Auto Trader Group PLC, the UK's largest digital automotive marketplace, reported a solid financial performance for the year ending March 31, 2024, with notable increases in both group revenue and operating profit. The company's core Auto Trader business experienced a 12% revenue growth across all segments, and operating profit rose by 14%, boasting a healthy margin of 70%.
Auto Trader's strategy and investments in technology and product offerings have strengthened its market position, with the company seeing record consumer visits and a growing lead over competitors. Despite a challenging new car market, Auto Trader is developing products to enable direct sales on its platform and has seen positive feedback from its Deal Builder product trial. The company also remains committed to sustainability, aiming for net-zero carbon emissions by 2040, and has returned substantial cash to shareholders through dividends and share buybacks.
Key Takeaways
- Group revenue increased by 14%, with operating profit up by 26%.
- Core Auto Trader business saw a 12% revenue growth, with a 70% margin.
- Record consumer visits achieved, outperforming competitors.
- Deal Builder product trial shows promise with 16,000 deals generated.
- Acquisition of Autorama completed, operating loss improved to £8.8 million.
- Cash from operations was £379 million; dividends and share buybacks totaled £250.3 million.
- Audience engagement strengthened, with cross-platform visits up by 11%.
- Used car pricing declined due to trade valuation movements and new car discounting.
- Strategy focuses on market leadership, technology, innovation, and culture.
- Average retailer forecourts expected to slightly decrease, with growth in Consumer Services and Manufacturer & Agency.
- Autorama’s operating losses expected to reduce due to better supply conditions.
Company Outlook
- Anticipates growth in trade revenues and average revenue per retailer.
- Plans to reduce operating losses in the leasing channel and expand margins.
- Expects to exceed the threshold for the UK's digital services tax in FY '25, impacting operating profit margins.
Bearish Highlights
- New car market remains challenging.
- Used car pricing has experienced year-on-year declines.
- Autorama made an operating loss of £8.8 million.
- Anticipates a modest expansion in margins due to the UK's digital services tax.
Bullish Highlights
- Strong demand and fast sales in the robust used car market.
- Positive feedback and initial success of Deal Builder product.
- High employee satisfaction and increased diversity within the company.
- Strong brand awareness and high usage rate among car buyers.
Misses
- Operating loss for Autorama, despite improvement.
- Lower than average attachment rate for part exchanges or finance applications.
Q&A Highlights
- Deal Builder's monetization trial is positive; plans to scale up and increase paying customers.
- No significant structural risk to retailer numbers despite market normalization.
- OEMs and the industry are adapting to changes in the EV market.
- Aims to increase the attachment rate for financing and achieve double-digit ARPR growth with Deal Builder.
Auto Trader's performance in the past year reflects its strong position in the automotive market, with a focus on technology and innovation driving growth and customer engagement. The company's commitment to sustainability and responsible working practices, along with its strategic investments and product developments, position it well for future growth. Despite some challenges, such as the new car market dynamics and the impact of the UK's digital services tax, Auto Trader's outlook remains positive as it continues to build on its market-leading position and capitalize on opportunities in the evolving automotive landscape. The company's ticker, AUTO.L, represents its ongoing journey in the competitive automotive industry.
InvestingPro Insights
Auto Trader Group PLC (ATDRY) has not only demonstrated a robust financial performance in its recent report, but also shows promising signs when viewed through the lens of InvestingPro metrics and tips. Here are some insights that investors might find valuable:
InvestingPro Data indicates that the company has a market capitalization of $9.26 billion and operates with a Price/Earnings (P/E) ratio of 31.83. This is slightly reduced when adjusted for the last twelve months as of Q2 2024, coming in at 29.46. Such a high P/E ratio could suggest that investors are expecting high growth from the company or that the stock is currently overvalued.
The company's revenue growth is also notable, with a 13.66% increase in the last twelve months as of Q2 2024. This aligns with the company's reported 12% revenue growth in its core Auto Trader business, underscoring its successful expansion and market penetration.
An InvestingPro Tip to consider is that Auto Trader has raised its dividend for 4 consecutive years, which could be a sign of the company's confidence in its financial health and commitment to providing shareholder value. Additionally, the company's cash flows can sufficiently cover interest payments, indicating financial stability and a lower risk of distress from debt obligations.
InvestingPro also offers a range of additional tips for Auto Trader Group PLC, which can be found at https://www.investing.com/pro/ATDRY. For those interested in a deeper dive, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 17 additional InvestingPro Tips available, investors can gain a comprehensive understanding of the company's financial health and market position.
These insights, when combined with the article's discussion of Auto Trader's solid financial performance and strategic initiatives, paint a picture of a company that is navigating the challenges of the automotive market with resilience and foresight.
Full transcript - Auto Trader ADR (ATDRY) Q4 2024:
Nathan Coe: Good morning, everyone, and welcome to Auto Trader's full year results for the year ending the 31st of March 2024. As usual, I'm joined by our COO, Catherine; and our CFO, Jamie, who will be both presenting and joining me later for Q&A. It's been another year of strong financial, operational and strategic progress for Auto Trader, building on the consistent performance displayed since our IPO in 2015. It is a testament to the strength of our marketplace and the partnerships that we're building with our customers. We're seeing record levels of demand and consumer engagement on our platform. We have increasing numbers of customers relying on our data and technology services to run their businesses. And we've made good progress on our strategic initiatives, which provide a meaningful opportunity to extend our role in car buying and retailing. I'd like to say thank you to our people, customers, shareholders and wider stakeholders for their continued trust in our organization. Starting with some of the highlights during the year. At a group level, revenue grew 14%, and operating profit grew 26%. Within the core Auto Trader business, revenue growth was 12%, driven by double-digit growth across all revenue segments, trade, Consumer Services and Manufacturer & Agency, which is the first time this has been the case since our IPO. Core Auto Trader operating profit grew by 14%, and margins increased to 70%. Trade revenue performance was largely driven by our retailer segment, where average revenue per retailer or ARPR grew 12%. This was underpinned by a strong pricing and product event in April 2023 where we launched our second module of Auto Trader Connect. We've also continued to see strong adoption of our additional products and services, including high-level packages and new cars. Retailer forecourts increased 1% year-on-year when adjusting for the Webzone disposal last financial year. Without this adjustment, retailer numbers were marginally down. We've achieved record levels of consumer visits, and our lead over our nearest classified competitor has increased to 10 times. Despite concerns over the wider economy, the used car market continues to be robust. Supply vehicles gradually increased during the year, but demand remained strong, which meant the speed of sale remained fast by historic standards. We did see trade prices soften in the latter months of the calendar year, which did feed through to retail prices. Those monthly pricing movements have since stabilized, although they do remain down year-on-year. The new car retail market continues to be more challenging than the used market, and we have seen offers and discounts steadily increase. We're seeing good engagement with both new car buyers and the retailers of those vehicles, and we continue to see this as a significant opportunity for the business given our new car audience and the structural changes that are taking place in that market. We're currently addressing this opportunity with products that enable franchise retailers, manufacturers and leasing companies to sell new cars directly to consumers on Auto Trader. Finally, we've continued to scale up our Deal Builder product trial. We ended the year with around 1,100 retailers in the trial and just over 40,000 vehicles. We generated 16,000 deals in the period with at least a reservation and many including part exchange valuations and finance applications. The feedback we're getting from both buyers and sellers continues to be positive. In January, we began testing monetization with a small cohort of customers, charging 0.25% of the vehicle price when a deal is placed. Our focus on Deal Builder in priority order is scaling up the number of customers and stock, increasing consumer engagement and conversion, and then finally, monetization. And if we get the first two priorities right, monetization is just a matter of when not if. Now turning to the group financial results. Group revenue increased by 14% with Auto Trader revenue increasing by 12%. Group operating profit increased by 26%. The core Auto Trader business increased operating profit by 14%, and Autorama made an operating loss of £8.8 million. Central costs relating to the acquisition of Autorama were £21.1 million, less than the prior year. Group operating profit margin was 61% with Auto Trader's operating margin expanding slightly to 71%. Basic EPS was up 13%, which was lower than operating profit growth due to the profit on disposal of Webzone last year and higher U.K. corporation tax. Cash generated from operations was up 16%. We returned £250.3 million of cash to shareholders through £80.4 million in dividends and £169.9 million in share buybacks. Today, we're declaring a final dividend of 6.4p per share, making total dividends for the year 9.6p per share. Now on to our operational results. The average number of cross-platform visits were up 11% to 77.5 million per month. And engagement, measured as cross-platform minutes, was up 8% to 553 million minutes per month. We're 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 decreased 1% to $13,783. But as mentioned before, adjusting for the sale of Web zone last year, underlying retailers were actually up 1%. ARPR was up £284 to £2,721 with positive contributions from all three levers: price, stock and products. Live car stock was up 2% to 445,000, within which new car listings declined to 20,000 due in part to a change in our own commercial model from all-you-can-eat to a slot-based model, which aligns more closely with what we do on used. This has had a positive impact on new car revenue and improved the quality of the stock listed. Finally, the average number of full-time equivalent employees increased to 1,233 during the period. And finally, our cultural KPIs. Culture is an integral part of who we are and how we operate, ensuring we're able to attract, retain and enable talented people from all backgrounds to fulfill their potential at Auto Trader. 97% of our employees are proud to work at Auto Trader and our gas or rating is 4.5 out of 5, which is a huge credit to the hard work of all our people to build a culture that's not only unique, but enabling and fulfilling as well. On to our diversity measures. Post our AGM, 6 out of 9 Board members will be women, of which 1 will be our Senior Independent Director, and 2 Board members will be ethnically diverse. Over the past year, within the organization, the percentage of female employees, female leaders and ethnically diverse employees have all increased. We are disappointed that our percentage of ethnically diverse leaders has dropped 2 percentage points, but we are making the right structural changes and systemic changes across the organization, just as we did from a gender perspective. And so, we're confident in time these will come through in the KPIs. We aim to have a net-zero carbon -- aim to have net-zero carbon emissions across our whole value chain by 2040 and halve emissions by 2030. We've amended our base year to incorporate the acquisition of Autorama. Our carbon emissions for the year across Scopes 1, 2 and 3 were 98,900 tonnes. The year-on-year increase is a result of slightly more vehicles acquired by Autorama, which passed through our balance sheet. I'll now hand over to Jamie to talk us through the financials in more detail.
James 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 12% to GBP 529.7 million. Trade revenue increased by 11%, with the largest components of this being retailer revenue, which also grew by 11%. This year-on-year increase within retailer revenue was largely a result of retailers continuing to see value in advertising on our marketplace and taking additional products. The average number of retailer forecourts on our platform decreased to 13,783. But as Nathan said, after accounting for the disposal of Webzone, retailers increased 1% year-on-year. Average revenue per retailer increased by 12% to £2,721 per month, with more detail given on the following slide. Also, within trade, we've seen an increase in Home Trader pay-as-you-go listings and growth in other trade revenue. Consumer Services revenue increased by 15%. Within this, private revenue, which is largely generated from individual sellers who pay to advertise their vehicle on the Auto Trader Marketplace, increased by 19% due to high volume of adverts in place. And motoring services revenue increased 7%. Revenue from Manufacturer & Agency customers increased 30%, which was mainly driven by manufacturers paying to advertise new car stock directly on Auto Trader. Now on to ARPR, Live car stock and retailers. The chart on the left shows the components that contribute to the movement in ARPR compared to the prior year. As you can see, the majority of ARPR growth was driven by the price and product levers with a smaller positive contribution from stock. It's worth noting that the disposal of Webzone, where retailers were lower-yielding, added about 2 percentage points to ARPR growth in the year. We delivered our annual pricing event for all customers on the 1st of April 2023, which included additional products and a like-for-like price increase. This increase contributed much of the £114 of price lever growth. Product contributed £136, and just over half of this growth was from the second module of Auto Trader Connect valuation, which is included in retailer advertising packages in April 2023. The remaining product lever growth was largely due to continued uptake of our prominence packages, which increased to an average of 35% of retailer stock in the year, up from 32% in 2023. Also contributing to the product lever growth with new car, where we increased the number of paying customers during the year. Market extension stock was consistent with the prior year at an average of 6%. 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 year-on-year. Within this, used car stock increased by 3%, partially offset by a decline in new cars. Some of the 3% used car stock growth was driven by an increased number of home trader and private listings, which do not impact ARPR. There was a small amount of growth in the volume of slots retailers paid for in the period, which drove the £34 stock lever. Total Auto Trader costs increased 8% to £153.9 million. People costs increased by 10%. This increase was partly driven by an increase in the average number of full-time equivalent employees to 1,060 and also an increase in underlying salary costs. Within people costs, share-based payments increased by 21%, largely due to the introduction of our new all-employee share scheme in November 2023. Marketing spend was flat at £22.3 million; while other costs, which include data services, property-related costs and other overheads, increased by 12%. Depreciation and amortization decreased by 12%. However, 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 and technology who are continually improving our platforms and developing new products for consumers and retailers, the costs for which are taken in full through our income statement in people costs. Operating profit increased by 14% to £378.6 million during the year, and core Auto Trader operating profit margins increased slightly to 71%. Our share of profit generated by Dealer Auction, the group's joint venture, increased 12% to £2.8 million. Having covered Auto Trader, the main part of the group, we'll now move on to the Autorama results. The acquisition completed on 22nd of June 2022, and so the prior year comparator for revenue, costs and operating losses represent just over 9 months of trading. Autorama revenue for the year was £41.2 million with Vehicle & Accessory sales contributing £28.4 million and Commission & Ancillary revenue contributing £12.8 million. The Autorama business delivered about 1,200 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 & Accessory sales. On the cost side, we saw people costs of £10.9 million relating to the 173 FTEs employed on average through the period. Marketing was £4 million and other costs were £4.5 million. There was £2.4 million of depreciation and amortization, which was largely for developed software capitalized in prior years. Total deliveries amounted to 7,847 units. The leasing market for brokers has been impacted for the last 12 months by supply challenges. However, we expect with the growing volume of new car registrations that this will improve over time. The Autorama segment made an operating loss of £8.8 million, an improvement year-on-year, largely through cost savings brought about by the integration with the main Auto Trader business and platform. With total group revenue up 14%, group costs being broadly flat and a 12% increase in our share of dealer auctions profit, we saw total group operating profit increased 26% to £348.7 million, and group operating profit margins increased to 61%. We continue to deliver strong cash flow consistently over time. 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 £379 million for the year. The statutory income statement outlines areas beyond our revenue and operating costs. Net finance costs increased to £3.5 million due to higher borrowing costs. Our profit before tax was £345.2 million, 18% higher than last year, but lower than operating profit, primarily due to a £19.1 million profit on disposal from the sale of Webzone in the prior year. The group tax charge of £88.3 million was significantly higher than last year due to the U.K. corporation tax rate increasing to 25%. We've previously stated that the group was potentially in scale for the U.K. digital services tax, with revenues exceeding £500 million. The U.K. government continues to work towards implementing a global 2-pillar tax solution. Although the implementation of Pillar 1, which would be DST repeals, is still not certain. There is no charge in financial year 2024, as in-scope revenues were below the £500 million threshold, however, we do expect to incur this tax from financial year 2025. Basic EPS increased by 13%, which was higher than net income grade due to fewer shares in issue following our share buyback program. The directors are recommending a final dividend of 6.4p per share, giving total dividends for the year of 9.6p per share. Now to briefly review net bank debt and capital policy. At the end of March 2024, the group had drawn £30 million of its syndicated revolving credit facility and held cash and cash equivalents of £18.7 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 while returning around 1/3 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 and steadily reduce growth indebtedness. That concludes the financials. I'll now hand over to Catherine to talk through the market dynamics and our consistent strategy.
Catherine Faiers: Thank you, Jamie, and good morning, everyone. 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 11% year-on-year to reach a record number of 77.5 million per month. Engagement, which we measure as cross-platform minutes, also increased to 553.2 million on average per month, an increase of 8% over the prior year. 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 over 10 times more minutes on Auto Trader than our nearest classified competitor, the combination of Gumtree Motors and eBay (NASDAQ:EBAY) and over, 19 times that of [indiscernible] combined. Outside of these competitors, we also compare our size of audience for that as retailers that are large enough to be tracked by Comscore. The number of minutes spent on Auto Trader was over 41 times these retailer sites combined. When doing the same exercise with all manufacturer sites, Auto Trader is over 32 times their combined size. Moving on to Slide 16 and looking at both new car registrations and used car transactions. It's worth looking at these separately as the demand and supply dynamics in each have been very different over the past year. From a new car perspective, as can be seen from the chart on the left, supply has continued to improve and registrations increased 16% year-on-year. It's worth noting, though, that we are still slightly below the levels seen pre-pandemic and significantly lower than the highs of 2017. Over the past 12 months, we've seen manufacturers attempt to stimulate private demand with increasing levels of discounts and finance offers. This has been particularly prevalent with electric vehicles with the zero-emissions vehicle mandate is now in place, which requires a minimum percentage of registrations to be electric. Despite these higher levels of discounts, private sales have been broadly flat year-on-year with new car registrations growth coming through Street. The fleet channel has seen very little volume in the three previous years, and these players are now replacing what has become a much older fleet. Fleet channels have taken up the greater share of registrations since the financial crisis, which is a trend we expect to continue this year. As can be seen from the chart, the used car market is much less cyclical. Over the past 12 months, we've gradually seen supply improving, which has led to an increase in transaction volumes with a growth rate of 6% year-on-year. At 7.3 million transactions for the year, we're still marginally below the level seen from 2015 to 2020, but expect a gradual and continued recovery over the coming years. On to Slide 17, looking at used car pricing and median days for sale. We continue to publish a monthly retail price index of cars advertised by retailers of Auto Trader, the results of which are shown in this chart. The dark-blue line on the chart shows the average retail price of a used vehicle advertised over the last three financial years. As can be seen, pricing appreciated dramatically in the second half of 2021, our financial year 2022, but has been relatively stable over the past 2 years. The average used car price over the financial year has been £17,833, a 1% like-for-like decrease in pricing over the prior year. Since September 2023, we've seen higher year-on-year declines in used car pricing, driven by significant movements in trade valuations. Although month-on-month pricing movements have recently stabilized, year-on-year pricing remains down. Greater discounting on new cars, which has been skewed towards electric vehicles, has weighed on the prices of younger used electric vehicles and driven some of this trend. Demand on Auto Trader has remained strong over the years. Cars have sold at a similar speed to the prior year and faster than pre-pandemic levels. This fast speed of sale has supported transaction volumes, but less so our livestock on-site measure, with retailers continuing to hold less stocks than they were before 2020. It is expected that the growing supply of new car registrations will gradually feed into better volumes of used cars. There remains a significant structural gap in vehicles aged 3 years to 5 years due to low registration volume since 2020. This will ease in the coming years as registrations continue to recover. Let's move on to consider our strategy where we've highlighted some of the factors that have contributed to our past performance. We believe these factors are also likely to be some of the key drivers of our future performance. Since our IPO in 2015, we have executed consistently and the business results have been similarly consistent. During the first few years as being a public company, we feel higher levels of profit growth as we remove parts of our cost base which related to our magazine heritage. Throughout this period, we focused on our core marketplace and product growth, coupled with investments in our platform and adjacent opportunities. This focus and investment have led to the higher revenue growth that we have seen since 2021 at relatively consistent margins. Our profits have been redistributed back to shareholders, which is something we expect to continue. Over the past 10 years, £1.1 billion of surplus cash has been returned to shareholders, and we have delivered total shareholder returns of 225% versus 60% for the FTSE 350. We don't always expect our performance to be linear, with financial year 2021 being a good example in a set of exceptional circumstances, but we do expect the key drivers of historic and future value creation to remain consistent. These drivers, which I will touch on next, include: a growing automated market, our market-leading position, our heritage of innovation, a focus and consistent strategy, and our purpose and culture. Over the past 20 years, the total size of the U.K. car park has gradually increased, growing on average by just over 0.25 million cars per year. This trend has been driven by U.K. population growth and, with that, an increase in the number of people with a full driving license. These drivers see their car as a necessity with our consumer research consistently telling us that car buyers want exclusive access to their car. Finally, with continued improvements in manufacturing, vehicles are lasting longer than those produced 15 years to 20 years ago, and therefore, more new cars are registered center scrap. In addition to the growth of the U.K. car park, the value of the park has also increased over time. This has been due to inflation, improved functionality, longer useful lives and the move towards more expensive electric vehicles. We expect both of these trends to continue with Auto Trader at the center of a market growing in both volume and value. Auto Trader is a technology business, and technology is key to our future success. We have a well-invested technology platform on which the many products we've talked to investors and analysts about over the years have built. All of our services have moved to Google (NASDAQ:GOOGL) Cloud. We invested to take full advantage of the significant benefits that cloud computing brings: scalability, resilience, security and cost transparency. Our data platform relates to a complex set of technologies that enable us to activate the enormous value in the signals and activities that we observe on our marketplace. We have a busy marketplace with tens of thousands of retailers advertising hundreds of thousands of vehicles to millions of consumers. This all generates a fantastic amount of click stream and transactional data that our data scientists and analysts can explore to unlock actionable insights for our retailers and consumers. This insight, in turn, is in surface in many of our products. And finally, our product delivery platform is optimized for speed and agility where we can rapidly test ideas with consumers. We deliver thousands of individual software releases every week, and this trend has been increasing year-on-year. It has grown tenfold since our IPO. With strong technology foundation and a rich set of opportunities across our marketplace, data and digital retailing, we expect to continue delivering products, adding real value to car buyers and customers alike for many years to come. As the wider automotive market increasingly embraces digital sales channels, technology and data, we are uniquely placed to help. Over the past 10 years, the number of visits to Auto Trader has increased by 60%. We see many more times the number of searches on Auto Trader for vehicles than Google feeds across make model terms and beyond. We have a highly engaged audience where car buyers are completing millions of searches on our platforms. Many of these buyers come to us directly via our app where over the years, we have seen over 21 million downloads. This means we're in the hands or pockets of one and two of all U.K. driving license holders. Our prompted brand awareness is 89% amongst the U.K. population. 8 in 10 car buyers use Auto Trader during their shopping journey, and 2/3 of buyers only use Auto Trader. These are incredibly strong foundations to build upon. We continue to invest in improving our site experience, maintaining high levels of trust, evolving our brands, creating new content and in building our marketing capabilities. Alongside this, and just as importantly, we continue to launch new tools and functionality for retailers and work to deepen our partnerships with them. We have made good progress against each of our three focus areas. These areas are closely interconnected. Our platform and our digital retailing capabilities build on the strength of our marketplace and deepen our relationships with retailers and car buyers. Our marketplace continues to grow, and we have seen a record number of car buyers and U.K. retailers using Auto Trader. We have consistently executed pricing and product events each year with a robust pipeline of future products, we're excited to bring to market over the coming years. These will be generated from our continued investment in data products, our Auto Trader Connect platform, AI-enabled products and continued improvement in our consumer experience. 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. The level of engagement with these products and services continues to increase over time. We embedded a new Auto Trader Connect module into this year's event, Trended Valuations. We are also enabling more of the car buying journey online on Auto Trader, be it through the scaling of Deal Builder and the work we are doing to integrate Autorama. We'll cover the highlights on both Trended Valuations and Deal Builder shortly. As Nathan mentioned earlier, we are well placed to support ongoing structural changes in the new car market. We have products to enable franchise retailers, manufacturers and leasing companies to sell new cars directly to consumers on Auto Trader. Franchise customers have been able to advertise physical new cars through a number of years. During the financial year, we successfully moved from an all-you-can-eat charging model to a slot-based model. We also introduced pipeline stock, allowing retailers to advertise stock that will arrive on their forecourt, but is not yet there. Finally, we have grown the number of franchise retailers paying to advertise their new car stock to 2,100. Alongside this, we've launched a product allowing manufacturers operating an agency model to advertise new cars directly to consumers nationally. We've also continued to integrate leasing into the core Auto Trader search experience. The pass no leasing market along with private new vehicle registrations remains impacted by supply constraints, which we expect to improve over time. This slide references many of the date points we have made available to retailer customers over the past 3 years through our Auto Trader Connect strategy. Auto Trader scale gives us a unique view of vehicle pricing with almost 1 million vehicle observations every day. Our valuations are data-driven, and so our customers can be confident and trust in the data we provide to help them source, price, dispose and retail their vehicles in the most effective way. Over the past 3 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've launched a Trended Valuations product. This product uses machine learning models of current and historical data to look forward and provide a view on where we expect the value to trend in future periods. This supports customers to set prices to vehicles with more confidence, hopefully maximizing their margins and with the data to fine-tune their pricing strategy over time. Moving on now to talk more to the outer ring of our strategy and our Deal Builder product. Our approach to digital retailing is to enable any retailer to sell their vehicles online. We've made good progress with our Deal Builder product, ending the year with 1,100 retailers and over 40,000 cars on the trial. A small proportion of these retailers are now monetized. We have started to charge a handful of customers, 0.25% of the vehicle price when a deal is submitted. We also saw around 16,000 deals throughout the year. Deal Builder uses Auto Trader technology to enable car buyers to do more of their car buying online, including valuing their past exchange, applying for finance and reserving the car. Importantly, all of these interactions can easily be carried out either online, over the phone or in the dealership. Currently, these tools are available in our Auto Trader retailer portal, which can be seen on the right-hand side of the slide. Over time, they will be made available via APIs as part of our platform strategy, enabling these transactions to be picked up in retailers' existing sales systems and processes. It is encouraging that deals convert into sales at a higher rate than any other inquiry type. We are seeing strong buyer engagement out of retail hours with over 50% of deals taking place outside of 9 a.m. to 6:00 p.m., Monday to Saturday. We support the case that this should build sales capacity for our retailer partners. Our face for Deal Builder in order of priority is to continue to scale the number of retailers on the Deal Builder trial, increase consumer engagement and conversion with the product and to continue to pass monetization. Everything I've spoken about up to this point has been possible because of the culture and ways of working at Auto Trader. Auto Trader people have always embraced change and been adaptable in the face of technology innovation and the evolution of the automotive landscape. I've already stated some of the examples where we embrace change and invested early. Firstly, in mobile and apps, we then embrace server virtualization, then private cloud, then public cloud. We invested in building out a new data platform and data science capability 10 years ago, making artificial intelligence available to the automotive industry. We believe in working as one organization where people feel empowered to have an impact. More recently, we've introduced share ownership with the launch of an all-employee share scheme this year, which reflects these principles. We always seek to work in partnership with our customers, a principle we've moved forward significantly over the past 10 years. The first step was the removal of sales commissions, bank democratizing and sharing our data and insights widely and increasingly, our conversations are focused on driving retailer performance and optimizing for their business goals. Finally, we believe in thinking and working responsibly in everything we do. This includes creating an environment that attracts diverse groups of people and enables them to fulfill their potential for both the business and themselves. Our environmental strategy is an important part of working responsibly. It has three pillars: to reduce our carbon emissions to support the automotive industry towards the mass adoption of electric vehicles and to support consumers to make environmentally friendly vehicle choices. Many of our initiatives in this space are underpinned by the amazing work of our employee-led guilds and network. There is still much work to do, but we believe with our market position in a growing market and our consistent and focused strategy, we have a significant opportunity still to deliver. We will deliver this because the foundations of Auto Trader are strong. Our well-invested technology platform means we can launch products quickly at scale; and our people, culture and way of working means we will embrace change and adapt to whatever comes next. I'll now hand back to Nathan to summarize our outlook for 2015 [ph].
Nathan Coe: Thank you, Catherine. We have a healthy core business with a good runway for growth. This remains our focus and first priority. In parallel, we have the opportunity to grow engagement with our products and our platform solutions for retailers to increase the number of customers benefiting from our digital retailing capabilities in Deal Builder. Trading so far this year has started well, and we're anticipating another good year of growth in trade revenues driven by retailer revenue with ARPR growth across all 3 levers. In FY '24, there was some positive ARPR benefit from the Webzone disposal, which won't be replicated in FY '25. We expect upper growth of £90 to £100 in price, £120 to £130 in product and £20 to £40 in stock. We expect average retailer forecourts to be marginally down year-on-year as market conditions return towards more normal levels. Consumer Services and Manufacturer & Agency are expected to grow at a rate of mid to high single digits. Despite tight supply conditions in the leasing channel for new vehicles remaining, we expect Autorama operating losses to reduce year-on-year. Group central costs, which relate to the amortization of Autorama acquired intangibles, will be £13 million for the year. As mentioned in our last results, in FY '25, we'll exceed the threshold for the U.K.'s digital services tax, or DST, which is taken as an operating expense in the core Auto Trader segment. Therefore, we expect FY '25 operating profit margins to be 69% or 71% if you excluded DST. However, at a group level, we do expect to see a modest expansion in margins. Our capital policy remains unchanged with most surplus cash generated by the business being returned to shareholders through dividends and share buybacks. That concludes presentation. We'll now move to Q&A with analysts in the room, which Jamie will coordinate.
A - James Warner: [indiscernible]
William Packer: It's Will Packer of BNP Paribas (OTC:BNPQY) Exane. Three questions from me, please. Firstly, there is some nervousness in the investor community around the cyclical health of the car dealers in the context of the normalization in pricing and potential impact on gross profits. Your guidance would suggest that the recent pricing round went well, but could you just update us on the cyclical health of the dealers from your recent engagement with them. I realize it varies by subsegment. So, any color there would be helpful. Secondly, another recent area of focus is the ongoing FCA investigation into used car finance. Could you just update us where we stand today, where the next catalysts are, what the risks are to your car dealer customers and the potential longer-term implications for Auto Trader? Is there an increased role for you in the finance side of things? And then finally, on Deal Builder, you're now another few months into the learnings, you started monetization, albeit cautiously. What are your key takeaways so far? And what would you flag in terms of progress there?
James Warner: [indiscernible]
Catherine Faiers: Sur. So I think we're definitely seeing a period of normalization for car retailers off the back of a few years of what has been exceptional market conditions, most of the pressure is coming from either the supply side or the cost base, used car and actually new car demand where the price point is right is still very robust. You can see it in all of our audience data and more generally, U.K. car buyers continue to prioritize automated spend over other categories. The key pressures for retailers are mostly in the cost base, whether that's the cost of stocking loans, which has gone up significantly for some with rising interest rates, whether that's energy bill, people costs, the structural cost pressures in their businesses have been rising for the last few years. And I think this year, those cost pressures, combined with a supply environment that's quite constrained depending on, again, the retailer cohort and segment of stock you're focused on and a pricing environment, retail pricing environment that has softened has meant that we've seen a normalization back to margin profile, I think, closer to where we were in 2019, early part of 2020 rather than the situation we've been in for the last few years. I mean, overall, we haven't seen any real growth in churn, and we haven't seen retailer insolvencies particularly spike or increase. So, we're not at a point where there's any real, I think, bigger structural risk to retailer numbers overall, but definitely some normalization, I think, back to a more consistent margin profile with historical levels.
Nathan Coe: In terms of the FCA investigation that's going on, it obviously just, quickly for those that aren't aware, relates to a commission structure and sales approach was in place but has been banned for some time. So, I think in terms of scope, there is some talk around this being like PPI. I think there's not really any strong argument to suggest it's going to be anywhere near the size of that, not least because the lending is lower, but it does relate to that historical period. The key time frame is September when they come back with their findings and what potential remedies that they might put in place. So, at the moment, I wouldn't say that we see it as a big risk to Auto Trader. It's something that we're paying a lot of attention to, obviously, because of the work that Catherine spoke about that we're doing on Deal Builder. But we don't sell finance. It's lenders that have mostly been focused, lenders that have made provisions. Retailers have to do quite a bit of work because they were the broker of a lot of that finance. But the average retailer isn't seeing this in the direct risk to their business. So, I think the obvious comment back to that is while the knock-on impact might be that vendors need to change the way that they work with retailers and that could impact retailer profitability, and finance is a meaningful part for anyone selling cars that are under 5 years, 6 years, 7 years old, that is important income. The reality you is, as our customers will very gladly remind you that these are not high-margin businesses and they're not making exorbitant or abnormal profit. So, to the extent the profit is impacted in one area, the industry has a long history of finding that somewhere else. And this would be a broad-based impact on the industry. So, I think it might turn up more in the metal margin. That sort of means for Auto Trader, what I think if you get behind the principle of what the FCA is getting at is they want better choice for consumers. They want more transparency. And actually, we think we've got a brand. We've got some technology, and we've probably got some data that could help them do -- help the industry actually do that in a way that can be probably achieved much faster than any one of those players trying to do it themselves. So, we do think what we're doing is consistent with where they want to go. And actually, if anything, there'll be more pressure to go down a route that does make finance transparent and easy to access.
James Warner: Yes. And then on Deal Builder, I mean I think the way that we started monetizing through the trial is a transaction charge linked to the price of the vehicle. That charge is generated when a deal is placed, which is when there's a minimum of a reservation. And I think that was a bit of a test of concept for us. And I think the fact that we launched that in January, there's still less than 100 customers that are monetized. So, the fact that we've been able to put that into place with that number of customers is 0.25% is what we've initially charged based on the price of the vehicle. About £40 a deal is positive because that feels like progress. These deals are converting into sale of about a rate of 1 in 2. So, it's about an £80 cost of sales. It's probably not where we said we wanted to get exactly to in the long term. But from an initial trial basis, we feel pretty positive about it. Sort of referenced in the presentation, the priorities for this year, which is still very much scaling up the number of customers, increasing the level of consumer engagement with the product and then monetization. So, I think through the year, we will increase the number of paying customers. We're going to look to continue to iterate the charging, although I think that the basis of charging that kind of transaction fee model is likely to be retained. And over the after guidance, the product lever of 120 to 130, less than 10% of that is made up with Deal Builder. So, stating we're suggesting it's a huge contributor for this year. But hopefully, we saw here in 12 months' time, and we've continued to make progress across those three focus areas.
William Packer: Catherine, just to come back on one element of your rents. Is it right, therefore, to think that the kind of worst of the normalization back to historic profit levels is behind us? Or would that be too extreme an interpretation of your comments?
Catherine Faiers: So, I think on -- probably a different answer for new car compared to used. So, I think on used car, we're now seeing month-on-month pricing movements have stabilized and the cost pressures that have hit retailers with interest rates more stable environment, inflation coming under control, I would imagine we'd see more stability and consistency to see there. On new car, slightly different situation because with a combination of the Z mandate and a return to a more supply push market in that segment, there's no doubt we're going to keep seeing more manufacturer discounting and expectation probably that retailers will need to preregister a bit more volume. And that return of short-cycle business does typically have or can have an impact on retail and new car margin. So, I think probably a bit more weakness to come on new car. But I think we're hopeful certainly that we're seeing a much more stable used car backdrop.
James Warner: [indiscernible].
Giles Thorne: It's Giles Thorne from Jefferies. My first question -- actually all questions are on Deal Builder. The first one is noting that you've got a bit more of an outbound stance towards highlighting the value of Deal Builder to dealers. But it feels to me that the major challenge is going to get a dealer to look at it through the lens of lowering the all-in cost to serve and improving competitiveness rather than just another cost or marketing cost per unit sold. So how do you approach that challenge? The second one is on 0.25%, I guess one for Jamie. Does that include -- well, does that fluctuate if the journey includes a part exchange and includes the sale of a loan? And then lastly, the 1,100 dealers, 40,000-plus cars at the end of March, it's picked up quite a bit since then. I'm assuming that's because in mid-April, you made it available to all FCA-authorized dealers. So just as we look forward to the number of cars that could be available for reservation, I don't know, by the end of this calendar year, how many FSA-authorized dealers are there? How many extra dealers are going to be taking it -- and yes, what will that impact be on the cars available for reservation.
James Warner: Do you want to do the first one?
Nathan Coe: So I think on deal builder and the value proposition to retailers, I think our belief is ultimately, this is just going to be the way that you need to sell cars, not necessarily because we're doing Deal Builder because consumers just want this and they want to be given and at some point, actually, retailers will end up missing sales or not being as competitive if they're not using a digital -- some form of digital channel ideally Auto Trader because it's very easy and consumers are already there. I think where we are now, it is the most difficult point in honesty to answer what the value proposition is because I think if you said to a retailer, would you rather -- how much of your cost is driven by the fact that your people only convert one in four inquiries? They would say that's mostly what everyone in the business is doing. So, it's a big part of my cost base. And we say, well, what if you could only convert 1 in 2 now? So, I think that will stack up. But if we're only accounting for say, 10%, 15% of their -- all their sales they're doing on Auto Trader, it's a little bit premature for us to suggest that they're actually going to be able to take costs out of their business. But I think when they see the thing that resonated a lot more stronger than we expected or certainly than I expected, maybe, Jamie and Catherine did expect it, was that 1 in 2 thing is very, very salable proposition for them and the fact that most of the deals are about -- at least half of the deals are being done when they're not in the office. And those two things are carrying us for now. And I think that's why, to Jamie's point, now we're focused on it not just being, say, 40,000 out to 400,000 cares of oil showed, we want to push that up. So actually, consumers start to become the learn behavior on Auto Trader, that will improve conversion. So that's client at this stage where at that point, then the value proposition, we think there's enough there that we're pretty confident actually that it will stand up. And it should be definitely stronger than what we've done today, and we've tested monetization. So, there's a few experiments that are kind of been doing.
James Warner: Yes. So, the second one, the 0.25% doesn't flex based on part exchange or finance attachments. And I think particularly with the lens of finance, but potentially a later iterations that there is some incremental charge. I expect to still a little way off where we are today. In terms of the opening up to all FSA-registered dealers, so that's about 70% of our customer base, 70% of franchise and independent dealers. But I would just caution, I think the cadence at which we're bringing customers on isn't going to be radically different. And that really comes down to the fact that this is a very different type of product the customers take and the onboarding process and the sales process on the forecourt and the way that we want customers to work with consumers that people are turning up with a deal at the forecourt and everyone knows exactly how to manage that and sort of the answer to the third question, those efficiencies are getting realized for consumers. So, it's great to have opened up a larger number of customers that still a product that's quite different to an advertising product kind of as we described it in the past, you just switch it on and people are away. So, we're definitely optimistic we'll still make progress or just caution suddenly thinking that it -- many multiples of where we are today and we're here in 12 months' time.
Catherine Faiers: The only thing I'd add is, obviously, it's a portal product today. And for some of that 70% of retailers are addressable, we need to do the API work to get deals in as part of the API so that they can consume the deal in their core retailing systems rather than medium to port.
Giles Thorne: What's the timing -- sorry, what's the timing for that, Catherine?
Catherine Faiers: I say we've started work we've proven with a couple of partners that we can make the deals API connectivity work. and we're integrated with over 100 partners or so for Retail Essentials and the other AP Connect module. And we will, over the coming months and years, work our way through that partner base to get the deals, API work integrated as well.
James Warner: [indiscernible]
Unidentified Analyst: A couple from me. So first of all, with some of the slowdowns and progress towards meeting these targets, are we seeing any differences in how OEMs are rolling out the agency model? And if not, are there any sort of impacts you'd expect to Auto Trader from some of those changes in the EV market? And then secondly, just to touch on Deal Builder again. So, I appreciate the product is working really well for retailers. For consumers, what are you seeing in terms of their propensity to take up that product when they view a particular vehicle? Is it something that's resonating really well? Or is it something that maybe hasn't taken up so much because you have so many people visiting you still manage to complete quite a lot of deals? I think that's it for me.
James Warner: Do you want to take the first one?
Catherine Faiers: Yes. Sure, on the mandate target with 20% for this year for every OEM. And we're currently tracking about 15% of new registrations, but a lot of that, if you see the retail of the manufacturers, a lot of that is actually coming through preregistration or other short-cycle business. So, there is a structural worry that the underlying level of actually private demand and private registration is some way behind that 15% of registrations that we're seeing. So, you're right to point out there is this big gap that manufacturers are either going to need to meet or pay the GBP 15,000 fine per vehicle. And the approach that different manufacturers taking does vary hugely. So, some have now very openly talked about potentially constraining registrations of ICE (NYSE:ICE) vehicles later in the year to the 20% target. Others have talked about putting up prices potentially on ICE vehicles to make electric vehicles look more competitive. And other OEMs are pushing full steam ahead with trying to drive as much EV volume as possible. So probably more variation in manufacturer strategies than we've seen for a long time in terms of how they're approaching the market. In terms of what that means for us and what we're seeing on Auto Trader, I think for the retailer stock, new car stock products, we're expecting to see more stock on that product as the year progresses, particularly to hopefully some of the volume OEMs when they're pushing later this year, we move from an all-you-can-eat to a per-slot model for that product during this year. So as supply comes back, we're hopeful we'll see some benefit there. The second product we have has been manufacturers advertising directly. Those that are selling direct as through agency model or have a direct-to-consumer proposition. We've got a version of our market extension products that they're on the platform, retailing those cars. So, we're working -- it's relatively early days still for that product. We've got work to do to get images, descriptions, all the kind of core advertising proposition as good as it can be. But we've got the cars there. And to the extent people are looking to push through that channel, we should be relatively well placed to pick up that volume. And then we've obviously got the leasing proposition as well, where we structurally haven't seen the market come back there. But if it did, I think it's probably unlikely later this year, but if it did into next year, then we've got a route to market there for funders and other leasing companies looking to sell through that market. So, I think we feel pretty good that actually we've got the proposition by whoever selling the car, whichever channel structurally benefit, that we've got a good proposition there for retailers, manufacturers and funders.
Nathan Coe: And then on consumer propensity around Deal Builder, I think our view, certainly my view, is that it's good. The feedback when people go through the process, most importantly, is very, very positive that even though it's quite an involved process, especially if you go through Part Exchange and finance, actually, it all makes sense. It's protecting vulnerable customers and doing all the things that we wanted to do. So, we're really happy from that perspective. From an engagement perspective, we spoke earlier at our last results about accounting for maybe 5% or so transactions. That number is starting to creep up. So, I guess if you want some evidence, you can more and consumers are engaging with it. I think the truth is, from our perspective, there's been no marketing. It's not being pushed on the website because we did a little -- we did a very subtle push in our retail case with us because some of them -- their finance providers weren't yet available. That's why we've kind of opened it up more recently, so we can start pushing on site without some retailers feeling like they've not really got a chance to go at it. We've not really done a lot of the optimization work other than optimizing for reservation. So, part of the propensity of the consumer to finance application and part exchange looks lower than what we would expect, and we'll get on to working on that. And it's not at scale on Auto Trader. So, when you run these big websites, they've been used by new consumers for years and years and years, they are surprisingly blinked. They just see red buttons and they press them and getting them to kind of read something different or behave slightly different is much easier said than done. But I think that's kind of -- that's really the stage that we're at now by allowing opening it up to all retailers, we can start to push on all 4 of those elements, actually, which we'd like to think will increase propensity from where it is today. But I think where it is today is actually pretty good actually considering.
Unidentified Analyst: If I can just ask a quick follow-up, Catherine. Just want to dig into retailer members. So, I'm sort of following on from Will's earlier one. A lot of the pressure in the used car market possibly peak and maybe start to decline a little bit. If we're guiding for retailer numbers down, is that more of a case of retail numbers right now are a little bit below where they were at the year-end, but we should maybe see an improving trend in, whatever, average might be slightly lower than last year, the exit rate might be quite good? Or is it a case of sort of a little bit of a decline still throughout the year that you're expecting?
Nathan Coe: I think it's more of a question just sort of stepping back and thinking what's happened over the last 3 to 4 years that we've seen almost an extra 1,000 customers coming into the market. And there's no doubt that some of them will have been drawn in by those higher gross margins that were realized sort of through '22 and '23. So, I think it's more of that higher level as those margins and to the first question starts to get back to more normalized levels. So, I think we see -- we expect through the year that some of those people will leave the market. So that's what's behind that guidance.
Catherine Faiers: We're not seeing it yet. So, it's an expectation of what might happen as we progress through the year.
James Warner: Ciaran?
Ciaran Donnelly: It's Ciaran Donnelly from Berenberg. Just on Deal Builder again, I guess, just in terms of the priorities you laid out on the first one in terms of uptake, could you just help us kind of understand how you define success? Is it, I don't know, a doubling of the number of retailers with deal builder available? Or how should we think about that in terms of success? And then I guess just in terms of monetization, could you just give us an insight on how you landed on 25 basis points as kind of the starting level -- and when you get to, let's say, full monetization, do you think it will be 25 basis points and then try to increase over time? Or it will go up to closer to getting to your kind of £100 revenue per vehicle that you kind of alluded to previously.
Nathan Coe: Okay. I told me guidance is done by the CFO, but I'll give you mine. No, look, I think the clip that we've been running at is like 500 retailers every 6 months. We've now -- that was with some constraints around the number of retailers that we had their finance provider available to do the integration. We've got some other ways to work around that and provide a different finance journey if they're -- what the desired providers not plugged in. So, I think we'd like to go quicker than that, but it's not a crazy amount. It's not double that at all, I think, because of the constraints that Jamie said. So, I think we'd like to be going faster than the 500 every 6 months that we've been doing it. That would seem, if I was you, that would seem like a reasonable expectation to have on us because now we don't have any of those constraints. But the onboarding is still quite -- it is a pretty involved product. And because we're choosing a monetization model that's based on not only a kind of a more involved product to onboard people, we're monetizing at the moment on a transaction basis, so we have nothing to gain by putting loads of work into a retail that's not really going to engage and do any transactions. So, we're a bit more discerning about who we bring on. So, there's some natural constraints in that. But we have got our foot down and it's a very big priority in the organization is to get people plugged in. Catherine Rose Faiers Auto Trader Group plc – COO & Director I guess the historic run rate as well has also been, well, it's been entirely free. And now we are monetizing that will put some kind of constraint around how fast we can go as well.
James Warner: Yes. And then, I mean, on the 0.25%, did have many of the prices internally are derived that we work through internally. We look at external benchmarks. We talk very closely to the sales team and talk to the customers that have been using the product. I think Nathan talked about the kind of consumer engagement where we're sort of 5% to 10% of customer sales have deals attached. And I think to drive the kind of real efficiencies kind of related to Charles' question where customers can meaning, well, actually, I'm able to operate in a slightly different way, you do want to be continually increasing that number. And so, I think that's what has been part of the discussion as we've arrived at that amount. We definitely have expectations over time that we can certainly add finance in time into the kind of charging model because that feels like a high part of value if you're able to get someone to complete that process online. So, there's a lot to learn through the next 12 months. But we certainly hope that it can greet over time. And we'll learn a lot more as we're rolling out monetization’s and more customers.
Nathan Coe: I think one of the reference points, just to add in there, is remember, unlike many other transactional platforms, this is on top of the 0.6% of revenue or 6% of gross margin we talk about, which is about 6% -- 0.6% of revenue. So, it does sit kind of on top of that. And that 0.6% is a reference point for where we were kind of pitching and thinking about the transaction phase.
Ciaran Donnelly: So just to confirm, at this point next year, every retailer using it will be paying for it?
Nathan Coe: Not necessarily, but there will be more than the less than 100 that we have today, I'm sure.
James Warner: Yes, Andrew?
Andrew Ross: It's Andrew from Barclays (LON:BARC). I've got two more on Deal Builder, amazingly. We just asked about the incrementality of monetization. So, appreciate the under 100 customers who are paying for it is a pretty small number and they're not paying that much. But as you've gone through the April pricing event, did you find with those customers that it was a simple conversation of you take normal price increase, normal product increase and menu pay for Deal Builder on top, such that you've seen kind of a higher yield from those customers as part of monetizing that? And I guess, as an extension to that, going back to the September '22 CMD, you spoke about an ambition to take the ARPR growth into double digits driven by Deal Builder. I guess FY '25 is not the year to judge you on that. But is fast to the ambition and when is the year that we should judge you on that and be able to start to scale?
Catherine Faiers: Yes. I mean I think with Deal Builder monetization, most of the conversations -- a number of the conversations have happened prior to the April event. So, for those retailers, yes, we would have -- it has been a yield increase for the individual retailers that have been monetized, as you say, is relatively -- I don't think the individual per deal yield is that low, but the volume of deals that they're getting as a percentage of sales means as an incremental Auto Trader cost, it's not been a huge shift yet. But the structure is there and set up now such that they're on Deal Builder is delivering value for them. So, as we've all talked about, we hope that continues to scale over time. We're committed to keep monetizing those retailers in waves over the coming months, mostly linked to how long they've been on the trial, and we'll keep doing that. So, any monetization in year will sit on top of the April rate product and price conversations that we've already had.
James Warner: Yes. And on the -- yes, we said at the Investor Day that business has historically run at mid- to high single-digit ARPR growth. And hopefully, with Deal Builder, we'd move to double digits. Obviously, we've managed to do double digits in '23, '24 and the top of the range is double digits that we've just put out. So, we're definitely aspiring that in '26, Deal Builder is a more meaningful contributor than what's in the guidance today. But for the next 12 months, we'll tell us more achievable. We have time for one more. Pete?
Pete-Veikko Kujala: It's Pete from Morgan Stanley (NYSE:MS). Let's stay on topic of deal builder. But I'm going to ask you through the stock lever. Your stock labor guidance, I'm wondering -- does that reflect your view of increasing supply or longer sales or like days to sale? Or have you seen any kind of change in dealer willingness to subscribe to more slots if they are on the Deal Builder product? Because I think you mentioned that like 50% or something are coming outside of like the normal business hours. So that's potentially like pretty attractive for a dealer. So, is that impacting your stock labor at all? Then the second question is just on attachment rates, so for financing. So, the Deal Builder deals that have gone through so far, what kind of attachment rates have you had there? And is it materially different from what retailers usually?
James Warner: So, the stock lever, so I think the guidance is -- I mean if you kind of split the half, second half was a bit stronger than the first half. And I think that is the kind of supply tightness that we've seen through a lot of the last 3 years as ease slightly just as you've had more new car registration, you're starting to see a little bit more increased level of deep fleet or cars being de-fleeted into franchise and independent dealers, but speed of sales still running very, very quick. And I don't -- the level of demand that we see, I don't think we expect that to slow down significantly. So, I think it's more just there's a lot less supply over the last 2 years or 3 years, and it feels like it should improve gradually. I would just say, if you look at the second half, it's almost GBP 100 stock lever and we're guiding to 20% to 40%, and that's because right now, actually, it suddenly -- you go through these strange periods were actually feels a little bit tight, and that is actually a period that we're going through at the moment. So, I think generally, looking across the whole year, we hope that it's a relatively small levels, so there is just a little bit more supply. I don't think we've seen Deal Builder customers necessarily increasing slots. But you're absolutely right that over 50% of deals are placed outside of traditional hours. By thing, it's still a relatively small example case saying that that's going to drive an increase in slots taken in the next 12 months. Then just on the attachment rate. So, the attachment rates were both, I would say, are lower than a dealer would see on average. So, as it's a bit over 10% that has a part exchange or a finance application. But the lead call to action is reserved, so I don't think it's, again, wholly surprising. As Nathan sort of mentioned, we want to drive deal volume. But on the list, the priorities are also to increase the attachment rate alongside it, which we were able to do that, then the kind of next phase of monetization where you're potentially charging for finance, we'll hopefully follow as well.
James Warner: [indiscernible].
Carl Smith: It's Carl Smith from Zeus. Just one question on something different on Autorama. So, on the deliveries, it says that the -- what you said that the car deliveries fallen about 50% versus the annualized FY '23 figures, and this is due to supply factors. But you've also said today that there's a supply push environment on new vehicles. So, can you just explain how the supply dynamics differ in the leasing market versus the overall U.K. new car market and whether there might actually be some demand factors in play as well for leasing? Or what's driving that 50% decrease?
James Warner: Yes. So, if you think about new cars registered in the U.K., half goes into retail and half goes into fleet. And I think the comment around more push factors is pushed into retail. So, pricing that you see, the PPP, the finance dealers are offering -- franchise dealers are offering and the finance offers that are attached to those cars is where the push is. There is more volume going into fleet. But that's being taken by corporate and rental and those fleet customers turning over what is quite an aged fleet that they've got on for 2 years to 3 years. If you get saturation in that fleet channel, those cars then get offered through the leasing broker. So, the vehicle that has flied into Autorama today come from fleet wholesalers. They're the ones offering the finance. So, they're still taking vehicles for their own needs and their own customers. And it's that saturation that then ends up fueling that leasing broker market. So, retail is seeing more push, fleet is taking volume, but we're not yet seeing it feed into the broker channel. I mean I think the fact that retail is seeing more of a push suggests there's not as much demand from private individuals buying those new cars. So, I'm not discounting your question that demand may also be a factor. But the competitive nature between what's available through PCH to what you get in PCP is -- you're not seeing the same balance currently.
Nathan Coe: Excellent. Well, thank you, everyone, for joining us. That brings us to an end.
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