Earnings Transcript for AUTO.L - Q2 Fiscal Year 2025

Nathan Coe: Good morning, everyone. And welcome to Auto Trader’s Half Year Results for the Six Months to the 30th of September, 2024. As usual, I’m joined by our COO, Catherine; and our CFO, Jamie, who will be both presenting and joining me for Q&A later. Our financial and operational performance in the first half demonstrates both the strength of our position and the strength of the partnerships we’ve built with our customers. Over this six-month period, we’ve had record levels of engagement and activity on our platform. There are more buyers using Auto Trader, more retailers, more cars transacted than last year. While all of these dynamics are incredibly positive, the nature of these market dynamics has not necessarily benefited us in this set of results as much as you might expect. I’ll come on to explain this shortly. On top of this growth in our core advertising marketplace metrics, we’ve made good progress with Deal Builder. With growth in the number of customers, the amount of stock, the number of deals generated and have commenced monetizing the product. Finally, and perhaps most importantly, I would like to say thank you to our people, customers, shareholders and wider stakeholders for their continued trust in Auto Trader. Starting with some of the highlights during the year. At a group level, revenue grew 8%, operating profit grew 14% and basic earnings per share grew 22%. In the core Auto Trader business, revenue growth was 9% and operating profit, excluding the impact of digital services tax, which was recognized for the first time this year was 10%. Retailer revenue growth of 8% was in line with our expectations, although the mix was not as expected. The number of retailer forecourts increased by 2%, largely through smaller independent and non-car customers. This mathematically has a dilutive impact on average revenue per retailer, which increased by 6.3% or £169 year-on-year. The growth in average revenue per retailer was underpinned by a strong pricing and product event in April 2024, where we launched our third Auto Trader Connect module. As already touched on, we continue to see very strong levels of activity on Auto Trader. We’ve achieved record levels of consumer engagement in the period and our lead over our nearest marketplace competitor has increased to over 10 times. Finally, on Deal Builder, we’ve made great progress over the past six months and our focus continues to be on scaling the number of customers and stock, increasing consumer engagement and conversion, and continuing to gradually monetize the products. Whilst we’ve reported a good set of first half results, certain market dynamics have created some headwinds on revenue, which has resulted in a lower stock lever guidance for the full year. Today, we want to give everyone a clear understanding of what has driven that trend. The chart in the top left shows the increase in number of visits on Auto Trader, which have reached record levels as mentioned earlier. Seeing a further increase over this six-month period on an already strong prior year is testament to the strength of our market position and how many people are in market considering a change of vehicle. Demand has gradually outstripped supply, which has meant cars are selling faster this year than they did last, which is shown in the chart on the top right. While the move from average days to sell of 31 to 29 sounds small, it has meant that in this six-month period, 5% more vehicles have transacted on Auto Trader, but there has been no increase in average live listings shown in the bottom left chart. Generally live trade listings correlate to paid for slots, which is what drives the stock component of ARPA. As a result, for the purposes of guidance, we have assumed that these conditions continue, which given a stronger second half comparator drives the negative stock lever expectation for the full year. Finally, for completeness, we have shown used car prices in the bottom right hand chart. Generally used car prices have been stable for much of this financial year, having declined through last year. Stable pricing is of course, generally more supportive of retailer margins, although we continue to monitor all these trends very closely. Now turning to the group financial results. Group revenue increased by 8%, with Auto Trader revenue increasing by 9%. Group operating profit increased 14%. The core Auto Trader business increased operating profit by 7%. And Autorama made an operating loss of £2.8 million. Central costs relating to the acquisition of Autorama were £6.3 million, £8.4 million less than in the prior year. Group operating profit margin was 62%, with Auto Trader’s operating margin contracting slightly to 70% due to the impact of digital services tax, as previously mentioned and flagged. Basic earnings per share was up 22% and cash generated from operations was up 9%. During the year, we returned £122.2 million of cash to shareholders through £64.9 million in share buybacks and £57.3 million in dividends. Today, we are declaring an interim dividend of 3.5 pence per share. Now onto operational results. The average number of cross platform visits were up 7% to 82.6 million per month and engagement measured as cross platform minutes were 560 million minutes per month. We are the U.K.’s largest and most engaged automotive marketplace for new and used vehicles and continue to account for over 75% of all time spent across our main competitor set. The average number of retailer forecourts advertising with us increased 2% to 13,986. Average revenue per retailer was up £169 to £2,852, largely driven by the price and product levers with a smaller positive contribution from stock. Live car stock was up 2% to 448,000. Within these new car listings declined slightly to 20,000 with the growth in stock largely driven by an increase in private listings. Finally, the average number of full-time equivalent employees increased to 1,252 during the period. And finally to our cultural KPIs. We report this subset of our cultural KPIs given the importance of them to our strategy, our people and our ability to deliver. 91% of employees are proud to work at Auto Trader and our Glassdoor rating is 4.5 stars out of 5, which is a large credit to the hard work of all our people. As at the 30th of September, six out of nine Board members were women and two were ethnically diverse. Within the organization, the percentage of female employees remained at 44%. The proportion of ethnically diverse employees increased to 18% and ethnically diverse leaders was consistent at 6%. We aim to have net zero carbon emissions across our value chain by 2040 and to halve emissions by 2030. Our carbon emissions for the six-month period across Scopes 1, 2 and 3 were 45.4,000 tons, most of which relate to Scope 3. I’ll now hand you over to Jamie to talk us through the financials in more detail.

Jamie Warner: Thanks, Nathan, and good morning, everyone. I’ll start by focusing on the core Auto Trader financials. Starting with revenue, total Auto Trader revenue increased 9% to £283.5 million. Trade revenue also increased by 9% with the largest component of this being retailer revenue, which grew 8%. The average number of retailer forecourts on our platform increased to 13,986, a 2% year-on-year increase and average revenue per retailer increased 6.3% to £2,852 per month with more details given on the following slide. Also within trade revenue, we’ve seen an increase in home trader pay-as-you-go listings and growth in other trade revenue. Consumer services revenue increased by 14%. Within this private revenue, which is largely generated from individual sellers who pay to advertise their vehicle on the Auto Trader marketplace, increased by 12% due to a higher volume of adverts being placed and motoring services increased by 20%. Revenue from manufacturing agency customers increased just 2% year-on-year. We’ve spent much of the past 12 months working with manufacturers to enable them to advertise new cars on Auto Trader and have made good progress with eight brands using this product at the end of September. However, there’s still work required to ensure the product works, as well as it does for our retailer customers. This work will continue before turning our focus to increased monetization. Now onto ARPA, live car stock and retailers. The chart on the left shows the components that contribute to the movement in ARPA compared to the prior year. Whilst the changes in ARPA growth look dramatic, on an underlying basis, which excludes the impact from the changing mix of retailers, growth was 8% last year and also 8% this year. In H1 2024, we had the removal of 550 lower yielding Ireland retailers, which inflated ARPA by 4 percentage points. This financial year, the retailer growth has come from lower yielding independent and non-car customers, and we’ve had the loss of one very high yielding online retailer. This change in mix has had a dilutive impact of about 1.5 percentage points, giving underlying ARPA growth for this year of 8%. The impact of that dilution is prorated across the three ARPA levers. As you can see in the first half, the majority of ARPA growth was driven by the price and product levers with a smaller positive contribution from stock. Taking each of the levers in turn, we delivered our annual pricing event for all customers on the 1st of April, 2024, which included additional products and a like-for-like price increase. Product contributed £80 to ARPA growth. Just over half of this growth was products which were included in retailer advertising packages in April 2024, being Trended Valuations and Enhanced Retail Check. The remaining product lever growth was largely due to new car, where we increased the number of paying customers over the period. Turning now to stock, you’ll see on the right-hand side of the chart that the number of live cars advertised on Auto Trader increased slightly. Within this, used car stock increased by 3% year-on-year. Although this growth was driven by an increase in the number of private listings, which do not impact ARPA. The volume of slots retailers paid for in the half was close to flat, which is broadly reflected in the stock lever. Total Auto Trader costs increased 16% to £87.8 million. However, £5.1 million of this relates to the digital services tax, which was recognized for the first time. Excluding the impact of the digital services tax, costs increased 9%. Within this, people costs increased by 19%. This increase was partly driven by an increase in the average number of full-time equivalent employees, so 1,122, an increase in underlying salary costs and share-based payments, which largely increased due to the introduction of our new all-employee share scheme in November 2023. Marketing spend decreased to £11.2 million, whilst other costs, which include data services, property-related costs and other overheads increased by 1%. Depreciation and amortization increased by 14%. As a reminder, our low levels of CapEx and depreciation are not a reflection of low levels of investment in our business. In addition to our investment in cloud-based services, we have around 400 people in product development and technology who are continuously improving our platforms and developing new products for consumers and retailers, the costs for which are taken in people costs through the income statement. Operating profit increased 7% to £197.5 million. Excluding the impact from digital services tax, operating profit increased 10% and operating profit margins remained consistent at 71%. Our share of profit generated by dealer auction, the group’s joint venture increased to £1.8 million. Having covered Auto Trader, the main part of the group, we’ll now move on to the Autorama results. Autorama revenue for the period was £19 million, with vehicle and accessory sales contributing £13.6 million and commission and ancillary revenue contributing £5.4 million. The Autorama business delivered about 430 vehicles which were temporarily taken on balance sheet as a pass-through in the period. The cost of these vehicles was taken through cost of goods sold with the corresponding revenue in vehicle and accessory sales. On the cost side, we saw people costs of £3.9 million, a year-on-year decrease of 42%, relating to the 130 FTEs employed on average through the first half. Marketing was £1.9 million and other costs were £1.7 million. There was a £0.8 million of depreciation and amortization, which was largely for developed software capitalized in prior years. Excluding cost of goods sold, costs of £8.3 million represent a 35% year-on-year reduction. Total deliveries amounted to 3,180 units. The leasing market for brokers has been impacted for the last two years by supply challenges. We expect that this will gradually improve and believe we’ve positioned the business to scale profitably over time. The Autorama segment made an operating loss of £2.8 million. This is an improvement year-on-year and half-on-half, largely through the cost savings already mentioned, which have resulted from the integration with the main Auto Trader business and platform. With group revenue up 8%, reduced group central costs and a reduced Autorama loss, we saw total group operating profit increase 14% to £188.4 million and group operating profit margins increased to 62%. We continue to deliver strong cash flows. As we grow, the strong cash generation of our business leaves us well-placed to return surplus cash to shareholders. Cash generated from operations was at £201.6 million. The statutory income statement outlines areas beyond our revenue and operating costs. Net finance costs decreased to £0.9 million, largely due to reducing our gross debt to nil. Our profit before tax was £187.5 million, 15% higher than last year. The group tax charge of £47.9 million represents an effective tax rate of 25.5%, marginally higher than the average standard U.K. rate due to non-deductible expenses. For clarity, digital services tax, being a tax on revenue, is reported as an operating expense in the Auto Trader segment and is not included in this calculation. In respect of DfT, whilst we understand that the U.K. Government continues to work towards implementing a global two-pillar tax solution, addressing the tax challenges arising from the digitalization of the economy, the timeline for finalizing this multilateral convention is still not certain and no recent updates have been made. The basic EPS increased by 22%, which was slightly higher than the growth in net income due to there being fewer shares in issue following our share buyback program. The directors are recommending an interim dividend of 3.5 pence per share. Now to briefly review net bank debt and capital policy. During the period, the group repaid all of the £30 million drawn of its revolving credit facility and held cash and cash equivalents of £15.1 million. During the period, cash generated from operations was largely used to pay tax or return to shareholders through a combination of dividends and share buybacks. The group’s long-term capital allocation policy remains unchanged, continuing to invest in the business, enabling it to grow, whilst returning around one-third of net income to shareholders in the form of dividends. Following these activities, any surplus cash will be used to continue our share buyback program. That concludes the financials. I’ll now hand over to Catherine to talk through the market dynamics and progress against our strategic priorities.

Catherine Faiers: Thank you, Jamie, and good morning, everyone. So moving on to Slide 16 and looking at both new car registrations and used car transactions. In the new car market, supply had improved gradually following the impact of the pandemic on production levels in 2020 and 2021, but has been broadly flat over the last 12 months. This can be seen on the left-hand chart. The market remains slightly below the levels seen pre-pandemic and significantly lower than the highs of 2017. Over the past 12 months, manufacturers have attempted to stimulate private demand with increasing levels of discounts and finance offers available. This has been particularly prevalent with electric vehicles, where the zero emission vehicle mandate is now in place. This requires a minimum percentage of registrations to be electric, with significant penalties for failing to achieve these targets. Despite these higher levels of discounts, private sales were down year-on-year, with some of the registration offset coming through fleet volumes. The fleet channels saw little volume before 2020 and 2022, as manufacturers prioritized higher margin retail volumes. As a result, these players have been replacing what has become a much older fleet. That said, we do expect this trend to ease over the coming months, as the replacement cycle is returning closer to historical norms. As seen in the chart on the right-hand side, demand for used cars has remained strong and transaction volumes have continued to increase, with a 6% increase in comparison to the same period last year. Now, the market news that has dominated the headlines in the last two weeks has been the Court of Appeal judgment against automotive finance lenders. All automotive finance lenders are now back in market after some temporarily pausing new business and we have not seen a notable impact on either consumer engagement on Auto Trader or in our retail sales data. Over the past 12 months, our audience position has strengthened, as both the volume and engagement of buyers has increased. The number of cross platform visits increased 7% year-on-year to reach a record number of 82.6 million per month. Engagement, which we measure as cross platform minutes, also increased to 560.3 million on average per month. The difference between the growth in visits and minutes was due to increasing use of our app, which has seen total downloads of over 21 million since launch. Sessions on our app are typically shorter than those seen on a desktop or mobile device, but we see more repeat visits. The chart on the right shows the total minutes spent across an expanded set of competitors, retailers, and manufacturers. On average, over the year, Comscore estimated that consumers spend 11 times more minutes on Auto Trader than our nearest marketplace competitor, a combination of Gumtree, Motive, eBay, and Kazoo, and 16 times that of CarGurus and PistonHeads combined. Let’s move on to consider progress against our strategic priorities. We have made good progress against each of our three strategic focus areas. These areas are all closely interconnected. Our platform and our digital retailing capabilities build on the strengths of our marketplace and deepen our relationships with both retailers and with car buyers. Our marketplace continues to grow, and we have seen a record number of car buyers and retailers using Auto Trader. We have executed our annual pricing and pricing product events successfully, which included the third module of Auto Trader Connect, Trended Valuations and Enhanced Retail Check. We have also invested in our new car experience, introducing a multiyear partnership with Whatcar, a significant multichannel marketing campaign, and further investments into our successful monthly EV giveaway. As part of our platform strategy, we continue to make the technology and data that we have built and scaled to support Auto Trader available to our partners. This is a key differentiator and connects our data and services into key business processes for our customers. In addition to launching and monetizing the third module of Auto Trader Connect in April, we have seen strong and growing engagement from retailers with an average of 86 million API requests per month. We are also leveraging our data capabilities to build and launch Co-Driver, a suite of AI-powered solutions to significantly improve both the retailer and consumer experience. We continue to scale our Deal Builder trial, enabling consumers to do more of the car buying journey online. We’ll cover each of these key areas in more detail in the coming slides. We are well-placed to support ongoing structural changes in the new car market and have continued to invest in our new car experience on Auto Trader. We have products to enable franchise retailers, manufacturers and leasing companies to sell new cars directly to consumers. Firstly, our new multiyear partnership with Whatcar. All 20,000 new cars on Auto Trader are now displayed and accessible on Whatcar, creating a seamless journey for consumers to research, find and buy their next new car. This partnership enables retailers and manufacturers to engage and influence a highly qualified audience at the beginning of their new car buying journey. We’ve also launched a significant new car marketing campaign across multiple channels to run over the next six months. The campaign is expected to reach 96% of U.K. adults at least 35 times and has been designed to support our partners to meet the ongoing changes and challenges of the new car market. Finally, we’ve continued our EV giveaway investment. With an electric vehicle to be one every month, consumer engagement has been strong with over 2 million entries in the six months of September and over 13 million in total since launch. This slide references many of the data points that we have made available to retailer customers through our Auto Trader Connect strategy. Our valuations are driven by Auto Trader’s unique value scale and depth of data that customers can trust to help them source, price, dispose and retail their vehicles to drive performance. Over recent years, the market has seen higher levels of average price movements and big differences in pricing trends between different segments of stock. With this in mind, we launched a Trended Valuations product last year. This product uses machine learning models of current and historical data to look forward and provide a view on where we expect a specific vehicle’s valuation to trend in future periods. This supports customers to set prices for vehicles with more confidence, to maximize their margin, and to fine tune their pricing strategy over time driven by data. In addition to trend evaluations, Enhanced Retail Check was launched for our independent retailers. This includes additional metrics previously only available to our retail accelerated products. It supports customers with sourcing and provides both predicted days to sell and retail rating metrics. As we’ve mentioned previously, Auto Trader’s data science capabilities, platform and unique data presents new opportunities to create AI-powered products. We are already utilizing these capabilities across the platform of products and services to benefit both buyers and sellers on our platform. The next step in this journey is the launch of Co-Driver, a suite of AI-powered tools. This first wave of Co-Driver feature launches includes three key components. The first, smart image management, categorizes and reorders vehicle imagery based on consumer insights. In addition to identifying missing imagery needed to improve the advert performance. The second, AI-generated descriptions automatically portrays the vehicle and the features most important to consumers to generate accurate, thorough and compelling vehicle descriptions instantly. And finally, key selling points that promote the vehicle’s key characteristics that the buyers value most. These products will significantly reduce the time and effort required to create detailed, highly compelling and high-performing used car and van listings, shortening the average time taken from around 28 minutes to just the click of a button for our retailer partners. We expect these products to significantly improve both the consumer and the retailer experience on Auto Trader. Moving on now to talk more to the outer ring of our strategy and our Deal Builder product trial. Our approach to digital retailing is to enable omni-channel retailing for all of our partners. We’ve made good progress with our Deal Builder product with around 1,500 retailers and 56,000 cars on the trial at the end of September. Of the 1,500 or so retailers, around 20% are now paying as we have started the gradual monetization of this product. In addition to scaling retailers and stock, the number of deals increased to 23,000 in the period, 10 times the number in the same period last year. We continue to evolve Deal Builder, enabling more retailers and consumers to benefit from the product. We recently launched our finance estimates journey, which enabled the consumer to engage with monthly prices without having to go all the way through to a full application, as shown on the slide. Over time, we expect to build out the stages of the finance journey, focusing on consumer transparency and allowing buyers to do as much or as little of the journey online as they choose. This will improve the quality of the inquiry and yield efficiencies when these buyers then visit the forecourt. We do not believe that Auto Trader products will be directly impacted by the recent finance court judgment, but we are making the relevant changes in our leasing journey to disclose and capture consent for commissions. We do not expect further product changes to be required to Deal Builder, but we continue to monitor the situation closely. Over 50% of U.K. car buyers fund the purchase of their next vehicle using automotive finance, and we expect these market developments to strengthen the role for us to play as an independent aggregator of automotive finance products. Consumer feedback on Deal Builder has continued to be positive and deals are converting at roughly double the rate of any other inquiry type. Over half of deals take place outside of 9 a.m. to 6 p.m. Monday to Saturday, validating that car buyers want to complete more of their car buying journey online at the time that is convenient to them. As Nathan mentioned, our focus on Deal Builder continues to be scaling the number of customers in stock, increasing consumer engagement and conversion, and continuing gradual monetization. I’ll now hand back to Nathan to summarize our outlook for 2025.

Nathan Coe: Thank you, Catherine. The new financial year has started well with strong growth in retailer forecourts, a good product and pricing event and growing sales volumes for our customers. However, we have seen a 5% increase in unique cars sold through Auto Trader, which due to the acceleration in speed of sale has not translated into a meaningful increase in either livestock or the ARPA stock lever. With this trend likely to continue, we now expect the stock lever to be negative for the full year. Retailer forecourts are likely to remain strong and be broadly consistent with the number we’ve reported in the first half. As seen in the first half, though, this is likely to dilute the contribution from both the price and product levers. Previous guidance on other revenue lines, Autorama losses, Auto Trader and group operating profit margins, and capital allocation policy remain unchanged. That concludes the presentation. We’ll now move to Q&A in the room with analysts, which will be managed by Jamie.

A - Jamie Warner: Well done. Giles, work line on the front.

Giles Thorne: Thank you. It’s Giles Thorne from Jefferies here. First question was on Co-Driver. First phase is live. First module within the first phase is live. And it’s all free for dealers, anyone taking an advertising package. So is it fair to say that this is going to be the product that goes into the packages to support your pricing event for April next year? And if that’s right, then a bit of commentary around how you see the value of Co-Driver in the initial phase of modules relative to the modules you put from Auto Trader Connect in April this year. Hopefully that makes sense. Second question was on all the activity around new car, the record marketing campaign, the Whatcar partnership, which was actually an extension of an existing partnership to cover new car. Should we see this as laying the ground for a Deal Builder product for OEMs? And lastly, yeah, Deal Builder monetization, just the latest commentary there, please. A little bit more color than what’s given on the slides? That’s okay.

Catherine Faiers: Should I start with the first couple? So Co-Driver, you’re right. The Auto Trader Connect comparison is a good one in that we see this as sort of an umbrella for a number of features and products that hopefully we can launch over a relatively long period of time. We see good runway for growth from the Co-Driver suite of products. We’ve got three features that we’re talking about at the moment. The first one of which is about to go live. The other two will go live early in the new year. We are thinking about this product being a product that we want all retailers to have and one that we do want to capture as part of advertising packages. Few reasons, really. Firstly, where we find products that we know really improve the consumer experience, really deliver value for retailers and where we can capture value as well, they are brilliant package products. And we’ve seen from the image work, the descriptions work, how much better this experience can make all of the product pages that we have on Auto Trader. So we want all retailers to be creating, generating adverts on our platform in this way and we’ve seen from the time we’ve spent with relist retailers, the significant effort reduction that they see from being able to use the tools. So for both consumer and retailer reasons, it feels like a really good product to make available to all retailers. We’ve talked about before, it does and it will raise the bar again for retailers, because we have a huge breadth of some retailers that are really, really good at creating a really good product page and others that are not so good. So we are raising the bar again for all retailers and for those that are really good advertisers today, they’re going to need to keep pushing on and finding new ways to differentiate. In terms of the product and the value of the product, I think we’re confident from all of the testing and work we’ve done with retailers that it’s a good product that will deliver really meaningful value. I think we’re still in the process of figuring out exactly how and where we pitch like this wave of product versus what we hope will come next, but we’re certainly hoping that the product is as valuable as the products we’ve seen in the last couple of years. In terms of new car, the Whatcar partnership, it was an extension of, we’ve been working with them for a couple of years on used car. That partnership has been, in terms of the traffic, unique visitors, has been a good partnership for us on the used car side. The new car partnership was a bit of a different moment for them because it was obviously much closer to their heritage and their core. But again, early days so far, it only went live in October. We’re seeing good consumer engagement, good unique visitor engagement transfer from Whatcar into Auto Trader and we’re confident that the commercial model we’ve done there will work well for us. In terms of what it means for our new car intent, I think between the investment in marketing, the investment in the partnership, the continued product work, new car absolutely remains a really important priority. We’ve still got work to do, I think, to get the advertising proposition as compelling as it should be and needs to be. But we absolutely want them to go on an equivalent Deal Builder journey on new car over time as we’ve been on used. But we’re just a few steps behind that at the moment.

Nathan Coe: I can take the Deal Builder. I think the headline would be we’re happy with the progress that we’ve made on Deal Builder. And you know that we’re normally pretty open when we’re not happy with certain things. But Deal Builder, we feel pretty good about. And if you split it into two sides, from a retailer perspective, we’ve been adding 500 retailers pretty consistently for a few halves now. And the number this half is a little bit lower than that. The reason why it’s lower is because we are progressively monetizing now. And when we do move to monetizing in cohort, there are customers that will not come on the journey. If you get 100% conversion on any digital product, you’ve probably not charged the right amount of money for the product. And even if we went free, I’m not sure we’d get 100% conversion. So you do have some of those customers that are starting to now net off. And as the number gets bigger and bigger, you will see that impact in the overall net number that we add during the year. But we’re still doing well at adding people on the trial. There is a fixed period now that then moves to monetization. The conversion to paid, we’re actually pretty happy with. So that’s the retailer side of things. On the consumer side of things, as we’ve increased -- as you’ve seen, there’s 10 times more deals, so as we’ve increased customer numbers, we are seeing consumers engaging with those and conversion rates are holding up reasonably well. Now, as you’d expect, we tend to add better customers early in the process for any product because they help us learn the most, and as you go on, you can see more variation in the performance of those customers. So the fact that we’re broadly kind of held feels pretty good, but I wouldn’t say conversions increased yet. And I wouldn’t say attachment rates, which we’ve spoken about previously in terms of finance and part exchange. They’re still there a bit better than what they were, but they’ve not really come into focus for our attention from an engineering perspective. And I guess that leads to, well, what are the things that you haven’t yet done that you can still yet do? We’ll carry on adding customers, we’ll carry on monetizing, we’ll carry on making sure that we’re looking to increase the conversion to deals, but we’ve not really marketed or pushed dealability yet heavily on the side. And that’s partly because not all customers are able to come onto it and our customers are very happy to share their views with us when we push products that they’re not able to get onto, because they might not have a particular lender, they might be ready from a finance perspective. So we’re still looking to open up and make sure everyone can come on the Deal Builder journey, but we are increasingly starting to turn our minds to, well, how do we increase the top of funnel and make it a bit more obvious to consumers that there’s a new way to buy cars in the U.K. that they might not otherwise find and now over one in 10 cars on Auto Trader do have Deal Builder on it. So it does feel like, if we pushed it to consumers, they will find cars with that level of functionality on it. I mentioned the attachment rates and opening it up to more and more customers. So larger customers where they want deeper integration into their systems. So at the moment, Deal Builder is very easy to use if you’re using our portal every day, that’s true for the vast majority of our customers. If you’re running a big complex group, the last thing you want to say to 10,000 employees is, oh, and for these deals that come in, can you log into, rather than doing what you normally do, can you log into dealer portal and do those over there? Because even if you told them to do that, they’re not going to do it. So they need much deeper integration into their lead management systems and stock management systems and that’s taken us a bit longer than what we would like, but that’s mostly not down to the tech on our side, it’s down to the working with partners and working with customers and their tech capability on their side. But that all still feels like that’s yet to come.

Catherine Faiers: I think just to quantify that on the Deal Builder monetization, I think we’re pretty clear, minimum within a six-month to 12-month period, we want to have everyone either monetized or on try before you buy. So there is some focus in second half of this year, then obviously got the pricing event and probably early next year. And to Nathan’s point around the conversion rate, even if you’re converting at 80%, that’s still probably, it could be a two or 300 retailer headwind. I think just knowing that we’re going through this process through much of the second half, but once we’re there, then everyone coming on Board is hopefully, if you come on and try before you buy, I think that will have a higher conversion rate than when you come on on trial, not knowing what the monetization look like.

Giles Thorne: And just to follow up on a comment from Nathan, can we expect in the next 12 months, a marketing campaign advertising the ability to reserve online?

Nathan Coe: Yeah. I think the way that we got, well, actually I should let Catherine because she runs marketing, but I think that’s something that we’ve talked about is how do we make sure? I think marketing campaign is one aspect of it, but probably more importantly is how do you bring it right up the funnel on Auto Trader? At the moment, we’ve got no lack of human beings looking at Auto Trader to buy cars and how we can direct them to think about using Auto Trader differently is probably where our biggest upside is, but we’ve always been open to going out with a campaign around how you buy online. I think the interesting question, one for the team to solve is going to be, well, do you just do that on your own or do you mix that in with EVs, with new car or with some other element, because just saying you can reserve a car now is only part of what you can really do. There’s visibility about finance, which is now obviously very topical for consumers. So I think it’s definitely on the list of things to push at the right time in the next year or so.

Jamie Warner: One on the side along the front.

Andrew Ross: Great. Thanks. It’s Andrew from Barclays. I’ve got two, if that’s okay. First one is to ask about the prominence products, which I think nudge down slightly to 34%. Just want to make sure I understand the puts and takes as to why I kind of understand that stock turn is fast, therefore maybe incentive to take a prominence product is less, but is it just a cycle thing or is there anything more structural that needs to be addressed there as we kind of think about how much that could contribute over the next couple of years? And then the second one is to come back on the motor finance disclosure. It sounds from what you’re saying like the market is continuing to turn in spite of all of the noise, just to clarify that, but there’s quite a few potential impacts here in terms of are consumers able to access credits? Are dealers getting the referral fees? What does that mean for their margins? What does it mean for the pricing of cars? Dealer health, stock on your site is quite complex in terms of how this could feed through. Appreciate there’s no right answer, but curious on your take as to how to think about that. Thanks.

Nathan Coe: So I think on the prominence products, we do see it as part of that kind of technicality, very fast speed of sale, taking in the last three months of this half, we saw supply starting to tighten up, demand consistently been very, very strong. And what those products do is, where it’s solving a customer problem is where someone comes and says, I’m not selling cars as often as I’d like, I’ve got build up on the forecourt. And that’s where you say, well, we’ve got these high level packages, we’ve got kind of the experience within our customer portal shows you exactly the amount of uplift in response you get for the additional amount that you pay and how that turns into leads and incremental sales. Yeah, and it’s just not the conversation that we’re having with customers at the moment because of that demand and supply imbalance that those cars are selling very, very fast. We don’t feel like the products are highly penetrated. So I think in a slightly more competitive market, we certainly feel like there’s further to go from an upsell perspective. You already know as well we’ve probably had two or three iterations of that kind of prominent staircase and we’ve had to think about it, is it a point where it needs some iteration? But I think we just think, wait until the market dynamics change in the belief that they’re not that highly penetrated and that may be something that then comes one or two years down the line. The last time we did it was in 2021. Typically, we’d look at it every three years or four years.

Catherine Faiers: On motor finance, I think there were three different parts to your question, Andrew. If I start with the first part, in terms of direct market impacts and what we’re seeing at the moment. Your headline was right in that we saw a few days of dislocation immediately after the 25th when some lenders paused new business. But we’ve seen the market recover incredibly quickly and we’re now in a situation where all the lenders that have paused or switched off are now back on and trading and many retailers in that period where lenders did pause switched lender. So many of our bigger retailers in particular will work with a handful of lenders. And so most of them were not directly impacted and still had finance that they could offer to consumers. So when we look across our market metrics, when we look at what we’re seeing through our retail sales data, what we’re hearing from retailers, when we look at the auction volumes, importantly, the number of cars that retailers are buying, all of those metrics held up really strongly that week. And importantly, whilst the consumer credit side was impacted, there was no impact on any of the stocking loan facilities that our retailers used to buy cars. So the odd day that looks a bit odd in the data, but actually already now, kind of 10 days to nearly two weeks on, we’re seeing most metrics sort of trending broadly where they were before that 25th of October date. So a market now that is back functioning broadly normally, as we would see it. In terms of consumers and access to credit, we haven’t seen any lenders, I guess close to those who may be the closest or the most likely to perhaps, but we haven’t seen any lenders exit the market. We haven’t seen any lenders pause and not come back. We’ve seen some significantly adjust either digital or manual processes to capture consent, sometimes through a bit of paper, sometimes through a slightly more sophisticated digital journey and we’ve seen a handful of lenders change the commission structure that they’re paying to retailers. So one lender has paused paying any commission and a couple of others have moved to a flat fixed fee. But the vast majority have left the commission structures in place that were there and have adapted the process to disclose that commission and then to capture consent. So we’re not seeing any reduction in the availability of credit to consumers. If anything, actually in the last couple of days, we’ve seen the average APR on Auto Trader have tipped down slightly to the cost but that credit has actually got a bit cheaper for consumers. A combination of expected interest rate reductions maybe today or later this week. And also some lenders, the lenders that have cut commission have often then made the APRs more competitive. So actually we don’t see any sign that near the 50% of transactions, car transactions that are funded by finance, we don’t see any lack of availability or any consumer credit issues there. Finally, when it comes to retailers then in the impact on their margin pools, we haven’t seen, some were predicting in the early days, a big, when we saw a couple of lenders move towards fixed fees or removing commission, some were expecting a bit of a wave of restructuring of how these fees work. That may still come, but we haven’t seen the market, I would say, fully -- the market fully move in that direction yet. To the extent that the market does move in that direction and we’ve had lots of conversations with retailers who have been looking at price and thinking about, if commission does become a flat fixed fee, how they might try and make up some of that lost margin to price. We’ve also, today, we have about 12% of stock on Auto Trader that has an admin fee attached. Retailers have talked about, the processing of the finance transaction becoming an admin fee type payment, transparent, dis-closable fee amount, rather than commissions that in the past have been slightly hidden to the consumer through the process. So retailers already been very, very quick to adapt through the switching lenders or changing processes and I think in the next nine months to 12 months, when we get through the Supreme Court judgment, and hopefully we get FCA in a clearer regulatory backdrop, we’ll understand exactly what it might mean for the retailer commission pool. But I think we feel comfortable that retailers have enough other levers that if there was an industry-wide compression of finance margins, that they would look to make that up to other channels and means.

Andrew Ross: Thank you.

Will Packer: Hi. It’s Will Packer from BNP Paribas Exane. Three from me, please. Firstly, in terms of the outlook, I feel that the most significant changes are more caution on the stock ARPA, reflecting market dynamics. Could you help us think a bit more about the medium-term stock ARPA dynamics? Periodically in the last decade, you’ve sort of pointed to significant inflections and trends, your first investor day, et cetera. I mean, my sense would be things look optimistic from a medium-term perspective of mild support from it because of normalization after a period of headwinds, but that could be too sanguine. So any color there would be helpful. Secondly, thanks for the detail on motor finance. If we were to think of the opportunities for Auto Trader from this upheaval, is there a way that you could become more integral via being the proponent of transparency here and get more connected to dealers or is that a little bit too far away for us to be thinking about currently? And then finally, on the 2025 pricing event, is it fair to think that Co-Driver is going to be the key new thing for us to think about in the way that we’ve had other aspects in recent history or is it one of a number of different things? I’m sure you’re starting to think about it as it’s relatively close. Thanks.

Nathan Coe: Should I say it first and the last and do you want to take the one on motor finance?

Catherine Faiers: Sure.

Nathan Coe: So, yeah, I think, you’ve obviously got the stock dynamics that are sort of being hit by two things, actually. One is clearly in 2020, there was a significant production gap from a new car perspective. Those vehicles are now sat at the kind of three-year to four-year category, which is what a lot of our customers would classify as the best quality used car stock. So you’ve got a kind of supply tightness in that area that they really want to source that. Obviously, people have slightly widened their stocking policy, but I still think that’s the kind of inventory that you want to get hold of. And then you’ve had this, we would have said, I’m sure we did say in May, that speed of sales very fast by historic standards wouldn’t have expected it to get quicker and such are the dynamics that it has got quicker. Clearly, we don’t know how both -- how quickly the speed of sale is going to trend over the next six months, 12 months. I’d love to sit here and say it’s going to slow down and that would be good for us, but it’s not impossible that it gets quicker. Again, we just don’t have that visibility. The bit that we do have visibility of is registration data is back up closer to 2 million. So an extra 400,000 to 500,000 cars being produced, being sold into the U.K. Obviously, a lot’s going through the fleet channel currently, but that does hopefully bode well for, it might take longer than six months, 12 months, but in time, we will see more supply of three-year and four-year-old cars than we’ve got right here today, and hopefully, that’s supportive of that stock component. And like you said, over a three-year to five-year period, is speed of sale going to be this quick for that long? Again, there’s no visibility, but it seems hard to believe that all of these dynamics that have played out over this short window continue for a very long period of time.

Catherine Faiers: In terms of motor finance, I’m trying to predict some of the longer term structural impacts from this and how that could create more of an opportunity for us. I think the things that feel like they’re here to stay from the court judgment the other week, I think the transparent disclosure of commissions is now, I can’t imagine any Supreme Court decision reversing that decision and similarly the consent journey. And within that shift and move, both of those two things and the case talk very much to this sense that the seller of the assets and the seller of the finance product, that because you’ve got one person, a broker selling both of those two things, this need for transparency and clarity and these two products, not the incentive for these two products to be sold together, not being distorted has become even more important. So there is a potential increase towards decoupling the lender relationship from the retailer relationship. Today, those relationships are very tight, very embedded with clear incentives. There is a structural trend that we might see more of where more retailers will work with more lenders to provide more choice for consumers. Importantly for us and the role we play, and there is a lot of choices and awful lot of automotive finance lenders operating in this market. We are an aggregator of both the inventory, the stock and all of these automotive finance products. So the role that we can play if we are moving to a world where there’s more choice for each consumer on every car, arguably our role in how you aggregate that choice, how you enable comparison becomes more important. And we’ve got work to do, we’ve got finance integrations live, we’ve got a tech platform, but how we surface that and how we do that in a way that is supportive of the journey that lenders are going on and retailers are going on without hugely disrupting what is already quite a changeable market backdrop. We just need to be responsible in how we go about doing that. But some of those bigger trends towards transparency, choice and a fragmented, fundamentally a fragmented end market should lend themselves well to the aggregation type of role that we can play.

Jamie Warner: And then just on the pricing event that will take effect from the 1st of April, 2025, obviously, Catherine spoke to Co-Driver, there are sort of three components within it. And I think we believe that’s a strong enough product on its own to be making as part of the packages. I know everyone will be trying to think about, there’s obviously a pricing element and a product element to that event. If you think about the price lever that we’ve reported in the first half, X the kind of dilution from retailers, it’s about 3.5% on an underlying basis. That’s close to £100 when you reverse out the dilution. That’s pretty consistent with what we’ve done for a number of years and I would expect that similar sort of level for 2025. You then got, the hard thing is how much is the product component going to be from Co-Driver? We haven’t landed as Catherine said on exactly how much that is. We’re quite excited about, I think, but you always wait and see how it’s, when you’ve just gone out with the trade cons, see how it’s landing with customers, really validate that it’s generating some of the savings and that’s what drives the communication that then goes to customers in January on that event. So very little bit early, say how much product lever contribution, but I’m sure there will be some.

Nathan Coe: I think the only thing that’s worth adding is that, a bit like AT Connect, Co-Driver becomes a category of products that we can then use for the event or outside of the event, a bit like AT Connect has done. So when we look at event products, we can look at the consumer aspect of things. We can look at the advertising aspect of things, the basics of classified. We’ve had quite a few years where we’ve done data and to enable retailers to run more efficiently. Now we have got this category of products based around AI, particularly the LLM side of AI that can help make their operations more efficient. So I think you shouldn’t think that, well, from now on now, I’ve got to just guess what the next Co-Driver product is, but there’s a lot more we can do on that umbrella. But it does give us a big, meaningful stream where we’re just getting started off with, as Jamie and Catherine have said, some pretty meaningful functionality that will save real time for retailers in what they have to do every day.

Jamie Warner: I’ll turn it over to Carl Smith of Zeus.

Carl Smith: Yeah. Two quite specific ones. Nathan, you mentioned some of the Deal Builder integrations on larger customers have been a bit tougher than you’d hoped. I just wondered if you could expand a little bit there and are there any milestones coming in terms of those integrations completing through H2 and how should we be thinking of those as we go forward, because presumably they could be quite meaningful when they do come? And then the second one was just, did I get it right, Autorama headcount you cut quite meaningfully in the short -- is that a short-term? Was there something specific or is there a sort of change in the trajectory you see there in terms of how you expect that business to expand from here?

Nathan Coe: Oh! You wanted to say one there, that’s fine. So on the integrations, in answer to your question, yes, there’s regularly milestones on large customer integrations. They just tend to slip sometimes because the nature of those integrations is difficult. I wouldn’t say there’s anything that I’d flag. I mean, I think you were right. If you get a big customer on it, can move those customer numbers quite a bit because these groups quite often will have over 100 retailers. And when you look at the net growth, that is meaningful. I don’t think we commit to saying there’s any that we see coming in this quarter by this quarter, because this is something that is largely out of our control. I would say that where we’ve had really good success in terms of integration is there’s probably about 100 tech partners that we work with that are providing a lot of those systems for our retailers. And I think we’re really pleased with how that integration has gone. We’ve already done stock with them. We’ve had to do trend evaluations. We want to do deal building. We now also need them to do Co Driver as well. So there is a bit of a -- it’s a good thing because they’re very keen to integrate that functionality. It makes their products much, much better on the back of Auto Trader technology, but there is only so much that they can digest. But I’d say we have had good success with those and we’ve got a good number of those that are integrated and able to build deals into the systems that their retailers are using. We have got large customers on. So we know it is technically feasible and operationally feasible as well. But I think it is something that it is going to be lumpy. And I think the reality is in some results, it might be we’ve had a particularly large customer that’s come on and that’s why the numbers are higher. I think there’s not really been those lumps, if I’m honest, in the results that we’ve had so far. That has been really grinding out the independent customers, portal users and groups that are still meaningful, but not necessarily significant enough for them to stand out in the numbers.

Jamie Warner: Yeah. And I mean, on Autorama, obviously with the kind of supply challenges that we’ve been up against, we’ve integrated into Auto Trader probably quicker than we’d originally anticipated. And with that integration has come a level of efficiency. So any kind of shared services have been integrated. So marketing, tech, finance, people operations. There’s also a level of leadership that comes out of that process as well. I wouldn’t expect people to come down further than what we’ve reported in the first half and I think we believe that with that level of headcount, we can probably do double the number of deals and deliveries that we are today. So there’s some operating leverage in there at the point at which supply does return. Yeah. And then beyond that point, then we’ll have to see. I mean, hopefully we’re continually digitizing the journey that it doesn’t, there would be some growth if you’re going beyond that level, but hopefully not, doesn’t restrain the business from scaling profitably.

Alastair Reid: Thanks a lot. Alastair Reid from Investec. A couple of questions, please. Firstly, on Deal Builder, for the dealers that are using it, what proportion of their total transactions are being sold through Deal Builder? And hence, have you seen any examples of dealers actually being able to take out cost by using it thus far? And then sort of related to that on a kind of broader, longer term perspective, if you’ve got a dealer using Deal Builder, using Co-Driver to sort of do all those sort of tasks that you talked about, how are you thinking about the amount of potential cost that a dealer could save in terms of that, I guess, sort of share of value you can target longer term?

Nathan Coe: So on the first question, I think I kind of flagged that the conversion has been relatively steady. I think it’s fair to say, like all things in Auto Trade, that the average is very, very deceptive because the spread around it is typically quite wide. But I think, on average, 5% to 10% of their sales will be going through Deal Builder. Some retailers will be doing twice as well as that and some retailers will be achieving absolutely nothing in terms of deals that are going through. Interestingly, we tend to see, what we’re seeing is a very high, well, which is perhaps unsurprising, but there’s a very high correlation between your performance as an advertising customer and how you do on Deal Builder in terms of how you price, the quality of your advert. Those things all do tend to make people more comfortable to transact online. Because it’s only 10%, I think the reality is, at the moment, there wouldn’t be many retailers, there wouldn’t be any retailers that I’m really aware of that would say that I’ve taken out costs that I wouldn’t otherwise have because of Deal Builder. Although what they would say is, half or 40% to half of my deals are coming out of hours and I don’t want to work out of hours, and I don’t want to pay someone to work out of hours. So I think it is a cost saving of sorts, but they would think of it as a bit of an extra sales resource that they’re not having to, well, they’re having to pay us for it if they monetize, but I’m not having to pay for. So in that sense, it’s almost opportunity costs avoided. I think that is over time as we move forward and this probably moves into your second question around, well, we put together Deal Builder, you put together Co-Driver, you put together the fact that we make pricing a vehicle, you can do that in one minute rather than in 30 minutes scouring through Auto Trader. I think that is very much the opportunity that we are going for, and the way that we think about it, I can’t give you an exact answer to this, but the way that we think about it is, a retailer will sell a car for, let’s say, £100. They keep £90 or £10 of that, that’s about their gross margin that they’re working with. They spend about 85% of that gross margin, which you end up at about 1.5% down at the kind of net line. We’re 6% of that 85%. Now, other marketing is another 6%, so we can push into that, I guess, if we have to, and that’s probably what we’ve done historically, but there is an awful lot of cost outside of Auto Trader that goes to the effective selling of cars that we think technology, a brand, consumers, trust, all the stuff that Catherine’s spoken about in terms of Co-Driver, but finance as well, feels like there’s an awful lot that we can go for there. So the way that we think about our addressable market is, what are all these things that are costing retailers’ money that are taking up time, that are consuming labor, and how might we address those? Short of, we can’t help with logistics as it turns out, but we’re not going to get involved in the prep of vehicle. We don’t want to provide labor services to them, but we do think technology can help. Half of those costs are probably labor costs doing jobs like administration, sales, sales commission. So we see those as all areas where we’d love to be able to help retailers to save time if Auto Trader can take one of those, which is the kind of masses that works out on the advertising side, and that feels like a very big opportunity for the business over the long-term.

Jamie Warner: Rahul?

Rahul Chopra: Hello, Rahul. Couple of questions. In terms of Deal Builder, I appreciate it’s quite early in the journey, but have you seen any evidence from retailers thinking, okay, we can have probably reducing their level of marketing spend in terms of product spend itself, given there are indeed better marketing spend and better efficiency in Deal Builder? Just one there. Second question in terms of the stock lever is probably, you’re talking about down this year. How are you thinking in terms of pricing events next year in terms of offsetting factors with product and price lever? Probably early stage, but just want to get some thoughts around that. And finally, in terms of Deal Builder monetization, you did, I think previously talked about 0.25% of the card transaction sale. Wanted to get a bit more clarity in terms of how you’re monetizing the finance part of that, and with the recent changes, how you think you can build the change in terms of what are you going to find? Basically, are you going to monetize retailer? Are you going to monetize the lender? Just want to understand the dynamics around that, please? Thanks.

Nathan Coe: If you want to do the first one, I’ll do the second and you do the third.

Catherine Faiers: Sure.

Nathan Coe: Yes. In terms of, is Deal Builder efficient enough? We’re not really saying actually, we’re saying if anything, we say that there’s, and this was our strategy in a way, the reason why we show the circles as we do, we say Deal Builder is very much a build on the core marketplace. And I think in all honesty, that is very much what we’re saying in terms of you can’t kind of trade between the two products. You won’t do well on Deal Builder unless you’re already good at advertising and that’s for better or worse in a way. So we’re not seeing any cannibalization, if you like, of our own advertising products as a result of Deal Builder. We’re not really, I wouldn’t say seeing retailers saying, I can reduce marketing elsewhere because of Deal Builder. Yet, I think we do have retailers that will have that conversation with us in terms of working with our core advertising products and saying, could I buy a prominence product, could I spend more here and I might reduce some of my other marketing spend because the audience overlaps so big on advertising, but it’s really much more of a core advertising proposition. So no real, I don’t think that’s where they’re looking for the efficiency, nor is it where we’re necessarily looking for it. It’s very much a -- we don’t pitch the Deal Builder proposition as saying that you will sell more cars. We deliberately don’t do that. We talk about, you’ll get leads that are twice as effective, so you can, or you’ll get sales that you can work half as hard to get, basically, is the pitch as opposed to selling more cars.

Jamie Warner: Yeah. I mean, on the stock lever and looking at pricing products for next year, I think it’s probably a little bit early to say whether you feel like you have to do something different just on the basis of the dynamics that we’re seeing right now, like the kind of starting assumption is that sort of 3.5% on price, that you’ve got Co-Driver from a product lever perspective. Obviously, if speed of sale is still very fast, like prominence, maybe the starting assumption isn’t quite as strong, but the Deal Builder contribution in there, this new car contribution, which I think we believe should continue to grow. Obviously, if the stock lever, the market dynamics persist for a long period of time, then it’s possible we do think differently. As I mentioned in the presentation, there’s a huge amount in a growing level of activity on Auto Trader, the marketplace is in great health. So we could think differently, but I think starting assumption is, let’s see how the next three months to four months play out before making any of those decisions.

Catherine Faiers: On Deal Builder and monetization, so you’re right, we charge a flat 0.25% on any deal, which is what we’ve just been talking about, is effectively a very highly qualified lead that will probably convert through to a sale. And we’ve deliberately charged a 0.25% monetizing, a piece is simple, a simple message for our retailer partners and a simple message for our partnership team to go to market with. And those bundles of deals that we’re sending through sometimes include a past exchange attachment, sometimes includes a finance attachment, but we’re not separately monetizing those, we’re monetizing the moment of the deal at the moment. How and when we monetize finance has been something we’ve talked about a lot over the last few years and I do think the events the last few weeks might change that. We’ve talked quite a bit for some time about the opportunity to monetize lenders and to become a distribution channel for lenders, with the retailers acting more as an agent with us providing the tech and the connectivity between lenders and the end party fulfilling their transaction. I think we will continue to monetize Deal Builder in the way we’ve set up for now. But I think there are probably more and different options to us now about how we think about that monetization of finance. I think we’ll probably want to wait until nine months, 12 months’ time before we lock down any commercial model to make sure we’re doing that with full information about how the market structure will evolve under I think what will be an evolved regulatory regime.

Unidentified Analyst: Thank you very much. Three from me if I can. So firstly on the Whatcar partnership, I was wondering if you could talk a little bit about how you see that as a source of traffic. I think you mentioned it. But obviously if Whatcar is sort of a top of funnel tool for you guys, I was wondering how you see the value of that particularly with respect to the new car proposition. And do they pay you for access to the inventory, do you pay them for traffic? I’m interested in the commercials there as well. Secondly, with some lenders having ceased paying commission, I think Lloyds are one of them, Stellantis are another. So some fairly large lenders there. Any idea if that is temporary, likely to be over a longer period of time and should we be pricing any sort of impact on retailers from cessation of commission payments there? And then just thirdly on OEM advertising, you said that you haven’t got the proposition quite right and I think revenues were only up slightly on first half 2024. I think I’m right in remembering that you were intending to transition from an all you can eat to a stock-based model. I’m just wondering given some of the pressures on OEMs to sell more cars, particularly more EVs at the moment, what is it you think needs to change there?

Nathan Coe: Do you want to take those two?

Catherine Faiers: So on Whatcar, you’re right, we do see it as a source of traffic. So they get about a 1 million or so unique visitors each month. And a good number of those are not visitors that we would see on Auto Trader. There is some audience overlap, but we are paying them effectively for the traffic and the visits that are coming through from the stock journey on what car through to Auto Trader. They are, I think their brand over many, many years has been associated very much with top of the funnel discovery content journey quite at the beginning often of the consideration part of the process for buyers. We do have buyers that engage with our content that will use our very structured search experience to do that job, but their depth and richness of content is a differentiator and their brand association with that is a differentiator. So we are seeing incremental unique users to our new car stock and platform through that partnership and we are paying them for the traffic that we’re getting. It’s a long-term partnership. It’s performed well for us on use. It’s literally a few weeks in on use. And I think we’ll keep iterating, excuse me, the experience to make sure that it’s performing well for us and for them.

Unidentified Analyst: Quickly.

Catherine Faiers: Sure.

Unidentified Analyst: Would you look to potentially make an acquisition?

Catherine Faiers: On Whatcar or anyone in general?

Unidentified Analyst: Whatcar?

Catherine Faiers: I mean, we’ve structured it as a long-term partnership for lots of good reasons, actually and I think it works best for us and for them that way. The second question on lenders. Excuse me, so both of the ones you referred to, we understand they’re going to be back paying commissions very quickly, potentially not in the same structure and mechanism as they were before, but both are very much, so I think one this week, probably tomorrow. So we’re not expecting either of the lenders that are paying no commission for that to be a permanent move.

Jamie Warner: I’ll just make one just clarifying comment on the commercial model for new car. And then Nathan, you can take the OEM product. So we have a new car product for franchise retailers and for OEMs. It’s actually the franchise product that we launched in 2019 as an all-you-can-eat model that we’ve moved from all-you-can-eat to a slot-based model. And that transition’s gone okay. New cars contributed about a quarter of the product lever this year. So that part of new car has gone quite well and we’ve put in a release that the number of franchise customers buying the product has also grown. The OEM product has always been slot-based. And you can talk on the product.

Nathan Coe: Well, that was the positive part of the answer, which I was hoping to give you in the two sides. So anyway, so yeah, retailers is doing good and we feel like we know what makes. That product is working very well for consumers, working very well for retailers. It’s monetized and it’s growing, and it’s been a meaningful contributor to the product growth that we’ve seen. The OEM side and our reference to it not quite working is right, where essentially we started with a very similar product because we know it works and we know consumers like that. What we have -- there are two things that have happened. It was built mainly for OEMs that are looking to sell direct, which is mainly OEMs that are looking to go down the agency route. So the first thing that’s happened is quite a number of OEMs have decided to wheel back a little bit or push back to move towards agency, because it’s not been the most straightforward process and they can all see the market share numbers. They can all read profit numbers. So some of them have been a little more hesitant or thinking about moderating their approach to agency. So there were just less, at one stage we would have said at a results announcement that we expect a good half of OEMs to go to agency and that’s not really, certainly in a volume respect, that’s not happened at all. So there’s a little bit of a slowing in that respect. I think the second thing, which is more about our reference on we need to get the product working better, is that, and you can see this on Auto Trader, if you look at certain new car manufacturers, the quality of those adverts is not able to compete with our other new cars that other brands are putting on, particularly through the retailer product that I spoke about. And you’d say, well, why is that? Well, retailers are really, really good, coming back to the Co-Driver point, at describing vehicles, pricing vehicles and taking photographs of real cars that people can really have today, like that instant availability. An OEM that has thousands of cars, potentially in a port in Wales, or wherever it might be, they’re not as good at taking real photographs of real cars and describing them really well, and then having those offers appended to them. So it’s just not performed as well on the marketplace, because our buyers come and they just say, well, I like the look of that, and I don’t like the look of that and that comes through in the conversion to lead. So that’s the thing that we’re trying to address. Now, I make it sound like it’s because the OEMs can’t do stuff. We as Auto Trader need to change some things as well. So our integration with their stock management hasn’t been as good as it could be. At the moment, we show you exactly the same price on an OEM’s new car as we do on a franchise’s new car, as we do on a used car. The problem is, that is a cash price. OEMs, when they’re selling new cars, any of you that have done this, will realize that all the discount or all the offer fits in the finance offer. It’s a deposit contribution for potentially thousands of pounds. We’re not showing that on Auto Trader. We’re not showing zero percent APR. So we need to, we can do all those things, but we need to build that integration and work with OEMs to make sure that we can show those new cars at the price they are actually available. Even if the images aren’t great, you at least want the offer to be the offer that you might be able to get to make it as attractive as everything else that’s competing with on Auto Trader. And there are a few other bits and pieces as well, but that’s kind of the bulk of it. So we’re working to get those things right. We did kind of launch the product. These cars, because they are available nationally, go straight on market extension, which is our most expensive advertising product that we have. But we’ve kind of paused and said, do you know what? Making money out of this isn’t the most important thing at the moment. Getting this to work for an OEM that wants to sell direct is the most important thing. And thankfully, we’re going all right. We’re doing well from a franchise retailer perspective. So we’ve kind of paused that. That largely, to be honest, explains the performance of the M&A line. It’s because we’ve made a more dramatic monetization decision around that that we will come back to once we’ve got the product working, because it feels like it’s a big opportunity, not necessarily a quick one. And to be honest, we thought it might be big and a bit quick as well, because we can get these cars working from a franchise retailer perspective, but it’s not quite turned out like that. Back to the start, Charles.

Jamie Warner: Yeah. Sorry. We can all go in a minute.

Giles Thorne: It’s a brief follow-up. What would have happened to the stock lever guidance if the sales lead times had been unchanged?

Jamie Warner: So, that’s a good question. So we said in the release that 5%, we saw 5% more vehicles onsite effectively turning through 5% to 6% quicker. I think it’s probably a little bit strong to say that’s a 5% headwind and revenue would have been 5% better, because again, people know as well, know there’s always a bit of a mix effect and it probably has been the kind of supply tightness, fast speed of sale has been seen more in the franchise segment than independent or that smaller independent end. So, that 5% is probably slightly moderated, but it certainly would have been positive I would hope that at least within our original guidance of 20 to 40.

Nathan Coe: Thank you everyone. We’ll conclude things there. Thanks for joining us.