I am on vacation, so I can type up a short summary of the webcast based on what I understood. In practice, the Q&A is the only interesting part, as everything else is largely the CEO and CFO reading the presentation to the participants.
I am combining answers related to the same topic under a single paragraph.
On a general level, I thought the tone of the webcast was quite neutral and conservative, even cautious. Expectations were not hyped at all in the sense that the Q2 growth figures would become the “new normal.” Q2 growth was indeed faster than the market, but it even exceeded the company’s own expectations. Otherwise, expectations are for a normal annual cycle where the machine is fine-tuned piece by piece to be more efficient. Q3 is usually strong, and Q4 is the weakest, especially for Merchant, as dealers reduce their purchases towards the end of the year. Q4 AEBITDA was expected to hover around zero. In practice, this means Q3 AEBITDA is expected to be around 20 MEUR and Q4 around zero, which mathematically brings it quite close to the midpoint of the annual target.
However, the CEO refused to estimate which way the entire market moved during Q2, as the data for that is not yet ready. Regarding Germany, they saw the market grow by 6-8% compared to last year. In terms of prices, a normal and healthy decline was observed. According to the CEO, this is good for Auto1 because it makes cars affordable and more accessible, and normalizes the market. For next year, mid-to-high single-digit growth in unit sales is expected.
Fixed costs (for HQ, this includes finance, HR, tech, marketing) are expected to remain fairly stable, perhaps growing slightly. The growth of the sales and purchasing network continues at roughly the Q2 pace, maybe slightly faster. There is also a focus on sales, so costs for these two areas will rise.
Autohero:
During the remainder of the year, only marginal growth is expected in Autohero’s GPU, and the expectation is to stay around the €2,000 level. An increase in GPU is only expected sometime next year when the improvements currently under development start to take effect.
Autohero’s unit costs before group overhead are improving quarterly, even monthly, and they are currently close to breakeven. In recent months, the first markets (countries?) have practically already reached this, but it must also be achieved at the company level. So, in practice, they repeated the goal of being at breakeven before group overhead, after which they will begin to accelerate Autohero’s growth. Autohero’s marketing cost per unit will remain at the current level in the near future.
Merchant:
The Merchant GPU was given a range of 800–900 euros for Q1-24, which was exceeded this quarter. In practice, this was explained by everything falling into place during Q2. There is no intention to raise the range, but the GPU is expected to stay near the top end of the range.
The growth in the number of dealers participating in trading with Auto1 generally comes from all 30 demand areas, so the growth is not particularly concentrated. Auto1 estimates there are about 200,000–220,000 dealers in Europe, of which they sold to just over 25,000 during the quarter. Thus, saturation is still a long way off.
Loan stuff:
There were three questions regarding these, but I didn’t have time to understand each one deeply enough, so I’ll leave them to others. I might try to go through these a bit later.
Additionally, I checked the updated recommendations after Q2 (at the time of posting), which have all remained unchanged:
- JP Morgan kept its recommendation at 7.1 euros (neutral/hold).
- Goldman Sachs also kept its recommendation at 7.2 euros (neutral/hold).
- RBC likewise kept its recommendation at 13 euros (Buy).
- A couple of days before the interim report, Deutsche Bank also kept its recommendation unchanged at 10 euros (Buy).
The fact that analysts kept their recommendations unchanged supports my interpretation of the webcast, where the strong interim report was still considered a one-off at this stage. However, the report was good, there’s no getting around that, so I personally hope this is mainly a “storm warning” of what’s to come.
