Auto Trader Earnings Call Highlights Growth Amid Challenges

Auto Trader ((GB:AUTO)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call from Auto Trader painted a generally positive picture, highlighting strong financial growth, successful product launches, and record consumer engagement. Despite these achievements, the company acknowledged challenges such as the impact of the digital services tax and fluctuations in used car pricing.

Record Consumer Engagement

Consumer engagement on Auto Trader’s platform reached unprecedented levels, with cross-platform visits increasing by 5% to 81.6 million per month. This surge in visits underscores a robust consumer interest in the company’s offerings.

Financial Growth Metrics

Auto Trader reported impressive financial growth, with group revenue rising by 5%, operating profit increasing by 8%, and basic earnings per share (EPS) up by 12%. These metrics reflect the company’s strong financial performance over the period.

Co-Driver AI Product Success

The launch of Co-Driver AI products was met with significant success, generating over 300,000 vehicle descriptions and 35 million consumer interactions. This indicates strong engagement and interest in Auto Trader’s innovative offerings.

Digital Retailing Expansion

Auto Trader’s digital retailing efforts have expanded significantly, with Deal Builder customer numbers growing by 82% to 2,000 retailers. Additionally, consumer-generated deals have tripled to nearly 50,000, showcasing the platform’s effectiveness in facilitating transactions.

Environmental and Cultural Achievements

The company made strides in environmental and cultural areas, reducing carbon emissions by 6% and achieving high cultural metrics. Notably, 91% of employees expressed pride in working at Auto Trader, and the company received a Glassdoor rating of 4.6.

Impact of Digital Services Tax

The UK digital services tax had a slight impact on Auto Trader’s operating profit margin, which contracted to 70%. This challenge highlights the financial pressures faced by the company in the current tax environment.

Challenges with Used Car Pricing

Auto Trader faced challenges with used car pricing, as prices fell due to a sudden drop in trade prices. This development impacted retailer profitability, despite the ongoing strong demand for used vehicles.

Stock Lever Decline

Despite a 5% increase in cars advertised, the retailer stock level declined by 1% for the year, attributed to a faster speed of sale. This dynamic reflects the changing landscape of stock management in the automotive retail sector.

Forward-Looking Guidance

Looking ahead, Auto Trader provided guidance for fiscal year 2025, expecting a 5% increase in group revenue and a 7% growth in core business revenue. The company anticipates retailer revenue growth for FY ’26 to improve to 5% to 7%, despite challenges from accelerated speed of sale and changing stock dynamics. Auto Trader is focusing on enhancing its product pipeline, including Co-Driver AI products and digital retailing, to drive future growth.

In conclusion, Auto Trader’s earnings call highlighted a period of strong financial performance and consumer engagement, tempered by challenges such as the digital services tax and used car pricing fluctuations. The company’s forward-looking guidance suggests a continued focus on product innovation and revenue growth, positioning it well for future success.