Auto1 Group U/Adr

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.