Auto1 Group Se

Hello, good afternoon and good morning and good evening to international participants. Welcome to the OtterOne Group fourth quarter and full year 2025 financial results presentation. I'm Philip Rikershoffer, Group Treasurer. I'm joined today by Christian Bertermann, our co-founder and CEO, as well as by Christian Valentine, our new CFO. We will start, as always, 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 your 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. These will apply to any forward-looking statements made by management today. And now over to you, Christian.

Thank you, Philip. Hi, everyone. Welcome to the AutoOne Group Q4 and full year 25 earnings call. 2025 was a fantastic year for us. We accelerated growth rates across both the merchant and retail segment. We achieved the highest EBITDA margin in our 14-year history. These outstanding results are a testament of the value-first strategy that governs our strategic thinking, and decision-making. We have been investing for more than a decade to build the leading vertically integrated pan-European used car platform with the goal to maximize value for everyone in this market. We focused our investments on various areas, notably our AI-powered pricing technology, our unique logistics network, our dense drop-off and pickup network, our production center network, and our financing facilities. in each of these areas we are the leader in the european used car market while we continue building our infrastructure we are now leveraging it we delivered record volumes and record profitability simultaneously benefiting significantly from the powerful structural advantages of our unique vertically integrated business model these advantages are increasing with further scale, forming an undeniable flywheel of improving product value and unit economics in parallel. Group unit sales reached a new all-time high of 842,000 vehicles last year. This is an increase of 22%. Total gross profit surged by 37% year-on-year, to €991 million, and group gross profit per unit also increased significantly, climbing 12% year-on-year to €1,172, up from €1,049.24. We delivered our best-ever full-year adjusted EBITDA of €198 million. This is 81% more than last year. Our adjusted EVDA margin improved by 70 basis points to 2.4%, demonstrating the substantial operating leverage within our business. Our vertically integrated business model has inherent structural advantages compared to the traditional brick-and-mortar approach in used car trading. These advantages directly translate into increased value for our customers. We are, for instance, able to generate higher selling prices for our selling customers as we aggregate more demand faster, enabled by our pricing and platform technology. We are also able to process transactions at lower unit cost as logistics costs and miles decrease and residual operating costs per unit decline with higher utilization. Similarly, we're increasing value in other categories enabled by vertical integration. We can increase selection and convenience faster as our demand scales. We're able to offer lower buying prices for our buying customers, helped by lower unit costs and the vast reach of our physical networks. And we're able to offer competitive financing rates enabled by our unique financing backbone. We are increasing trust enabled by our rigorous car quality standards and our highly motivated staff. And all of this together means higher value for our customers. And that in turn translates into more demand for our products and services. Now to one of the market's favorite topics, AI. Let me take a moment to focus on the question, how can AI be effectively applied to the used car market? Let's start with the obvious. Any AI model starts with data. In the used car market, the most important data you can own is pricing data. In contrast to openly available sources like the public internet or open source code hosting facilities like GitHub, used car pricing data is private. Obtaining this data isn't straightforward. In order to generate, you have to start trading. Even classified platforms that serve as market aggregators do not own the final transaction price data. They only store asking prices and they lack detailed information on the car's condition. We, Ottawa, own the largest and most comprehensive pricing data set for the European used car market. And that has always been a key priority from the very beginning. After gathering trading data for five years since foundation, so since 2012, we started to build our first data science teams tasked to develop machine learning-based pricing models, roughly 17, 18, with the goal to leverage our proprietary transaction data Today, these pricing algorithms are one of the strongest elements of our competitive mode. They cannot be replicated without being us or going through the same history of trades. But data alone isn't enough. With price quotes only, you cannot grow and grab share in this market. You need to back them up with real pricing power. Or in other words, you require sufficient supply and demand in order to create the same real-time trade system that sits at the heart of Auto1. We operate the largest European vehicle drop-off and delivery network, seamlessly connected to the biggest logistics infrastructure for use class. With a weight of one to two metric tons, our goods require a unique logistics chain. A combination of our AI pricing models with our physical network infrastructure enables us to efficiently aggregate supply and demand. always focusing to maximize value for all of our customers. In short, we own physical networks that form a very strong moat and cannot be conquered by an AI prompt. You also need to be an outstanding trader in our business, and that requires a sufficient balance sheet and smart management of capital. The sheer size of our balance sheet and the efficient management of it through our real-time trade system is another rock-solid element of our competitive mode that simply cannot be replicated by AI software only. One thought becomes more and more clear. If you set out to apply state-of-the-art AI technology to the used car market with the goal to become the long-term market leader, you will create a company like AutoOne. You can think of AutoOne As an AI-enabled Amazon for the used car market, we are not a company where AI is being put on top of legacy systems. Rather, AI is rooted deeply in our DNA for over a decade. As I just mentioned, we started AI pricing in 2016-17. We are a company that leverages this homegrown technology to connect our proprietary pricing intelligence with our unique physical transaction network to handle the complexity of the used car market in the most efficient way. Okay, let's continue with a look at the merchant segment and its performance last year. Merchant, our largest business, performed very strongly last year, achieving new records across all key metrics. Full-year unit sales increased by 20% year-on-year to a record 741,000 vehicles. Breaking through the 20% growth level is a strong confirmation of our outstanding execution and the value-first strategy we pursue, particularly given that Merchant is our largest business segment that we started 14 years ago. In Q4 alone, we sold 190,000 units to our partners, representing an increase of 17% year-on-year. We also achieved our highest ever merchant gross profit of 723 million euro for the year. This is 160 million or 28% more than in the year before. Growth in the fourth quarter was also very strong with gross profit landing at 188 million euro, up 23% from Q4 24. Merchant GPU was €976 for 25, representing an increase of 7% year-on-year, a result of the steady progress of our pricing algorithms and trading systems, higher merchant average selling prices, and strong merchant finance execution. Merchant GPU and Q4 was €986. This is €44 more compared to the same period in 24. In 2025, we achieved a new record number of dealers purchasing on orderone.com. For the ninth consecutive quarter, our network of active partners grew, reaching 33,700 in Q4, an increase of 23% over Q4-24. For the full year, a record 54,400 partners purchased from us, up 22% compared to the year before. The average basket is roughly flat year in year, driven by the strong growth of new dealers. We also continued our branch network build-out at a high pace with the aim to increase supply capacities fast enough to meet our growing merchant and retail demand. We added 178 branches last year, a 32.5% increase year in year, bringing our total branch count to 725. We purchased 809,000 cars from consumers with around 16% of our cars purchased for retail. By the end of last year, we operated a quarterly capacity of around 300,000 units, an increase of 38% year-on-year. We supported our growing dealer base strongly with logistics as well. Our network processed 29% more transports to dealers last year at improved speed building out our physical capacities further and further. The overall transport share in the merchant segment increased by 7% to 48% year-on-year, while the transport share of all cars sold across Florida increased even more by 11% to 60%. We are now operating the largest used car logistics network in Europe with more than 1.5 million transports last year and over 170 logistics compounds across the continent. We are also very happy with the progress of our merchant financing product in 25. We extended merchant financing to Poland and Sweden last year, and it is now available in eight markets in total. More than 4,400 dealers used our financing product last year, an increase of 47%. Overall, we increased merchant sales finance by €580 million, up 74% year-on-year, and we increased financing attach rate by 41% to a new level of 17% overall. We believe that we can increase the merchant financing attach rate to a level of 50% in the long term. The number of vehicles financed grew to 124,000 units for the full year, a 73% increase compared to 2024. Merchant Finance in its current form is a great product for our customers as it combines faster transaction speed with maximum buying comfort and increases the capital base of our dealers, letting them grow together with us. However, we believe our current product offering is only the first step. We aim to add more geographies later in the year and we're obsessed with the question on how we can support our vast dealer base with additional financial products going forward. Let's now look at retail results. Our long-term unit and gross profit track record in retail is a strong confirmation of our vertically integrated retail business strategy and the structural advantages that play out more and more as we increase scale. No other public auto retailer in the EU grew faster last year than us. And while our retail market share grew strongly by 36.35%, with 0.44% of the total market, we have an almost infinitely long runway ahead of us. However, our new scale already drives vertical advantages in a variety of areas from pricing models and inventory algorithms to delivery time, warranty attach rates, production center efficiencies, logistics speed and costs, and the strength of the Autohero brand. We continue to be absolutely thrilled by the long-term opportunity we have with Autohero. For the full year, Autohero delivered excellent results. We made outstanding progress across units sold, cross-profit, and GPU. Our retail segment achieved a major milestone last year, delivering a record 101,500 units and surpassing the 100,000-unit mark for the first time in Auto Euro's history. This represents a 36% year-on-year increase compared to 74,400 units in 2024. In the fourth quarter, retail continued its strong momentum, growing 40% with 28,700 units sold versus 20,600 in Q4 of the year before. Retail gross profit also reached a new all-time high of €268 million for the full year, a significant 65% increase year-on-year. Retail GPU climbed to €2,605 for the full year, up 20% year-on-year, and it set a new quarterly record of €2,632 in Q4. These great results strengthen our confidence in reaching our long-term retail GPU target of €3,000. We are also laser focused on our goal to make Autohero the leading European used car brand. Our brand awareness grew strongly last year, especially from the second to the fourth quarter when we stepped up investments. By the end of last year, aided brand awareness was 33% across all markets. This is an increase of seven percentage points compared to the beginning of 24. Our strong NPS of around 70 helps us to build more scale faster as our existing customer base serves as a future demand multiplier. We also continue to set new standards for efficiency and transparency through our proprietary AI-powered damage detection technology. In Q4 of last year, we successfully scaled our in-house AutoOne car audit technology to five major production centers across Germany, Spain, France, and Italy. Our cut AI technology leverages deep learning models trained exclusively on our proprietary data set of real and diverse car images to deliver highly accurate and detailed inspections for each vehicle. Delivering seamless fulfillment remains a top priority for us, as it's an important component of our superior customer experience. In the fourth quarter, we achieved a delivery time of 10 days. This is 13% faster than in Q4 24th. This result was driven by the expansion of our European Fulfillment Network, which allows customers to choose between convenient car pickup or home delivery. We are now offering 153 pickup locations across Europe, of which 42% are designed as express hubs, ensuring cars are ready for our customers within just 72 hours. In the second half of 2025, We accelerated our network expansion by leveraging more of our existing purchasing branches as combined pickup and drop-off locations. This strategic move allows us to bring our brands and services closer together, delivering enhanced overall customer experience. We still need to learn much in this area, however, especially how to best optimize the trade-offs between branch space, logistic speed and cost, combined with increased retail purchase conversions. Let me now finish with a fresh view on our long-term ambition. We continued our strong growth trajectory last year, achieving a record market share of 3.1% in Europe, a 50 basis points increase over the last year, and an important next step on the road to our 10% long-term market share target. With 27.5 million used car transactions across the European market, Our growth outpaced the overall market growth by far, growing nearly 14 times the rate of total used car transactions. This exceptional performance underscores the strength of our vertically integrated business model and our increasingly strong market position. Despite this important next step towards our long-term market share target, we are still barely scratching the surface of our immense opportunity within the €700 billion European used car market. Also on margin, we made meaningful progress last year, reaching a new record for adjusted EBITDA margin with 2.4%, a 70 basis points improvement compared to 2024, well-placed for a long-term adjusted EBITDA margin of 5% to 9%. To sum up, 2025 was a great year for OtterOne and beat 2024 on all metrics. New records for units sold in both segments for revenue and gross profit, for retail and merchant GPUs, for adjusted EBITDA margin and absolute EBITDA, and consequently also net income. Beyond these results stands a very talented and experienced team, execution experts with a relentless drive and ambition to always build our business, our platform, our network bigger and better. We continue to be thrilled by the long-term opportunity in both merchant and retail in this gigantic market. an opportunity that we continue to seize through our vertically integrated strategy every single year with increasing traction. With that, I'll hand it over to Christian, who will provide further insight into our financial results.

Thank you, Christian, and a warm hello to everyone joining us today. It's a real pleasure to walk you through our Q4 and full year 25 results and to also share in the end how we think about the path ahead for 2026. Christian mentioned, was an exceptional year for Auto1. We delivered record results across all our key metrics and we grew market share, further understanding the scalability and the strength of our model. If you look at the numbers, for the full year 25 we delivered more than 842,000 group units. This compromised 741,000 merchant units and over 100,000 of auto hero units. representing a year-on-year growth of 22% at the group level. The merchant units were up 20%, and auto hero units increased by 36%. During the year, our average selling price climbed by around 7% year-over-year. Looking at gross profit, it grew to €991 million, up 37%, while adjusted EBITDA reached €198 million, growing by 81%. This considerable profit expansion, well ahead of unit and top line growth, is a clear testament to our operating leverage. As the platform scales, incremental volume continues to drive outsized earnings, validating the investments and the strategic decisions that we have made over the recent years. Focusing on Q4, which is typically our softest trading quarter, we grew group units by 20% year over year. even as December trading conditions slowed down over the holidays, consistent with the normal industry pattern, as both dealers and consumers tend to transact less during this period. We closed the year with a Q4 adjusted EBITDA of roughly 45 million euros. This is a strong result, especially considering our ongoing investments into the Auto Hero brand, our inventory selection, our inventory and organization are foundational for the next phase of our growth, ensuring we stay ahead of market trends and continue to enhance our leadership position. In 25, we grew cross-profit by 266 million. Almost 60% of this growth was volume driven, showing the market's appreciation of our platform and model. remaining 40% came from advances in gross profit per unit, demonstrating the increasing attractiveness of our custom offering we're building and the continuous improvements in the business. Looking at the core OPEX, we made major investments into our brands and team capacity, particularly towards the end of the year, to fuel our continuous strong growth in preparation for 2026. Internal logistics expanses reflect volume growth across merchant and retail. So in summary, Driven by 22% growth in unit and profitability improvements, gross profit grew 37% and adjusted EBITDA grew by 81% to the record level of 198 million. We are pleased to see the strong 25% adjusted EBITDA growth reflecting both the positive scale effects that we see and the strong strategic investments we're making into the brands and our organization to support future growth. Moving on to the balance sheet. We are continuously maintaining a strong balance sheet with a stable cash level of around 600 million and no corporate debt. We continue to build inventory to support the growth with roughly 1 billion at the end of Q4. We funded the growth in inventory through our inventory ABS and also positive trading cash flow during the year. Inventory ABS loan-to-value was 83% at the end of the year. Our captive financing products continue to scale with our overall growth supporting profitability and are objected to deepen our relationships with our customers and also achieve a higher share wallet to increase the lifetime value of each customer. The captive finance business volumes grew almost 50% year over year and is increasingly becoming a strong contributor to the current and future profitability. At the moment, consumer finance contributes 500 euros of GPU then we expect ongoing growth towards our long-term GPU targets. The GPU contribution of merchant finance is less pronounced, but we see it as an important demand driver with overall attractive risk-adjusted returns profile, which also contributes to customers' stickiness, as Christian mentioned, for the qualified dealers. Overall, with my background in financial services, I'm spending a lot of time with the team developing our captive finance strategy going forward. We will continue to build this area to drive further profitability across the merchant and consumer businesses. Now to guidance. For the full year 2026, we guide 940,000 to 1 million group units, compromising of 815,000 to 865,000 merchant units and 125,000 to 135,000 alt-euro units. We expect a gross profit of 1.1 to 1.2 billion euros and an adjusted EBITDA of 250 to 275 million euros. At the top of the end of our guidance range, we set the important milestone of 1 million units traded for 2026. We expect that the 50 to 75 million euro year-over-year EBITDA improvement to be fueled by unit growth driving absolute gross profit expansion, with merchant and retail GPUs broadly flat compared to 2025 to drive growth at pace. Overall, we are expecting further operating leverage as EDIOS3 BTA growth outpaces unit growth. We are absolutely thrilled by the opportunity in front of us and continue to build scale now, expanding our leadership position. A brief word on quarterly trends. We expect adjusted EBITDA distribution between the quarters to be closer to the 2024 precedent, which means that adjusted EBITDA for the second half of the year will be significantly higher than for the first half of 26. As in 25, we expect all-to-one trading cash flows to be positive in 2026, reflecting the profitability of our model and also reinforcing our ability to self-fund our growth. We expect CapEx to continue to be moderate at around 25 basis points of revenue. In summary, to round up things, 2025 was a fantastic year for Ottawa Group. A year in which our model proved itself further, delivering record growth, record profitability and significant market share gains. As we look to 2026, we believe our model is becoming increasingly powerful. The flywheel is working. A stronger brand drives more customers, more customers enable better inventory selection and pricing, and greater scale drives lower unit cost, improved logistics and fulfillment. We are growing from a position of strength, our balance sheet is robust, and we are geared for continued expansion. We look forward to updating you on the progress as the year progresses. With that, I'd now like to open up for questions.

Before we begin the Q&A portion of today's call, I would like to go over a few brief technical points. If you haven't already, please feel free to submit your question using the Q&A tool located at the bottom of your Zoom screen. Philip will call on participant interns. Once your name is announced, I will unmute your line and hand the floor over to you. Kindly ensure that your microphone is enabled and that you're ready to speak when prompted. Our first question comes from Nizla Nazer. Please unmute your line and ask your question.

Nizla, are you there?

Can you hear me?

Now we can.

Excellent. Thanks. I have a few questions. The first, if you can kindly give us some colour on how Q1 is progressing in terms of growth, keeping in mind that you've got a range of growth for the full year. Where does Q1 sort of sit in that range? Some colour there would be grey. And is there a phasing of investments in 2026 we need to be aware of? You did say that EBITDA in the second half would be higher, but sort of where are the investments going into over the course of the year would be great to know. And my next question is on the average used car price. Now, it was down slightly in 2025 from what we see, but your ASBs were up quite nicely by 7% for the group. Can you take us through your ability to grow your ASP and your expectations for 2026, both in terms of prices in the market and your own ASP? I'll leave it there for now. Thank you.

Thank you, Nisla. Yeah, your first question was on... progress growth because they're saying like, okay, we're operating like a unit growth corridor here for Q1 and how Q1 is going. So we had a, I would say, good start into the year. And we are, from a unit point of view, not expecting to change anything in our growth trajectory. um for now so there was a little bit of headwind at the beginning i think uh with the with the winter um with the winter conditions but um yeah growth-wise uh yeah i would i would say we will continue the latest trends phasing of investments christian you want to take that one absolutely

Two different kinds of investments. So we have invested a lot into Q4, so brand and operational capacity. So we see that we will run on those investments, so getting utilization higher on the OPEX side. So we will grow into the OPEX that we see from Q4 and go into, as I mentioned, implicitly the OPEX per unit. We'll see that trending down from Q4 into the 2026. is marginal for us. We get around 25 basis points. So that's 20, let's say that's around 20 million or so historically. And we have grown quite a lot in investments across 25. So expanding production and retail fulfillment capacity, we invested into the Auto Hero Band, will continue to do. So we will not see a as quick investment in two branches, et cetera, in the beginning of the year, at the very least. We're using the capacity there. So it will be more towards, if we see that we're tracking on the growth path that we're in, then we will continue when utilization is slightly higher towards mid-year. So we will evaluate this during the year. And on the... We have ASPs... So the ASP, I think there's a few trends in this. One is that if you look back historically, we've always gradually increased ASPs. So we're trading more older cars historically, we're trading newer and newer cars. So that's one thing. And then we also look, when we look into the future, card prices. So we're trading the bucket that we are trading. We see that there's a push upwards in ASP for that particular segment of the market when we're moving to also amplified by moving to slightly newer cards as well. So we see from our point of view, a higher ASP going forward as well. We saw that in 25, it was a 7% increase in ASPs for us.

Maybe to add to that, I mean, the overall group ASP is on the one hand pushed by higher auto-euro share, right? So auto-euro units are almost double the ASP than what we trade in the merchant segment. But then also what Christian referenced, so the overall basket that we're trading, for instance, on merchant, like, yeah, it's roughly 10 years and for auto-euro it's younger. This basket is having a distribution of different years, right? So some of the 2000, let's call it 15, we have a 2015 average price, but then there's new cars in there from 2024, new only, and there's old cars from 2008. And as we are progressing, through every single year, then we're moving up one year in the new registration age of the car. However, when we are tracking the new car prices of the incoming, so the newer, the fresher cars that are coming this year, when we track the new car prices along each and every single year that we're trading, we're seeing that the new car price has strongly evolved was simply put from 2015 to now. So new cars have become very much more expensive over the course of the last 10 years. And those more expensive units, assuming stable residual value, are then as a basket effect increasing also the ASPs that we are trading. So we are not depending on one year of new car price movement, but we're trading the basket, and the basket is moving up, assuming stable residual value with every single year, which gives us a tailwind on ASPs.

Very helpful. Thank you.

Next question comes from James Tate. Please unmute your line and ask your question.

Good afternoon. It's James Tate from Goldman Sachs. Yeah, I've just got a few questions, please. I guess, firstly, on AI, and I think you touched upon well in the presentation about your right to win as AI technology develops with your unique data sets in the presentation. I guess, have you started to see any changes in the competitive landscape or any new entrants into the market looking to compete with your business, whether on the sourcing or retail side? Secondly, the continued investments into auto hero marketing and the broader logistics build-out, will somewhat weigh on EBITDA margin expansion in 2026. Is it fair to assume that EBITDA margin expansion will accelerate and improve in 2027? I guess essentially, can you help us understand the operating leverage of the business as it scales over the next one to two years and give us confidence there's a path to your long-term EBITDA margin targets? And lastly, you touched upon some of the headwinds at the start of the year from winter conditions. I guess what is your assumption for broader market volume growth that you embed in your full year unit sole guidance?

Yeah. Thank you, James. Yeah, on the AI, I mean, it's very simple. No, we have not seen any new entrants. And again, yeah, I mean, we are at the core a dealer. As a dealer, you have to move goods, you have to buy them, you have to sell them, you have to have balance sheets. So I think the area that is being attacked by AI, especially like the the very distributed large language models with OpenAI and Grog, but then also with Google Gemini. So on the, let's say, first touch point with the market, customers searching for a car, customers interested in selling their car, I think it might naturally be shifting a portion of the traffic to those AI companies and a little bit away from the classifieds, which is also a similar trend that we have seen with, for instance, Google vehicle ads in the past. in the last couple of quarters. So for us, this does not pose any threat at all because we are, the cars that we're buying, the cars that we are selling, we're selling them because they have great prices. And when we are, and because we have a fantastic brand out there and a fantastic service. So it's just a, The way how the customer finds us, unless they go direct to our brands, which is obviously the best way, direct customer acquisition through branding, when we are in the paid advertising space, that might change a little bit, but that would for us not change a lot because we are A, present in those markets, in those spaces as well because of the strength of our brand. And then on the other hand, they will at some point in the next probably month or quarter, open AI and already announced that they will go into advertising, have competitive systems to be able able to pay for that traffic as well. So in other words, I think those will develop as an advertising channel, some of that, which does not pose a threat to us, but for the incumbents, the matchmaking incumbents, namely the classifieds, which are enjoying a strong organic traffic at the moment. So we're neither seeing any competitive entrance somewhere and we are our own competition by now. So it's our ambition that is the competition and it's all the small and bigger dealers out there where we want to do the best possible job in retail and we're not competing with We're not competing with AI prompts at the moment. Even more so, we are owning the pricing technology that is vital for this market, as illustrated in all of the argumentation. And maybe I take the third question as well, which is the market. What do we assume with the market? So yeah, market has come down in January because of the slow start. It's catching up in February. Overall, we are, but that is a weather effect. Nobody can change that. Overall, we are assuming stable volumes or slight growth. We've seen that in the latest full year numbers, a little bit more than 1% growth. So we assume in our forecast stable volumes And then, Christian, maybe you can go and tackle the investment EBITDA margin going forward, long-term path question.

Absolutely. So I think stepping a little bit back on that question, James, so we see the market opportunity ahead of us, and we believe we absolutely have the right model to capture that opportunity. So we clearly want to expand our leadership position and to grow market share in sync with growing profits, really. So we're preparing the organization to really grow, right? And doing that in sync with growing profitability. So with that said, so we think the right priority this year in 2026 is to scale the business decisively. So grow the adjusted EBITDA absolute level while doing so, which is reflected in the guidance. And we absolutely continue to target our long-term EBITDA margin. And we believe that these investments So I don't want to comment particularly on 2027, but you can look at the last few years historically, we are expanding the margin as well as the units clearly. So both of those are equally important. And for the 26 guidance, we are... use as well.

Understood. Thank you very much.

Our next question comes from Marcus Debo. Please unmute your line and ask your question.

Hi, everyone. Just questions left on my side. Free cash flow for 26. How shall we think about free cash flow developments, given that we have the EBITDA guidance? uh second question if you can just tell us um a bit more about what you see as a weather impact in uh january um we understand obviously we have a full year guidance and clearly the weather has been impacted but there was a discussion obviously this morning so if you could just tell us what you think that the sort of like impact on volumes ideally in percentage terms roughly you have seen in January, just to get to understand that. And then maybe thirdly, if you can tell us a bit more, again, on your assumptions on merchant volume growth in 26. What makes you confident in those volumes? What are the underlying assumptions? That would be very helpful to just get a little bit more detail how you get to merchant guidance for 26. Thank you.

Do I do the recap, Christian?

Absolutely.

Yes. So we are continuing to, we did grow with profitable or positive cash flow on the trading cash flow, as we call it. So this is then assuming that we will continue to use ABS structures to fund the inventory. So the working capital of our business and equally using the ABS to fund the consumer merchant receivables from our financing. So with those assumptions explicitly, we see that we continue to have free trading operating cash flow in 2006 as well. So we're self-funding the growth.

Any sort of like numbers? Is it sort of like similar to EBITDA growth or how should we think about this? Just to get a better understanding sort of like what absolute number we should see.

Well, we're not guiding on it. We're expanding the work. We're growing into the financing business. So we're seeing that the cash has been stable the last few years around the 600 plus level. So we see that that will continue. So it's one of the variables that goes into the growth equation, so to speak. Okay.

So maybe on the merchant volumes, Marcus. So, yeah, we're confident in our merchant volume growth assumptions. So definitely if we look at unit guidance, and you've also heard, Christian, that we have invested into an increase in capacity, especially in Q4. We want to utilize that capacity, and that means that our aim internally is absolutely go to the high end of the unit guidance, and that's also done subsequently true for the merchant volume part of the guidance. And yeah, the weather impact of Q1 that we've been briefly touching about, I think it roughly lasted 10 days, especially in the first 10 days. So it was a slow start to the year. because of that. However, these effects are baked into our guidance at this point. So, yeah, I think that's everything we can say to that.

Is it so critical not to give a number on the effect? I think it would be just helpful if we can sort of see as an impact And I understand we have to pull your numbers.

The first quarter is a running quarter, right? And then we don't know how much of that will be caught up. So I would say it's 10 days with, let's say, a 30% impact on the units. 10 days out of 90 days. That would be my gut feeling, but I don't have all. I'm with a calculator at the moment.

I mean, Marcus, as we said this morning, the general performance in any case is baked into the guidance. And so I don't think you should view this as a major driver coming out.

Yeah, okay. Thank you.

But that's over to Joe Barnard-Lamb from UBS. Joe?

Yep. Hey, can you hear me, guys? Yes, we can now. Excellent. Yeah, so a few from me. So first one, I think you guided to sort of broadly flat OPEX per car back at 3Q last year. I think at the midpoint of your guidance, it now implies a few percent reduction. It's a slightly improved guide now due to better volumes. And when we consider your OPEX more broadly, what proportion of your OPEX is actually volume driven versus how much is fixed or set separately? That'd be the first area of questioning. Second area of questioning is just a bit around GPU. Obviously, we've seen a lot of GPU expansion in recent years, and your guidance for the coming year is effectively for that to cease for the current year. But even between the lines of what you're saying, it's effectively that you're sort of deliberately holding GPU at the current level in order to fuel top-line growth. Is that the correct interpretation? And can you just confirm, therefore, that GPU hasn't hit a ceiling? It's effectively being held where it is for growth purposes. And then the third and final question, I think reported GPU in Auto Hero is not equal to gross profit divided by the number of cars sold. I think it says the effects of inventory changes due to the capitalization of internal refurbishment costs. But in 4Q25, that was quite a large impact. It was about 71 million euros. So could you just talk a little bit about how we should think about that factor going forwards? Thank you.

Yeah. Yeah, maybe, Christian, you take the first and the third question. I take the GPU expansion question. Let's go for it.

So the OpEx, we got it for 940 in Q3. We invested into the growth of the inventory, which has some implications on the OpEx and also method to operation capacity to then now increase utilization into 2026. And therefore, the go down for the next few quarters. And with regards to variable versus fixed, I think it's, in the long run, everything is variable, right? I mean, if you really scale, then you need to add increments as well. But we do see that of the cost that we have added, a lot of that is variable, clearly. So we see that the operating leverage is coming through on It's a super tactical business, as you know. So the operating leverage is coming from all these small line items. And we see it particularly in the profits growth, where we accelerate the revenue growth and the unit growth, the profit level. So we'll make sure that that will continue. keeping the OPEX per unit flat to encourage growth, that's to some degree true, because we think that in order to grow, we need to spend some money to do that as well. We're not optimizing the cost base in the short term.

So second question on GPU expansion. Yeah, we think these GPU levels that we have reached roughly last year, they are optimal for our growth. We are also able to hit our EBTA targets also in the high end with it. And while we think there is definitely longer term continued upside on the GPUs, especially on retail in line with our 3,000 euro target. Yeah, we think that this is a proper reflection of what we think they are at the high growth, at the high pace that we are going through at the moment. Obviously, yeah, there could be upside if we're able to combine the high volume growth with GPUs that are higher. So that's not a potential that I would rule out. But it's not something that we are assuming in the current guidance, neither at the low nor at the high end. I think this is our question, Christian.

Yes, so the capitalized part of the inventory. So this is coming from output here, so the value add that we add to the cars in the refurbishment process of those cars. So that will continue to be there, actually, and to which extent it will be. We invested a lot into the inventory in Q4. Okay, thank you.

Our next question comes from Andrew Ross. Please unmute your line and ask your question.

Hi, guys. My question is about, or my two questions about the retail unit economics. In the shareholder letter, you talk about retail EBITDA being positive pre-marketing costs. I was hoping you could be more specific and tell us what was the retail EBITDA per car in Q4 or range. And then the second question is, can we be completely clear that loss of retail EBITDA per car has peaked in Q4 and will get better each quarter from here as we start to scale across marketing and other OPEX? And if you could give us a sense as to how the retail EBITDA per car

might look exiting this year embedded within your guidance that would be very helpful thank you so when we when we wrote in the letter that retail unit economics on a segment allocated base for the full year of 2025 are positive before marketing that then that's exactly what we mean yeah so without allocating The marketing spend, and we consider vast majority of the marketing spend an investment, especially into our brand. We also see that cohort-wise that we roughly get 30%, 40% of the spend directly and 50%, 60% are distributed as a return to later periods, then that is exactly what we mean by that. So EBITDA positive, ex-marketing, I would say, slightly positive, where we're not giving out the exact numbers. On top of that, there are roughly... a 400-euro basket of cost items that need to be carried by the existing, by the current deliveries, given the growth rate that we have seen, exit growth rate in Q4 of last year. So if you sum the two together, then you're well north of – let's say 400 euro on an EBITDA segment allocated base. And nevertheless, we continue to grow because we think this can be, you know, like a one million unit business one day. So that's why we continue to grow. And we are configuring the growth in a way that we are constantly improving queue on queue improving the unit economics sometimes with a flat volatility in there depending on the growth rate but that we overall are constantly progressing and we expect those improvements also throughout this year especially towards the end of the year but then as we continue to uh grow depending on the growth rates the growth drag on the per delivered unit economics are higher or lower over the long run we are expecting marketing to come sound come down substantially yeah if you look at the marketing per unit values that we have in the b2b business then we're talking currently probably about 5x in retail. And we have seen similar improvements in C2B over the years as our brand grows stronger. And we also expect that growth track from the investment into inventories and also production, two of the other questions I was asked, to come down over time.

Okay, that's helpful. So just to be clear, having had a couple of quarters of deleverage on an EBITDA per car basis in retail, as you've been investing into brand marketing and production and inventory, that has now stopped in Q4, and we should expect leverage in the next few quarters from here in retail? Yes.

I mean, I would have said that if there was deleverage, then there was very slight deleverage from Q1 to Q2, and then maybe like a little, very slight deleverage, then... Q3 to Q4. And yeah, now we're going a little bit, now we expect it to go the other way around. But the overall track, you zoom a bit out, is a track of constant improvements. That's very helpful, thank you.

Our next question comes from Wolfgang Specht. Please unmute your line and ask your question.

Yes, hello. Good afternoon. Three additional ones from my side. First on the inventory side, can you give us an idea how the split of units between a retail channel and merchant channel is roughly? And then on the financing side, you mentioned that the consumer attach rate moved towards 39%. Where do you see, let's say, a feel-well limit before you touch, let's say, or you come close to subprime? And then on, yeah, I'll leave it here. The other question has been answered already.

What did you say on the attachment rates? Do you see the limit of attachment rates?

Attachment rates for consumer financing.

Yeah, okay. So I think across markets, depending on which market you are, because we have different markets, attachment levels depending on that so 40 to 60 i would say so it's reasonable to to on average let's say 40 to 50 there's some some ways we can we can say that as a reasonable average across markets and then gradually we want to have more and more internal financing of that clearly

And I think the other question was on the inventory split. Yeah. So, I mean, inventory is, yeah, split it in line with kind of on the one hand, the size of AutoEuro versus the merchant business. But then on the other hand, also, auto euro has a much higher share because of the turnover, the longer turnover that retail has versus merchant. So at the moment, I would say roughly one-third of the cars that we own are for retail and two-thirds are for merchant. Okay, thanks a lot.

I mean, Wolfgang, obviously the split between the segments will actually be published in the full year financials coming out in March.

Yeah, okay.

Otherwise, thank you very much, everybody, for attending the call. I hope it was helpful. We have a specific number of calls lined up. I think Christian and Ria will also be in New York in two weeks' time meeting a lot of you. So thank you very much. And otherwise, talk to you on the Q1 numbers in May.

Thank you so much, everyone.

Bye.