was talking about um Uh, yeah. So, I mean, I'm, I'm not sure how else to, to answer, um, your, your question or hopefully that does, does answer it.

That's helpful. It sounds like most of that kind of incremental run rate OPEX is in the Q2 numbers. Then we think about second half.

Yeah. Typically Andrew, because of the lower days, right. In Q2, I mean, and, and, and then the, the usual, like very strong months of September and October and Q2 is an investment quarter in order to prepare for this step up that we also saw last year, which is then fueling the growth in Q3 and Q4, so especially the months September, October, November split into the two quarters, right? So if you look at the seasonality investment versus growth, then Q2 is one of the slower ones, and then Q1 and Q3, you will see then stronger upgrades. And this is why um mathematically also if you look into the guidance and the impact of the additional opex is getting weaker through the rest of the year because we think that we have now built up a lot of capacities uh in merchant but also an auto hero to fuel more growth and that is why we also were confident to upgrade our unit guidance for the full year while increasing ebitda as well helpful if i could just squeeze in one more follow-up as well once i've got the time so on

The retail side, you guys have talked about good progress about managing the GPU as you kind of accelerate the unit growth in Q2. Sounds like that's going a bit better than you were expecting at the Q1. But obviously, the other big element of the unit economics that sits below GPU is marketing. So can you just talk a bit about how customer acquisition costs are trending in retail as you start to kind of further accelerate that business and how that's trended relative to your expectations?

yeah i mean it's trending in line with our expectations but because you don't get the full um benefit of the uh investments into the brand in one quarter and obviously if you just divide the marketing through the units in one quarter it looks worse yeah so it's like a six to nine month payoff where you are accelerating the awareness for the brand but then also certain lead cohorts that we're buying will only convert over the course of the next six months to nine months. So as we're steadily investing into it, the view just on the quarter is a limited view and it's not the correct view because those cohorts are split, right? A portion of the customers, I mean, let's take for simplicity, we take half of the customer's interest that they will convert. maybe within six to eight to 10 weeks, right? And then the other half is kind of converting on a much, much longer timeframe thereafter. That's why the view on the, let's just divide marketing by the amount of units sold in that quarter is not the right view to build up the brand. While we, as long as we continue this investment levels and can increase it also, over time in line with the growth of gross profit in Autohero, then we're getting step-by-step the full impact of those. And at scale, then, let's say, in a couple of years from now, then the marketing cost as a share of revenue in Autohero will decline substantially.

Very clear. Thank you.

uh that concludes uh today's call thank you everybody for dialing in i hope you will all have a great opportunity to take a summer holiday and i'm sure i'll see a lot of you also then on the conferences in september or otherwise we've got our q3 earnings in november coming up thank you thank you everyone have a good day bye