Auto Trader reports another year of strong financial, operational and strategic progress

Auto Trader Group plc (LON:AUTO), the UK’s largest automotive marketplace, has announced full year results for the year ended 31 March 2024

Strategic overview

–     Group revenue increased by 14% and Group operating profit increased by 26%. Core Auto Trader revenue grew 12% driven by double digit revenue growth across all segments. Core Auto Trader operating profit grew by 14%, with operating profit margins expanding to 71%.

–     Average revenue per retailer (‘ARPR’) grew 12%, driven by continued uptake of additional products and services and a successful annual pricing and product event on 1 April 2023. As part of this event, we launched our second Auto Trader Connect module enabling all retailers to benefit from our market-leading retail valuations.  

–     Over the past 12 months both our marketplace and our competitive position have strengthened, with record numbers of buyers and sellers using Auto Trader. We were 10x larger than our nearest classified competitor and UK retailer forecourt numbers were up 1%.

–     The used car retail market has been robust throughout the financial year, which we expect to continue. Demand is resilient with cars continuing to sell faster than before the pandemic and used car supply has gradually improved. Trade prices softened in the latter months of the calendar year, which subsequently impacted retail prices, but monthly pricing movements have since stabilised in line with typical seasonal trends.   

–      The new car retail market has been more challenging and discounting has started to return. We are well placed to support the structural changes in this market, which remains a significant opportunity. We now have products to support franchise retailers, manufacturers and leasing companies selling new cars directly to consumers on Auto Trader.

–      Our Deal Builder product, which is part of our digital retailing strategy, enables car buyers to value their part-exchange, apply for finance and reserve a car on Auto Trader. The product is still in trial phase but scaling well with c.1,100 retailers onboarded at the end of March 2024 (March 2023: c.50). During the year we have seen c.16,000 deals (2023: c.200) with at least a reservation and continue to receive positive feedback from both buyers and sellers. We commenced a small monetisation trial in January 2024. 

Financial results

–     We have returned £250.3 million to shareholders (2023: £225.0 million) through £169.9 million of share buybacks and dividends of £80.4 million.

–      With a proposed final dividend of 6.4 pence per share (2023: 5.6 pence per share), total dividends for the year are 9.6 pence per share (2023: 8.4 pence per share).

Operational results

–      Over 75% of all minutes spent on automotive classified sites were spent on Auto Trader⁷ (2023: over 75%). Cross platform visits^8,10 were up 11% to 77.5 million per month (2023: 69.6 million) and cross platform minutes^8,10 were up 8% to 553 million per month (2023: 514 million).

–      Like-for-like retailer numbers were up 1%, after removing the impact of the Webzone Limited disposal in the prior year (a loss of 305 retailers), Without this adjustment, the average number of retailer forecourts⁸ in the year declined slightly to 13,783 (2023: 13,913).

–     Average revenue per retailer⁸ (‘ARPR’) was up 12% (or £284) to £2,721 on average per month (2023: £2,437), driven by a positive contribution across all three growth levers (price, stock and product).

–     Live car stock^8,12 on site was up 2% to 445,000 cars (2023: 437,000), within which new car listings declined to 20,000 (2023: 25,000). We delivered 7,847 new lease vehicles (2023: 6,895²) which continues to be impacted by limited supply.

–     The average number of employees⁹ (‘FTEs’) in the Group increased to 1,233 during the year (2023: 1,160).

Cultural KPIs

–      97% of employees are proud to work at Auto Trader¹³ (March 2023: 91%).

–      We continue to build a diverse and inclusive culture¹⁴:

o  Board: There were more women than men on our Board (March 2023: five women and four men) and one ethnically diverse Board member (March 2023: one). From the start of May, we increased to six women and two ethnically diverse Board members.

o  Leadership: The percentage of leaders that are women^15,17 was 42% (March 2023: 40%) and those who are ethnically diverse^15,16,17 was 6% (March 2023: 8%).

o  Organisation: The percentage of employees who are women was 44%¹⁷ (March 2023: 43%) and those who are ethnically diverse^16,17 was 17% (March 2023: 15%).

–      We aim to achieve net zero across our value chain before 2040 (Scopes 1, 2 and 3) and to halve carbon emissions by the end of 2030. Total Group emissions for the period were 98.9k tonnes of carbon dioxide equivalent¹⁸ (2023: 79.5k tonnes). Most of our CO₂ emissions are Scope 3, attributable to both our suppliers and the emissions related to the small number of vehicles sold by Autorama that pass through the balance sheet, which were responsible for the year-on-year increase.

Nathan Coe, Chief Executive Officer of Auto Trader Group, said:

“This has been another year of strong financial, operational and strategic progress for Auto Trader. More than 8 in 10 car buyers now use Auto Trader during their car buying journey and two thirds of buyers only use Auto Trader. Our data and technology continue to underpin the UK automotive industry and we are constantly innovating to help our retailers access the very best tools to achieve their business goals.

“We are confident in our prospects for the year ahead and, in the longer term, we see significant opportunities to continue growing our marketplace and to move more of the car buying process online, on Auto Trader.

“As ever, I would like to thank our people, customers and the UK’s car buyers for continuing to place their trust in us.”

Outlook

The new financial year has started well.

We anticipate another good year of ARPR growth across all three levers. In FY24 there was some positive ARPR benefit from the Webzone disposal, as on average their retailers were lower yielding, which won’t be replicated in FY25. We expect ARPR price growth of £90-£100, product growth of £120-£130 and stock growth of £20-£40, with average retailer forecourts likely to be marginally down year-on-year, as market conditions continue to return to normal levels. Consumer Services and Manufacturer & Agency are expected to grow at a rate of mid-to-high single digits.

We expect Autorama operating losses to reduce year-on-year, despite tight supply conditions in the leasing channel for new vehicles continuing. Group central costs, which relate to the amortisation of Autorama acquired intangibles, will be c.£13m for the year.

As mentioned at our last results, in FY25 we will exceed the threshold for the UK’s digital services tax (‘DST’) which will be taken as an operating expense in the core Auto Trader segment. We therefore expect FY25 operating profit margins within this segment to be 69%, or 71% when excluding DST. However, at a Group level we expect to see modest margin expansion.

Our capital policy remains unchanged, with most surplus cash generated by the business being returned to shareholders through dividends and share buybacks.

Analyst presentation

A presentation for analysts will be held in person at the offices of Bank of America Merrill Lynch and also via audio webcast and conference call at 9.30am, Thursday 30 May 2024. Details below:

Audio webcast: https://edge.media-server.com/mmc/p/vw8vywth

Conference call registration: https://register.vevent.com/register/BIdab284011b934097a5130184192bd492