Auto1 Group U/Adr

Good morning, hello, and good afternoon, good morning, and good evening to international participants. Welcome to the Auto1 Group second quarter 2026 results presentation. I'm Philip Reikersdorfer, Group Treasurer. I'm joined today by Christian Bertermann, our co-founder and CEO, as well as Christian Wallentin, our CFO. As always, we will start with a presentation followed by a questions and answer session. 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 the presentation here. These will apply to any forward-looking statements made by management today. And now over to your question.

Hi, everyone. Thank you, Philip. Welcome to the Audubon Group second quarter earnings call. Our second quarter results were very strong. We delivered increasing operating leverage across the business at scale. We sold 240,000 units at the group level. This is up 20% year-on-year. Total gross profit reached €281 million, an increase of 21% compared to Q2 of last year. And we grew adjusted EBITDA from €42 million in Q2 2025 to €59 million this year, representing an outstanding 38% increase. Our adjusted EBITDA margin climbed to 2.4%. This is 30 basis points higher than last year and the highest Q2 margin we ever achieved. These great results continue to demonstrate the strength of our value-first strategy and the structural advantages of our vertically integrated business model that we laid out in detail at our capital markets event back in June. This is our first quarterly trading update since our CME, so alongside our Q2 results, we have also disclosed the adjusted EBITDA on segment level for the last four quarters in this presentation to give everyone a complete set of quarterly profitability data. Let's start with a deep dive into merchant performance in segment financials. We sold 207,000 cars to our partner dealers in Q2. This is a new Q2 record and represents a 17% year-on-year unit increase. Merchant cross-profit grew to €198 million for Q2, increasing by 17% compared to the previous year. Merchant GPU was €959 for the quarter, stable versus €961 in Q2 of last year. Merchant adjusted EBDA surged to 67 million euro in the second quarter, a new quarterly record. This is 14 million euro or 28% more compared to Q2 of last year. Adjusted EBDA margin increased by 30 basis points to 3.7% in Q2 for merchant. 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 orderone.com. Our network of active buying partners across Europe reached 36,300 dealers in the second quarter, a 22% increase compared to Q2 of last year. As we continue to expand our buyer base, the average basket is slightly down year on year, driven by the strong growth of new dealers. Unit demand per dealer is generally increasing when the dealer cohort ages in time, as we also laid out in our capital markets event. Our merchant financing portfolio continues to perform well, growing by 20% year-on-year from €264 million last year to €317 million in the second quarter. We provide eligible partners with an instant credit line integrated directly into our platform. This allows them to finance vehicles with just one click and enables our partners to grow their business significantly with our floor plan financing solution. We financed €370 million of merchant sales, a growth of 13% year-on-year. The number of vehicles financed increased to 33,000 units, a 14% increase compared to Q2 of last year. Overall, we are very happy with the performance of our merchant segment in the second quarter. We outperformed our long-term unit growth corridor of 10-15% by growing 17.1% year-over-year. We slightly increased merchant GPU quarter over quarter, which is a very good result considering the following factors. Q2 seasonality generally puts a small drag onto margins created by an accumulation of holidays during Q2. Macro continued to have a limited but controlled impact on merchant in Q2. Our results could have been even better in a more stable environment. We invested into a number of initiatives over the course of H1 with the shared goal of speeding up our trading. These initiatives have been resulting in a short-term GPU drag. We have completed the majority of those investments in H1 and hence are expecting a sequential GPU increase for merchant in H2 combined with higher capital efficiency already visible today and significantly reduced inventory levels. We expect to grow inventory from its new base today in line with future unit growth rates. This means that the strong Q2 performance on profitability was primarily driven by disciplined cost management. We lowered our SG&A per unit to 633 euro, a 4.4% decrease compared to Q2 of last year, reflecting economies of scale in our purchasing organization and overhead. Marketing costs per unit were roughly stable quarter over quarter. Overall, we are progressing well towards the merchant milestone targets, with Q2 SG&A just 8 euro ahead of the SG&A milestone target. Our goal is to keep that level for Q3 and combine it with a sequential increase on GPU, as we expect short-term GPU headwinds to moderate down. Now let's switch to retail segment results and financials. Altruhero is our consumer growth engine, and we are still barely scratching the surface of its massive long-term opportunity. The structural advantages of our vertically integrated model, including sourcing, pricing, our physical infrastructure, and financing, continue to compound as retail scales. This is clearly visible in our strong Q2 results. We sold 33,400 vehicles to customers, This is 40% growth compared to Q2 25 and a testament to the increasing traction of our Autohero brand. Retail gross profit reached 82 million Euro, a 34% increase year on year. Retail GPU was 2,503 Euro for the second quarter, a strong result in light of the outstanding unit growth in Q2. Adjusted EBITDA margin of the retail segment improved significantly compared to Q2 of last year by 1 percentage point from negative 2.5 to negative 1.5 this year, demonstrating operating leverage by managing our cost base more and more efficiently. We remain fully focused on establishing Autohero as the leading used car brand in the European market. The Auto Euro brand is at the core of our vertically integrated model, setting the standard for a superior way to buy, sell, and finance a car. This brings customers peace of mind while serving as a durable engine for demand as brand equity continues to strengthen. At the end of Q2, aided brand awareness reached 36% across all our markets. That is a new high and an 8 percentage point increase year over year. While increasing brand recognition remains a strong driver of demand, the speed and convenience with which we deliver our vehicles to customers is equally important. Our average delivery time currently stands at just over 10 days and ensuring a seamless end-to-end delivery experience remains a top priority as it underpins our best-in-class customer journey. Zooming out a bit, We are very happy with the retail set of results for the last quarter. We kept growing slightly north of the high end of our long-term growth corridor, We realized that growth while keeping retail GPU almost flat year on year and quarter on quarter. We are happy with retail GPU, given that there have been a number of short-term headwinds to it. As laid out in the CME, every 10% of additional growth means a roughly 100 euro short-term headwind to unit economics, partially affecting GPU. Similar to Merchant, Q2 seasonality generally puts a small drag onto margins created by an accumulation of holidays during Q2. Macro continued to have a limited but controlled impact on retail GPU and Q2. Our results could have been even better in a more stable environment. We invested into a number of initiatives over the course of H1. with the common goal of speeding up our retail trading and unlocking a bigger step up in retail GPUs going forward. These investments into those initiatives have been residing in a short-term GPU drag. We have completed the majority of those investments in H1 and hence are expecting a sequential GPU increase for retail in H2 combined with higher capital efficiency, again already visible today, and significantly reduced inventory levels. We expect to grow inventory from its new base today in line with future unit growth rates. With retail GPU being flat year-on-year, the €170 improvement on adjusted EBITDA per unit is primarily driven by the €207 improvement of SG&A demonstrating operating leverage in retail for Q2. We continue to invest strongly into the Autohero brand with marketing cost per unit of €884 as we are laser focused on building a leading European used car brand. At the same time, our adjusted EBITDA loss per unit improved significantly from €436 last year to €266 in Q2. Now let me sum up with a short walkthrough of our vertical integration strategy, the basis for reaching our milestone and long-term segment targets. For more than a decade, we have invested in the leading vertically integrated pan-European user platform with one objective, maximizing value for everyone in this market. Our investments have focused on key areas, including our AI pricing technology, our unique logistics network, our dense drop-off and pickup network, Highly efficient production centers and comprehensive financing facilities. Together, these capabilities form the backbone of our vertically integrated business model. They shape how we think and how we make decisions at every level of the business. We apply our Value First strategy across all our segments, relentlessly focusing on the levers that create value for our customers. While we have executed this approach since day one, we're continuously sharpening our understanding of what our customers want and expect. In our business, value can take many forms. Higher selling prices, lower buying prices, reduced processing costs, greater selection and convenience, Highly motivated staff, increased trust, faster and more reliable delivery or competitive financing. It is this thinking applied at scale that underpins the ambitious long-term targets we have set. We're highly motivated to continue our journey of capturing the massive opportunity in the European youth car market as we progress towards 10% market share. Let me now hand over to Christian Wallentin, who will give you a detailed financial update.

Thank you, Christian, and hi, everyone. Q2 was another quarter of strong growth with further operating leverage in the business. The key message overall is that we saw volume, pricing, and cost discipline compounded into a strong 38% adjusted EBITDA growth year over year. We sold roughly 240,000 units, up 20% year on year. Revenue grew even faster than volume to 2.4 billion for the quarter, up 23%. Cross-profit was 281 million, up 21%, at a Group GPU of 1,174. Operating expenses were 222 million, that is 18% growth against 21% cross-profit growth. This demonstrates our disciplined cost management and the operating leverage of the business. Adjusted EBTA was 58.6 million, up 38% year-on-year, at a margin of 2.4%. That is 30 basis points better than Q2 last year and the strongest second quarter margin we have ever delivered. Overall, we pay very close attention to the capital deployed in our business and we have changed the presentation here so that you can separate total assets from the parts we fund ourselves. Starting with how we think about these facilities. We view our ABS structures across inventory, consumer finance and merchant finance as evergreen working capital financing. We grow them with the asset base and reduce them only when the assets reduce. This quarter, the inventory closed at 803 million. Given the improvement in trading speed that Christian described, we reduced total inventory by 252 million, or 24%, and we reduced the linked inventory ABS drawings by 225 million as a consequence. This means that we funded only 111 million of 803 million of inventory ourselves, leading to cash release in the quarter. Consumer finance, total assets grew to 700 million, of which 576 million was externally funded. Both the ABS funded portion and our own portion increased. Our own funding was 124 million. I want to flag one point of timing here. With the closing of Finance03 imminent at quarter end, there was no reason to optimize ABS consumer funding in the final days of June. For merchant finance, the portfolio reduced slightly to 317 million, of which 259 million was ABS funded. The reduction is mainly faster repayment by our merchant partners, which we read as a positive signal on the health of the dealer market. We optimized funding nonetheless, taking our own funded portion down to 58 million. Taken all together, we carried 1.8 billion of assets across the three pools and funded 84% of that externally and without recourse. This demonstrates our approach to utilizing our ABS structures as a key driver in keeping our business capital light and efficient as we continue to scale. We had no corporate debt during Q2. This page is our self-funded growth model working in practice. Capital Light, funded from the cash we generate, becoming more profitable as we scale. To be precise on what that means, the assets are largely funded externally, as I've just described. But the business funds itself is the growth from the cash we generate with no external funding raised. On the left-hand side, you can see that we generated 24 million of cash in the quarter, taking total cash to 676 million. On the right-hand side, we've outlined the out-of-one cash flow we use to assess business performance and cash flows. This is aligned with the view we've set out that the capital markets invent that we publish every quarter on our webpage. It shows the earnings generation of the business and our net investments into our three asset pools, inventory, consumer finance, and merchant finance. Under IFRS, the gross asset change sits in operating cash flow and separately, the ABS funding and financing cash flow. These facilities are working capital in character. The assets and the funding move together. So we manage them that way and we present them that way on this page. The bridge itself is straightforward. Adjusted EBTA contributed 59 million. Cash items below the adjusted EBTA line, for example, capital expenditure, tax and general working capital changes, were an outflow of 29 million. The changes across our three funded asset pools used 6 million net with inventory reduction releasing cash and the Consumer Loan Book absorbing it. That takes us to the 24 million of cash generated in the quarter. As I indicated earlier, the consumer finance outflow was a timing effect. It has unwound with the closing of Finance03 after the quarter close. In early July, we priced our third public ABS transaction, Finance03. The transaction backed by German and Austrian consumer car loans originated by Autohero was met with very strong demand. What makes this transaction particularly significant is the evolution of our structure. For the first time, we introduced a six tranche capital structure and we adopted vertical risk retention, which means holding 5% across every tranche and then refinancing the retention through a repo facility. The effect is that we now retain 1% effective cash contribution. At the Capital Markets event, we said vertical risk retention should take that to an average of 1-2% in our public AVS structures over time. Finance Hero lands at the bottom of that range, at the first issuance under this new structure. Now to full year guidance. The first half of the year has developed as we planned. Strong unit growth and cost discipline. On that basis, we're confirming our full year guidance across all metrics, We're targeting the top end of our ranges. We expect merchant units in the range of 815,000 to 865,000. For auto hero units, we expect 125,000 to 135,000 units. We therefore expect 940,000 to 1 million total units. We expect gross profit of 1.1 to 1.2 billion. Based on continuous strong SG&A management, we expect adjusted EBITDA of 250-275 million. In Merchant, we expect sequential improvements in GPU driven by faster trading speed, combined with unit growth at the top end of our 10-15% growth corridor for the second half of 2026. In Alto Hero, our focus for the remaining part of the year will be on continued growth and increased GPU levels, moving faster towards a milestone profitability target. During the second half, we're likely to see year-on-year growth for Vital in the 20-30% range of our long-term growth corridor. We have exercised strong cost discipline in the first half of 2026 and expect to continue to operate at current levels of SG&A per unit for the rest of the year. Putting these strong performance parameters together, we expect to complete the year towards the top end of the guidance ranges. To wrap up the presentation, Q2 was another port of strong growth, cost discipline and profitability. We also materially increased our trading speed. As outlined, we expected to come through in GPU increases in the second half of the year. Our vertically integrated business model continues to deliver a highly differentiated custom offering, driving operating leverage while steadily progressing towards our long-term targets. With that, I'd like to open up now for questions.