Auto1 Group U/Adr

Hello, good afternoon and good morning and good evening to international participants. Welcome to the OtterOne Group third quarter 2025 earnings presentation. I'm Philip Reikersdorfer, Group Treasurer. I'm joined today by Christian Bertermann, our co-founder and CEO, as well as Markus Boser, our CFO. I'm also very pleased to welcome Christian Valentine, who will be succeeding Markus in stepping into the role of CFO effective January 1st, 2026. We will start with the presentation followed as always by questions and answers. If you would like to ask a question, please raise it by 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 to a question, I must make you aware of the safe harbor provisions at the beginning of the presentation here. These will apply to any forward-looking statements made by management today. And now over to your question.

Thank you, Philip. Hi, everyone. Welcome to this AutoOne Group Q3 earnings call. Our business performance in the third quarter has been very strong. We saw 219,000 vehicles. This is a new quarterly record and an increase of 24% year-on-year. Total gross profit surged by 38% year on year to €258 million. This is €71 million more than in Q3 of last year. We grew adjusted EBITDA from €34 million in Q3 of 2024 to €52 million this year, representing a 51% increase. Our adjusted EBITDA margin increased to 2.4%, that is 30 basis points of increase compared to last year and the highest Q3 margin we ever achieved. These great results reflect the effectiveness of our strategy, our discipline and targeted investments in key areas, strong execution and above all, the dedication of our teams. We are pursuing a value-first strategy across all segments. We are strongly focusing on the drivers that create value for all of our customers. While we have been executing this strategy since our foundation, we constantly take steps forward in understanding our customers' needs, expectations, and priorities even better, resulting in superior demand levels across segments. 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. Let's start our deep dive with the merchant performance update for the third quarter. In Q3, We sold 192,000 vehicles to our partner dealers. This is a new all-time quarterly record and represents a 22% year-on-year unit increase. We also generated record merchant gross profit of €185 million for Q3, increasing by 29% year-on-year. Merchant GPU was €966, a 6% increase compared to Q3 of last year. We sold 550,000 merchant units in the first nine months of 25, that is 22% more compared to the same period last year. Gross profit increased by 125 million Euro to 535 million compared to the first nine months of 24, a 31% increase. The strong growth in our merchant segment is driven by constantly rising demand for our B2B offering. This momentum is reflected in yet another record-breaking quarter for the number of merchants buying on auto1.com. For the first time ever, we surpassed 30,000 active merchant buyers, reaching 31,100 in the third quarter, a 22% increase compared to Q3 of last year. Our average basket size per merchant remains stable year on year with each merchant purchasing an average of 6.2 vehicles per quarter. We are very happy with these strong results while we continue to expand our buyer base further. Ottawa Merchant Financing delivered another strong quarter as well. We continued the successful rollout of our financing solution for partner dealers, expanding into Poland and Q3, and most recently, launching Sweden just a few weeks ago. Our merchant financing portfolio grew by 60% year on year, increasing from €178 million last year to €284 million for the third quarter. We financed 359 million Euro of merchant sales, a growth of 63% year on year, and the number of vehicles financed grew to 33,000 units, a 65% increase compared to Q3 of last year. We continue to be very excited about Auto One Financing and plan to bring it to even more markets and partners in the future. Our sourcing network expansion continues to go very well too. We opened 42 new branches in the third quarter and closed the quarter with 690 drop-off locations across Europe. Growing our drop-off network increases convenience for our selling customers and increases selection for our partner dealers. Now we will take a look at retail, which had a very strong quarter as well. In the third quarter, our retail business grew strongly in unit sales, in GPU, and in total gross profit. Autohero delivered a record 27,000 units compared to 19,100 in Q3 of last year, an accelerated increase of 42% year on year, and a reflection of our ambition to build a bigger business faster. We generated the highest ever retail gross profit of 73 million Euro, growing significantly by 68% year on year. Retail GPU was 2,664 Euro in Q3, representing an increase of 18% compared to Q3 of last year and setting a new record. Q3 retail GPU was positively impacted by a 2 million Euro one-off benefit. In the first nine months, gross profit increased by 76 million Euro to 190 million and GPU increased by 490 Euro compared to the same period of last year. We take a look at production. We continue to expand our production center footprint across Europe in the third quarter. We announced three new production centers located in Italy, in Austria and the Netherlands, bringing our total to 12 centers across 10 different markets. With these facilities, our total production capacity has increased by 38%, rising from 179,000 to 248,000 cars per year at full utilization. Collectively, the three new facilities span a total of 184,500 square meters and have a combined annual production capacity of 71,500 cars at full utilization. Our new facility in the Netherlands is already operational, and we expect the locations in Austria and Italy to open before the end of this year. Today, approximately 95% of all Auto Hero cars are refurbished in our own used car production centers. By operating our own facilities, we maintain full control over every step of the process, which remains a key driver for car quality and optimizing unit economics while we support the continued growth of Autohero. We are constantly building out our fulfillment network for Autohero across Europe to speed up delivery and increase comfort for our retail customers. We aim to provide our customers with the fastest delivery of their new car at great rates or in many cases already for free. We aim to build our network in a way that supports this effort as best as possible, supporting pickup or home delivery, depending on our customers' preferences. We were able to reduce the average delivery time from just under 12 days in Q3 of last year to 9.5 days this year. That means we deliver 20% faster year on year. Finally, let's take a look at our 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 the European used card transactions in the long run and combine this volume with 5% to 9% of adjusted EBITDA margin, depending on the relative size of the merchant and the retail business. With total units growing 24% year on year and EBITDA margin improving by more than 14%, quarter on quarter to 2.4%, our Q3 results mark an important further step towards both long-term targets. They are also demonstrating first and early returns of the increased investments we made since Q2 of this year. Most of those investments, however, particularly the increased investment into the Autohero brand building, are strategic multi-quarter investments that strengthen our market position and drive long-term value and margin expansion in the future. We expect the full impact of these efforts to become increasingly evident in the quarters and years ahead as our vertically integrated business continues to scale. I'll now hand over to Markus for a detailed financial update.

Thanks, Christian. Q3 represented yet another record for us in terms of units, and with 219,000 units sold, beat our previous quarterly record by over 7%, as well as achieving 24% year-on-year growth on a group-wide basis. It also represents the first time that we broke the 2 billion euro barrier for revenue achieved in a quarter. We're definitely back in growth mode. We achieved this growth reflecting the mixed effect from the higher GPUs in our retail business as its higher growth at over 42% in units means it becomes a larger portion of our business. We also incur 206 million in OPEX to support this growth, resulting in adjusted EBITDA of 51.9 million and a net income of 19.2 million. If we go through our OPEX quarter over quarter, We have been investing to accelerate our growth and increase the moat around our business so that we can grow to a bigger business faster to reap the scale effects once we get there. Gross profit has grown by 38%, the majority of which has been a result of higher units. Over time, higher units also help drive higher GPUs as the more data we receive, the better we can price cars that we see on both the merchant and retail parts of the business. We increased marketing by 7.6 million of which the overwhelming majority was an auto hero marketing as we invest to create a strong pan-European brand while the cost of WKDA marketing per purchase car has been steadily declining. Likewise, we see positive scale effects across both logistics with only 1.6 million increase as well as payroll with 2.2 million in additional costs despite significant quarter over quarter and year over year growth. Moving to the balance sheet, we maintain a strong balance sheet, increasing cash with no corporate debt. Total cash increased quarter over quarter to 628 million as a result of increased profitability and the public securitization of our consumer loans, which we conducted in September. We continue to build inventory to support our growth with $879 million at the end of Q3. By way of reminder, 80% of the inventory and its growth is financed through our inventory ABS. Lastly, we continue to invest in our captive finance assets with quarterly growth of circa 76 million, consisting of 20 million growth in the merchant loan portfolio and 55 million growth in our consumer loan portfolio. The growth in both portfolios are a reflection of the ongoing growth in sales of both our merchant and retail units. In September, we issued our second public securitization, Finance Hero 2, of our consumer portfolio. This was a unique transaction that combined consumer loans from both Germany and Austria, the first ever public auto ABS combining assets from different countries. This transaction enables us to both increase the loan to value on the portfolio, as well as achieve a reduction in our net interest margin with a blended spread of 87 basis points. This transaction further represents significant validation of the quality of our consumer loan or consumer finance portfolio. Lastly, we come to guidance. We are increasing our expectation for merchant units from 680 to 720,000 to 715 to 745,000 units for 2025, representing 19% year-on-year growth at the midpoint, and our expectations of auto hero units from 92 to 97,000 units to 96 to 100,000 units for the full year, representing 32% year-on-year growth at the midpoint. Together, this results in 811 to 845,000 units for the group. We expect that we can maintain this increased growth in retail at a GPU of around 2,500 as Q3 retail GP had a small one-off effect. With respect to merchant GPU, while we continue to be confident in the long-term upside, our 2025 guidance assumes it will be around 950 for Q4. Together, this leads to increase our gross profit range to 940 to 975 million, up from 890 to 940 million, our previous guidance. We believe that we will continue our current level of OPEX spend, resulting in an adjusted EBITDA guidance of 180 to 195 million for the full year, up from 160 to 190 million guided previously. As I've mentioned previously, Q4 is generally the quarter with the highest volatility as dealers tend to slow down their purchases as we approach the end of the year, the extent of which is hard to predict. While we normally make no comment on the forward year until we are in that year, I'd like to make a few comments to frame our thinking for 2026 in light of the extraordinary growth that we've achieved at our previous commentary. Last year at this time, we believed that Merchant would grow in the high single digits, and clearly we've been able to out-achieve this. we believe that we can continue to grow merchant in the low to mid teens over the next year while achieving marginal improvements in GPU year over year. In Autohero, we aim to achieve 25 to 30% growth next year on our updated 2025 guidance, reflecting the strong growth and progress that we're achieving this year, as well as ongoing marginal improvements in GPU. With respect to OPEX, our baseline assumption is that our OPEX per unit will be similar to the circa 940 euros per unit we achieved in Q2 and Q3, though this may edge higher if we achieve much higher auto hero growth than mentioned. We see an incredible underexploited opportunity in front of us and believe these increased investments, primarily in Autohero marketing, will enable us to achieve our long-term 5% to 9% EBITDA margin expectations as we scale to Autohero faster, enabling us to reach the scale benefits in logistics, tech invest, branding, procurement, and operations. In the meantime, we will compensate this additional investment through higher profitable merchant unit growth so that overall, we believe that we can maintain the current consensus adjusted EBITDA expectations for 2026. Before we move into the Q&A session, I'd like to take a moment to share a few personal reflections As you know, this will be my final earnings call as CFO of AutoOne Group, as I will be stepping down at the end of the year after 10 truly memorable years. It's been an extraordinary journey from our early days as a startup to becoming a publicly listed company and building a business that is not only financially robust, but also incredibly positioned for sustainable, profitable growth in a huge market. I'm deeply grateful for the trust and support I've received from Christian, Hakan, our supervisory board, our customers, partners, the entire Auto One Group team, and all of you on this call. Thank you for your collaboration and partnership throughout my tenure. Starting January 1st, Christian Valentin will be stepping in as CFO. Since early October, we've been working together closely to ensure a seamless transition. Christian brings a wealth of financing experience to the team, and I'm genuinely excited to watch both Christians lead Auto1 Group into its next chapter. Christian Valentin joins us on the call today, and I would now like to hand it over to him for a brief introduction.