Release Date: August 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CAR Group Ltd (ASX:CAR, Financial) reported a 15% growth in revenue and 16% growth in EBITDA on a constant currency basis.
- The company achieved a strong margin performance of 53%, slightly up from the previous year.
- Adjusted NPAT increased by 24%, reflecting strong financial outcomes.
- The company reached a milestone of $1.1 billion in revenue, with double-digit revenue and EBITDA growth across all regions.
- Significant progress in international markets, particularly with acquisitions in Brazil and the United States, contributing to long-term shareholder value.
Negative Points
- Softer demand in the United States offset growth in leads in Australia and Brazil.
- High interest rates continue to pose a challenge, although the company has demonstrated resilience.
- The new car demand has moderated, leading to more offers and discounts from manufacturers.
- Used car pricing has reduced slightly, although it remains above pre-COVID levels.
- The company faces competitive pressures, particularly in the trucks vertical in the United States.
Q & A Highlights
Q: Can you confirm if the margin percentage expected to be similar in FY '25 has implications for dollar EBITDA growth versus market expectations?
A: Our overall strategy is to grow margin long-term. While "similar" could mean slightly up or down, the objective is to grow margin. We are investing in long-term growth opportunities, which may impact the margin percentage but not necessarily the dollar EBITDA.
Q: What is the outlook for dealer growth in FY '25, and can you provide the split for FY '24 dealer growth?
A: Dealer leads are positive heading into FY '25. For FY '24, dealer growth was driven by volume, yield, and depth, with a split of around one-third each.
Q: Can you elaborate on the health of the domestic used car market compared to the new car market?
A: The used car market remains strong with resilient pricing and healthy dealer leads, unlike the new car market, which has seen some margin pressure.
Q: Are you being conservative in your guidance for media and Brazil revenues?
A: For Brazil, there's no upper limit for "strong" growth, and we feel positive about the business. In media, while replicating past growth rates becomes challenging as the business grows, the exit run rate for FY '25 is positive.
Q: Should we expect price increases in Korea to become more common given the 10% price increase for guarantee ads?
A: The guarantee ads have been well received by dealers, and we will continue to look for price increase opportunities in the future.
Q: Can you quantify the depth contribution to growth in FY '24 for Trader Interactive (TI)?
A: Premium Select made a material contribution to FY '24 results and is expected to continue contributing significantly in FY '25 and beyond.
Q: What is the revenue contribution of the guarantee product to Encar, and what impact will the 10% price increase have?
A: The guarantee product is the largest revenue source but still less than 50%. The 10% price increase will have a less than 5% revenue impact, spread over the next 1-2 years.
Q: With the leverage ratio coming down, do you see potential for further acquisitions?
A: We are cautious with shareholder capital and have a high bar for M&A. Opportunities exist, but we ensure they meet our high standards.
Q: What should we assume for price increases in Australia for dealers and private ads in FY '25?
A: No decisions have been made yet. We will monitor the market and value provided to dealers. Dynamic pricing will help manage yield for private ads.
Q: Can you provide more color on the drivers for TI's growth in FY '25?
A: Premium Select, media business, OEM penetration, and private package enhancements are key drivers. Customer growth from acquisitions is not a significant factor for FY '25.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
