AUTO1 Group SE (AG1) Earnings Call Transcript & Summary

Hello. Good afternoon, and good morning and good evening to international participants. Welcome to the AUTO1 Group Fourth Quarter and Full Year 2024 Results Presentation. I'm Philip Reicherstorfer, Group Treasurer. As always, I'm joined today by Christian Bertermann, our Co-Founder and CEO; and Markus Boser, CFO. We will start with the presentation followed by questions and answers. [Operator Instructions]. Before I hand over to Christian, I must make you aware of the safe harbor provisions at the beginning of the presentation here. These will apply to any forward-looking statements made by management today. And now over to Christian.

Thank you, Philip. Hi, everyone. Welcome to our Q4 and full year '24 earnings call. At the end of 2023, we were envisioning a bright road ahead for our company. 2024 was a fantastic first milestone on that road of profitable growth, demonstrating the strength and resilience of our vertically integrated business model and the power of our digital trading platform. The full year 2024 and the fourth quarter results have been outstanding. We delivered record-breaking performance across all key financial metrics. It marked the best year in our 12-year history as a company and is a testament to the strength of our strategy and execution as well as the dedication and hard work of our teams. We capitalize on the advantages of our vertically integrated business model while driving forward automation and advancements in artificial intelligence. Group unit sales reached an all-time high of 690,000 vehicles, an increase of 18% year-on-year. Total gross profit surged by more than 37% year-on-year to EUR 725 million, nearly EUR 200 million more than in 2023. Group gross profit per unit also increased significantly, climbing 17% year-on-year to EUR 1,049, up from EUR 899 in '23. The last year marked the sixth consecutive year of sequential group GPU increases. We grew adjusted EBITDA in each of the 4 quarters in '24, resulting in our best ever full year adjusted EBITDA of EUR 109 million. That is an improvement of EUR 153 million compared to '23. Our adjusted EBITDA margin climbed to 1.7%, a 2.5 percentage points increase compared to '23, demonstrating the significant operating leverage inherent in our business. We are pursuing a value-first strategy across all segments, strongly focusing on the drivers of value creation for all customers we are serving. And while we have been performing this strategy from the very beginning, we took another major step forward in understanding our customers' needs, expectations and priorities in the last year, resulting in superior demand levels across the board. Value in our business can mean higher selling prices, lower buying prices, lower processing costs, greater selection, greater convenience, highly motivated staff, increased trust, fast and reliable delivery and competitive financing. To execute the strategy successfully, we are managing our business very closely, meticulously analyzing comprehensive customer inventory, margin and cost data sets on a daily basis for all our business units, steadily asking questions with the aim to better understand our customers and the business we are operating for them. We constantly study and question our daily management of the business with a goal to improve it further and further. And we sometimes are surprised about how much we can still learn in a business like Merchant, one that we have been operating for more than 12 years. Consequently, we continue to go through a massive learning curve at an increasing pace in our much younger Retail business. Let's deep dive a bit and start with Merchant. We've had an exceptional year and fourth quarter in Merchant, our largest segment. In '24, we achieved an all-time high of 615,000 units sold, growing 18% year-on-year. With 163,000 units sold in Q4 of last year, the last quarter set another new record, representing an accelerated 24% unit growth year-on-year. Merchant gross profit hit EUR 563 million for the full year, representing a 34% increase compared to the previous year. Merchant GPU also showed strong development, climbing to EUR 914 for the full year, up 14%. GPU for the fourth quarter reached a new record with EUR 942, a 19% year-on-year increase, driving Merchant gross profit to EUR 153 million for the quarter, a 48% year-on-year increase. In the last year, we further improved our products and services for partner dealers always aiming to deliver maximum value. We decreased average delivery time by 4 days year-on-year, proving the effectivity of our transportation solutions. We upgraded our AI recommendation algorithms, optimized document tracking and refined equipment and car condition translation with a goal to maximize convenience for our partners. These advancements resulted in superior demand levels in our Merchant segment. In total, we enabled 44,600 partner dealers, 14% more than in '23 to find, purchase and rapidly receive the best vehicles for their stock with the average basket growing 3% year-on-year to 13.8 cars in the last year. In the fourth quarter, 27,500 merchants purchased vehicles from us compared to 23,700 in Q4 of the previous year, representing a 16% year-on-year increase. The average basket size in the fourth quarter grew by 7% with merchants purchasing an average of almost 6 vehicles in Q4, up from 5.5 vehicles in Q4 of 2023. One major driver behind these strong results was the increase in selection for our partners, driven by our accelerated branch rollout strategy in C2B. By densifying our sourcing network, we make our service even more convenient for our selling partners. In total, we added 114 new branches in '24 in our purchasing division, an increase of 26% year-on-year. Together with this large step-up in the number of branches, our teams improved the management framework of our purchasing operation, positioning them for sustainable long-term growth while maintaining tight cost control. We aim to operate as lean as possible to be able to offer our customers highly competitive selling prices. In '25, we are continuing the rollout of additional locations across Europe. Merchant financing also continued to perform very well, and we keep receiving very positive feedback from our dealers. Designed to be the most convenient professional financing solution, we offer qualified dealers an instant credit line embedded directly into our platform, enabling them to finance a car with a single click and repay seamlessly. AUTO1 financing is fast, it's transparent and designed to grow our dealer partners business significantly. Merchant financing is now available in Germany, France, Spain, Austria, Belgium and the Netherlands. In Q4, we financed a total of EUR 255 million of merchant sales. This is 5x more than in the previous year. While the number of units financed grew to 24,000 in Q4, which is 6x more compared to Q4 of last year, only a little more than 3,000 dealers utilized the solution so far. We will roll out AUTO1 financing to more markets and look forward to offering it to more and more partners. Let's move to Retail. Our Retail business delivered new records across all metrics in '24. We sold 74,400 cars in our youngest division, up 18% year-on-year. While we started slow with Q1 units slightly down, unit growth strongly accelerated in Q2 to 23%, Q3 to 28%, in Q4 to 31% year-on-year. Retail GPU was EUR 2,163 for '24, growing 26% year-on-year, driven by constant GPU gains in all quarters. '24 marks the fifth consecutive year of Retail GPU increases. As a consequence of strong unit and GPU growth, total Retail gross profit increased to EUR 162 million, growing 49% year-over-year. While the financial performance of Retail is moving in a strong direction, growing double digit and increasing GPU, we are convinced it's even more important that we are rewarded with continued high NPS levels of around 70 by our customers. We attribute our strong results to the value we provide to our retail customers. We increased selection in '24 with a larger but also wider stock. We improved retail pricing through higher precision and more data and aided trust through more transparency about car condition and history. We enhanced convenience for our customers through a variety of measures, including but not limited to the launch of the Autohero mobile app, AI integrations and e-mail and chatbot systems, improving recommendation algorithms and a better warranty offering. We made delivery time a strong priority in '24, delivering 20% faster year-on-year, driven by the rollout of Express Hubs, which can receive cars within 72 hours. With this offering, we are putting our logistics muscle to work, offering fast delivery as a benefit to our retail customers at no additional cost. We also improved our scheduling systems to give our customers the opportunity to pick the exact date and time for their delivery themselves, further enhancing convenience. Finally, we worked hard to scale our in-house production capacities for future growth, increased processing speed and decreased production costs by achieving better efficiency. Our consumer financing offering continues to be a key value driver, guaranteeing affordability and enhancing customer satisfaction. In '24, we had more than 25,500 customers with tailored financing solutions, growing our consumer financing portfolio by more than 35% year-on-year to EUR 365 million. We are pursuing a hybrid financing strategy right now, consisting of internal financing for Germany and Austria and external financing for all other markets. Our in-house financing solution provides a seamlessly digitally integrated process with instant approval and tailored payment plans for best-in-class customer experience, fostering trust and long-term loyalty while driving customer retention and repeat transactions. In July of last year, we completed the first public securitization of our consumer loan portfolio, demonstrating the quality of our loan book and enabling us to achieve a significantly lower cost of capital, setting the stage for increased profitability and less capital usage. In our external financing markets, we partner with a combined strong set of over 30 lenders to ensure maximum flexibility and attractivity. Autohero's GPU from financing is steadily progressing towards our long-term goal of EUR 800 to EUR 1,000, and in Q4, consumer financing contributed EUR 368. This is an increase of EUR 116 or 46% compared to Q4 of last year. This growth consisted of finance GPUs from internal financing of EUR 470 and EUR 306 of external financing. We will continue to invest into our financing platform and expand our in-house financing solutions to other markets. In summary, our conviction that our vertically integrated retail business model is superior to the traditional brick-and-mortar approach growth with every single month of operation. We are convinced that our way of operating retail will lead to substantially lower unit cost at scale while generating superior gross profit per unit as a consequence of outstanding customer value generation. We believe that we are slowly starting to see the first signs of operational leverage in retail, but that we're barely scratching the surface at this point. What we're most excited about, however, is the learning curve we will go through in retail. It seems unlimited. Going forward, we aim to find the best balance between unit growth, GPU growth, OpEx per unit and investment into future growth of our retail operation. So if we zoom out a bit, how will our track look like from where we are today? Our value-first strategy resulted in strong demand generation across our businesses in '24, driving double-digit unit growth and 2.5% market share for us. Similarly, on margin development, last year, we laid the foundation for long-term profitable growth by configuring investments, cost structure and margin requirements of our different businesses in a certain way to generate meaningful absolute EBITDA levels while continuing to accelerate growth strongly. Leveraging this foundation in '24 for the first time led to the first full year positive adjusted EBITDA and a group adjusted EBITDA margin of 1.7%. However, it still feels like we're just starting. We have set a long-term market share target of 10% and a long-term adjusted EBITDA margin target of 5% to 9%, and we'll continue to execute towards those targets. We couldn't be more excited about what the future holds. I'll now hand it over to Markus, who will provide a detailed financial update for Q4 and the full year '24.

Thanks, Christian. We are very proud of our financial results, both for the full year 2024 and the fourth quarter, which represented our best ever quarter across all metrics. Full year 2024 was a breakthrough year for us as we achieved full year profitability on an EBITDA basis -- on an adjusted EBITDA basis for the first time, but without comprising or compromising our investments in our talent and our brands while growing the business by 18% year-on-year. With respect to Q4, conventionally, Q4 has been a weaker quarter for us and for our Merchant business, in particular, with the December month being the most at risk as dealers generally slow down their purchases towards the end of the year and consumers, both from the perspective of selling cars and purchasing them, are enjoying the holidays. As a result, we have traditionally slowed down our purchasing towards the end of the year as we see the sales speed slowing. Nonetheless, over the past few years, we've also noticed a corresponding increased demand from dealers at the very beginning of the following year. On the back of this trend, this year, we did not slow down our purchases as much as in previous years, therefore, investing in our purchasing and a positive result was that -- that we ended up able to grow our sales in Q4 versus Q3. This improvement in units and GPU enabled us to maintain and even marginally expand our EBITDA margin quarter-on-quarter from 2.1% to 2.2%. If we take a more detailed look at our year-on-year development of profitability, we can clearly see the operational leverage that we gain from more scale. Year-on-year, our gross profit increased by almost EUR 200 million, of which EUR 93.4 million from increased units and 103.4 million from increased GPU across both our Merchant and Consumer businesses. We continued our discipline in marketing, which only increased EUR 3.9 million or 2.9% relative to our 18% top line growth, the consequence of 2 positive factors. On the one hand, the ongoing success of our branch expansion strategy, which enables us to buy more cars by being closer to customers. On the other hand, our ongoing ability to leverage the existing and strong Autohero brand for higher sales. We invested a further EUR 21 million in our talent, both to enable existing growth, but also investing ahead to create the infrastructure across production, sales and retail to enable us to continue to grow profitably in the future. Moving on to the balance sheet. We were able to increase our cash position by EUR 65 million over the course of the year, though there were some positive year-end cutoff effects this year. Year-on-year, we invested EUR 153 million into inventory, again, positioning us for further growth. Lastly, we continue to invest in our capital finance -- in our Captive finance assets, increasing our Merchant finance portfolio by almost EUR 200 million and our Consumer finance portfolio by almost EUR 100 million, demonstrating the strong growth in these products. As always, I'd like to emphasize, we have no corporate debt. With respect to guidance, we are guiding that we will sell between 735,000 and 795,000 units in 2025, of which 650,000 to 700,000 in Merchant and 85,000 and 95,000 in Autohero. We guide that we'll achieve a gross profit of EUR 800 million to EUR 875 million and an adjusted EBITDA between EUR 135 million and EUR 165 million. With respect to CapEx, we spent just over EUR 11 million in 2024, though we expect this to grow to around EUR 22 million in 2025 as we add some additional internal logistics capacity and expand usable refurbishment capacity in our existing facilities. We may potentially look at also expanding refurbishment capacity via some limited additional facilities in strategic locations. Overall, we are very proud of our performance in both Q4 and the full year 2024. We are now investing into our future on a profitable basis to ensure that we will continue to demonstrate the growth and profitability we've been able to achieve and drive to ongoing market share and margin expansion gains. Now over to questions.

Hi, everyone. I am Rafael, your Zoom operator. [Operator Instructions].

Thank you, Rafael. And we will start with Nizla Naizer from Deutsche Bank.

I just have 3 from my end. Firstly, could you give us some color on how you think European used car pricing will evolve in 2025 as this has become sort of a topical point of conversation? And secondly, can you remind us again if there's seasonality in Q1 when it comes to how we should think about adjusted EBITDA in the sense, could adjusted EBITDA in Q1 in absolute terms be lower than Q4 because of certain things that we should be mindful of? That would be great. And my last question is on your marketing efforts. Clearly, you've been very efficient with it in 2024. How should we think about where you think you'd spend more of your marketing in 2025 and what it needs to be spent on? Those are my 3 questions.

Nizla, thank you for your questions. So let's start with the first one, EU used car pricing. So after this very volatile years of '21, '22 and '23, '24 has been a very much more stable environment for used car prices with lower volatility and a gradual slow decline that is normal for the industry. So in other words, we have now, out of our point of view, entered normal territory in which used cars again depreciate in a stable and normal fashion. That's our view. And we expect that environment to continue throughout '25 because we don't see very big volatility in new car volumes for the markets that we operate in and also no other factors that would affect us either negatively or positively. Maybe, Markus, you go for the seasonality Q1 question.

Sure. I mean, generally, Q1 tends to be a relatively good quarter, certainly relative to Q4. I think we kind of just talked about, I think, some of the specifics around this year's Q4, given our slight change in approach. I think your third question was then on marketing efforts specifically. We don't give specific guidance on marketing. As you can see, we see at the midpoint, OpEx per unit going up slightly in our guidance. Some of that is a mix shift as I think we shift more growth into Autohero relative to Merchant and in particular, kind of looking at the higher growth that we expect there that, that does reflect a slight increase in OpEx per unit that you see in our guidance.

Very helpful. And congratulations on your set of results today as well.

Thank you, Nizla. And now over to Christopher Johnen from HSBC.

First, on -- coming back to the point on OpEx. I mean, looking at the guidance on the top end, you have roughly 15% unit growth on 15% OpEx growth. In 2024, there was 8% OpEx growth on 18% unit growth. I get the point about the mix shift you just mentioned, pivoting a little bit more towards the Autohero investment. But I mean, still, that is quite a significant step-up in OpEx. I'm just trying to figure out if there is a bit of conservatism in that guidance given it's still early in the year. That's the first question. Second question, is there any color you can give us in terms of the expectations for the dealer count you expect that to develop throughout the year in 2025 on the numbers that use the Merchant financing solution. I think you mentioned we're currently at around 3,000, if I understood that correctly. So that would be interesting. And then is the guidance including the launch of the Merchant financing solution also in additional markets? Or would that come on top? And then last one on Autohero. I would have guessed maybe going into numbers that you would have sort of touted the target to breakeven on Autohero or maybe earn a little bit of money at Autohero in 2025. Can we pick your brain on the plans here?

Okay. So these are some very good questions. Markus, maybe you want to start with this OpEx, 18% versus 8% and now in line with units with OpEx, which certainly is a reflection of increased investment in Autohero.

Yes. I mean I think that's right. As we -- I mean I think Christian several times in the presentation, I think, really said, look, this is a big focus for us now in 2025. We see a huge amount of opportunity. I think there's also, though, I think, a lot that we are still learning to get there, made some significant shifts from -- in 2024, frankly, went from an unprofitable business in '23 to a much more profitable business in 2024. So I think that type of level of operating leverage is going to be unlikely to be repeated in 2025. And so I think that's why you're seeing that slight uptick in OpEx per unit for this year.

Then there were 2 questions on Merchant finance, Christopher. So dealer count on Merchant finance, we expect the dealer count to increase, of course, with the growth that we are planning for Merchant finance for the full year. We're also planning with an increased attach rate. So we would think that the share of financing dealers out of all buying dealers would gradually increase. But in the pace that we have been seeing it. So there is a gradual increase step by step of attached dealers out of total dealers buying that are Merchant financing customers or also the amount of units that are purchased by Merchant financing dealers out of the total units also on a units base, we would assume increased attach rates over the course of 2025, but in line with the speed of progression that we have been seeing. Maybe a side remark here, we are only financing dealers at the moment that have purchased in total and paid, of course, 6 cars from us. So you can see that we are also building a portfolio of known dealers and not completely new dealers. Launch of other markets are factored into the guidance to the extent that we have been planning them and see it likely. And the last question was, yes, the breakeven in Autohero. And maybe I hand that over to Markus.

Yes. So on an adjusted EBITDA basis before HQ costs, we are basically breakeven or just below. Obviously, we want to be and make this a profitable business also after -- on a variable basis after HQ costs so that they are profitable. And I think one of the things is at what level of growth does that happen? I think we think that we can get there at the growth that we're showing right now, which is around about 20% for the Autohero business, and that continues to be a key focus going forward. And that's also, like I said, reflected in the OpEx numbers that are implicit in our guidance.

Thank you, Christopher. Now over to Andrew Ross from Barclays.

Great. Can you hear me okay?

Yes.

Yes.

Yes.

I've got 3, if that is okay. First one is, can you give us a sense as to trends you're seeing in January and February units in Q1-to-date, particularly on the retail side to get a sense of kind of sequential growth Q4 into Q1 as you start to build out inventory? The second question also on retail. Clearly, inventory on the site is going up as you start to budget for more units. Can you kind of tell us what you're learning about the cost of bringing customers onto the site and then how you're able to convert those customers to actually transacting as you kind of start to scale that business and how you're managing both the marketing costs and the asset turn as you scale it? That's the second question. And then the third question is, today, as I understand it on the retail side, you are originating, issuing the loans on your balance sheet only in Germany and Austria. Are there plans to launch more countries this year?

Markus, should I start with the trends question?

Yes, I think trends and maybe just a little bit on retail.

Yes. I mean they're all 3 are retail questions. So thank you, Andrew, for your question. So yes, the year has started well. And I mean, the configuration of the days of the first week were not optimal, but we can't change that. So there was like, I think, the start of the year on a Thursday to Friday. So a lot of Europeans took bridge days and then the year actually started in calendar week 2. But aside from this, I would say, first week that because of the days was not optimal, we saw a good pickup in momentum, and we also see that continuing through February. When we talk about specifically marketing costs while scaling retail, then of course, our ambition is to build that in line with the cost that we have achieved after optimizing it so much. We are now thinking, yes, this can be done. Maybe we need to invest a little more, let's call it, 10% maybe 15% depending on the market. But on the other hand, we're also learning so much about how to exactly do that in an efficient way right now. So there's, on the one hand, really kind of this today perspective on this question, but then there's also like the 3-to-4-weeks perspective on this question where we are then again, learning a lot about which customers are we actually buying? Do we buy the right mix between cash and financing customers? Do we buy -- which kind of credit rating do we buy in terms of the financing customers? What should that actually cost in a performance marketing view and how much more brand can we do and through which channels. So yes, there's a lot of knowledge to be gained. And yes, execution is going pretty well on that side and learnings as well. So I think over the course of the year, we should have a very good answer to that question. But for now, I would think, yes, maybe stable to a little bit up is a realistic view. And then I think for the internal financing markets, we have planned one more market for this year at least, and that is Spain, and we are in preparation to do that.

Thank you. And with that, over to James Tate at Goldman Sachs.

It's James Tate from Goldman Sachs. I've got 2 questions, please. I think firstly, on the adjusted EBITDA guidance of EUR 135 million to EUR 165 million for 2025. Could you just give a bit of color what you see as the key moving parts or variables for achieving the lower and upper end of this range? Because given that you delivered EUR 37 million EBITDA in Q4, it means you're already entering 2025 with the run rate required to achieve the midpoint. So just helpful to how we think about the cadence of EBITDA through the year? And secondly, a question on the Merchant business. GPU of EUR 942 was again ahead of the raised guidance range. Could you give some more color on the key drivers of the strong performance there? And is this the new normal for the Merchant business?

Yes. I mean maybe I take those. I think in terms of -- I mean, a key driver for our adjusted EBITDA is, as you've seen, really making sure that we hit kind of the gross profit numbers that we're looking at in terms of units and GPU. And as long as we obviously have, I think, spend under control. But I think that really reflects the top and bottom of the ranges that we're reflecting there. In terms of -- and maybe Christian can give a little bit more color overall on kind of the drivers of the Merchant GPU. But in terms of the range, I mean, you'll -- in Q3, we had talked about the EUR 825 to EUR 925 as our range. We didn't put that in the presentation to increase that range this quarter. Obviously, we're above that range with the EUR 942. Nonetheless, as I talked about, I think in Q4, we took this kind of new strategy of purchasing, and I think we really want to make sure that, that's kind of that it is sustainable, continues to flow through for a bit more before I think we kind of formally say, all right, we're permanently ticking up that range. Nonetheless, I think you should assume that we are clearly at the top end of the range -- of the Merchant GPU range that we've talked about in the past. I don't know, Christian, if you want to add a little more color about drivers.

No, I think it's a good idea to assume something around the top end of the range for Merchant GPU for the full year. I mean, as Markus just mentioned, I mean, we have been running a little bit of different strategy for the first time since we found the company in December and also throughout the most parts of Q4. So far, as we can see, this has been going really well, but we don't want to take this get as the new normal. And that's why I think it's a reasonable assumption to go towards the higher end of the communicated Merchant GPU range.

Thank you, James. Before we go over to the last question, we got, yes, one more question. But if you have any other questions, please submit them now. And with that, over to [ Pal Scatter ] from [indiscernible].

Please unmute your line.

I think he dropped, but. Maybe let me read out his question. He has a question about the potential cease fire in Ukraine as a positive catalyst for our operations in Eastern Europe. If a piece deal is reached, how much additional potential do you think the Ukrainian market could bring, if any?

I think immediately, let's say, after the cease fire, let's say, with a time horizon of maybe 4 to 6 weeks, I think it wouldn't change that much. But in a, let's say, 3- to 4- to 5-quarter perspective, Ukraine has been a market that we have been selling to before all of this happened. And yes, apparently, there will be high demand for used cars in that market. So this is definitely then a positive catalyst, but one that would need to realize over several quarters after the event.

In the meantime, we got 2 more questions from Mourad Lahmidi from BNP. I don't know, Rafael, we got some issues with unmuting the lines.

No, Mourad, you just need to unmute your microphone..

This is Mourad from BNP Exane. Could you please elaborate on the purchasing strategy that you've rolled out in Merchant and how it's been accretive to the GPU? And a related question on the GPU is how much is Merchant financing within the EUR 940 of GPU in Merchant?

So the purchasing strategy and increasing convenience for our selling customers by getting closer to them by offering one of our drop-off points closer to them than we were before is not directly influencing GPU. So it's increasing selection overall. So it would drive more unit growth as a driver. And then GPU growth is more a factor of how fast do we turn and the overall demand. So I would think it doesn't directly influence Merchant GPU, but then other elements like Merchant finance and getting the right selection at the right price and price algorithms and transport offering and overall recommendation on the platform and digital levers on the checkout flow and so on, they would all be accretive to GPU measurement. And yes, second question it's still kind of low, Markus, right? The Merchant finance contribution.

Yes, exactly. Exactly. I mean the net interest income contribution is around about EUR 20 or so per car, although I would say that the benefit is really much more in the increased demand that it produces as opposed to the net interest income in and of itself.

Thanks, Mourad. And thanks for dialing in from your holiday. And we also got a follow-up question from Andrew Ross at Barclays.

I've got 2 follow-ups, if that's okay. First one is your favorite question, Markus, about bridge between EBITDA and kind of overall cash in 2025. But as you kind of build out the Captive Finance business, just kind of curious as to how much cash you expect to come into the business in 2025? That's the first question. And then the second one is to follow up on Chris' question earlier on the kind of unit loss per car on retail. And just to make sure that, that is a comparable number to the EUR 200 to EUR 300 loss per car you spoke about at the Q3 results. I think when you were talking about a kind of fully loaded number post allocation of all the kind of variable costs. Is it apples-to-apples? Or are we talking slightly different definitions when you talk about broadly breakeven?

So I think we don't give any guidance for 2025 in terms of kind of cash flow. But I think maybe -- and on the 2nd of April, we're going to release our annual report. So I think you'll get a lot more granularity there in terms of that bridge, both from an adjusted EBITDA basis down to net income and cash flow. But I think based on what we've disclosed in today and our kind of key KPIs, what you can see really is sort of for the full year of 2024 we, in total, generated about, year-on-year, EUR 65 million of additional cash. And we invested around EUR 60 million into Consumer finance and the Merchant finance portfolio, net of refinancing. So if you think about that from kind of looking at adjusted EBITDA and then the investment in inventory, we basically generated around EUR 124 million before investing in Captive finance and then invested -- looking at -- and then invested around EUR 60 million, a little bit less than that into the equity as it were of Captive finance. So I think going forward, maybe the way to think about it is, as Christian said, we're looking to launch one new country. We probably won't launch it quite as quickly as we did Germany and Austria because as you see, while long term, having your own Captive Finance business is clearly accretive to GPUs, short term, you miss the kickback. So we want to be able to manage kind of the profitability of the business there. So we'll be investing more into the Consumer finance portfolio and also more in the Merchant finance portfolio now on a net basis as we ramp both of those businesses up. But nonetheless, believe that the generation -- the cash generation from an operating perspective should basically cover the investments that we're making there. Then I think your second question, apologies, was?

Sorry for asking so many questions. So you said an answer to Chris' question that retail was close to EBITDA breakeven on a per unit basis.

Yes, no, it's on -- so we want to really focus on the like-for-like adjusted EBITDA. I think we sometimes measure it a little bit internally, slightly differently. So I think we want to kind of bring everything to an adjusted EBITDA basis. So it is a slight different measure.

It's not then comparable to the Q3 number, to be clear.

Not directly comparable.

Yes. But what you can assume, Andrew, is that when we said this EUR 200 to EUR 300, then this is pretty much variable contribution, but then before headquarter cost. And now we're doing this, yes, the next step pretty much where we're requiring, hey, of course, headquarter costs also need to be financed. And similarly to what Markus was explaining to Christopher is we believe that a unit expansion will get us there and the unit expansion that we guide to will then ensure that we hit adjusted EBITDA breakeven in retail. So as we guide to adjusted EBITDA for the full company, our goal, of course, internally is and must be to also be breakeven on an adjusted EBITDA base in retail.

And then I would like to welcome Wolfgang Specht from Berenberg, who published his first research report recently on AUTO1. So welcome to the call, Wolfgang.

Two additional ones from my side. One on housekeeping, just the CapEx expectation or indication for 2025, was that EUR 22 million? And one on the retail production costs. Could you maybe quantify any improvements you're expecting here for full year 2025?

So the answer to the first question is yes, it's EUR 22 million. It consists of -- it's increasing relative -- and again, you'll get the full detail on CapEx on the 2nd of April. But for '24, we're just above the EUR 11 million. And that investment is in part into some internal logistics trucks because with some select investments, we think we can really boost a lot of those initiatives that we've -- and Christian talked about around speed of delivery, but also cost of delivery and overall consumer experience as well as some incremental investments in refurbishment, primarily around our existing refurbishment centers, though we may look at some incremental refurbishment centers. We don't go down in terms of our forecasts or guidance down to the individual improvements on production. I don't -- we don't quantify that in our guidance. Clearly, we do think in order to hit that adjusted EBITDA per car profitability, we would expect to see more. But I think that's embedded in our overall guidance.

Thank you, Wolfgang. And then we finally got Marcus Diebel from JPMorgan.

Just taking on Retail finance. The range, EUR 800 to EUR 1,000. I recall in the past, we talked about EUR 1,000 contribution, now EUR 800 to EUR 1,000. Is there anything to read into this? That's my first question. Second question is number of merchants -- number of partners in Merchant. We have 44.6 (sic) [ 44,600 ]. Where do you think this number can actually go from here? It's not about guidance. It's more like conceptually, if you can give us some flavor how excited you are also about the number of merchants going forward? And then on your guidance overall again, I think just on the metrics, again, there were some questions already, but if I use the Q4 exit rate, it looks like that the top end of your guidance range of EUR 165 million looks rather conservative. Is there anything to think about in terms of marketing and again, that would explain that we should assume EUR 165 million is really the top end of the range for 2025?

Yes, so in terms of the retail, I think the reason for that is I believe that we we're probably more likely to hit the EUR 3,000 before we -- the EUR 3,000 overall GPU in the -- over time than specifically the EUR 1,000. And I think -- so I wanted to kind of reflect that. I still think the EUR 1,000 is very much achievable. What it does assume though is from when we talked about that number back was that we would have internal finance in all the countries. And I think that just is something that will take longer than I think what we initially looked at. But at the same time, our overall GPU continues, as you've seen, to evolve quite positively quarter-on-quarter. And so I think I wanted to really focus more on the overall EUR 3,000 than the EUR 1,000 and so kind of see us hitting that before we hit the EUR 1,000 in finance GPU. In terms of your second question, I have to say I have to kind of laugh a little bit because I was reading a research this morning, and we -- you said you were surprised that we were able to do that maybe upon reflection so that you feel it is conservative. No, I mean, I think we feel that it's -- I think there's no, I think, particular topics other than the more general one, which is as the mix shifts between Autohero and Merchant, Autohero obviously has much higher GPU potential, but it also has somewhat higher OpEx per unit as well. And I think the 20% growth there that we're talking about reflects some of that incremental investment. And I think we're really trying to work at finding what is the right balance between getting the benefits of operating leverage, which, of course, you get with -- you get more with less growth and kind of finding the right growth lever. And so I think that's what our guidance reflects.

So Marcus, I think the last question was Merchant growth and how we conceptually or how you should conceptually the number of merchants think about that. And while we have been reporting a basket increase of 3%, we think that our growth in line with the merchants that we project -- the units that we project in Merchant will be also mean an in-line increase in the number of buying dealers. So we think we will grow with stable basket and now not completely changeable increase in basket, but, yes, rather in line with the baskets that we've been seeing and then you would can assume a proportional increase for the number of merchants buying.

Perfect. Let's see if the guidance is conservative or not.

Thank you,Marcus. Thank you, Christian, Markus, for your time. I think that brings us to the end of the Q&A. I think this is actually probably one of our longer earnings calls, certainly much interest. I think we'll hopefully see a lot of you over the next 2 weeks, either on one-on-one phone calls or on our non-deal roadshow next week and then subsequently, the conferences in London. And otherwise, we don't see you, we'll have the Q1 earnings at the beginning of May. So thank you very much, everybody.

Thank you, everyone. bye-bye.

Thank you, bye.