CAR Group Limited (CAR) Earnings Call Transcript & Summary

Thanks, Christian. Good morning, everyone, and welcome to the call this morning. So this morning, in keeping with tradition, what we'll try and do is we'll try and get through the presentation in about 30 minutes, and then we'll allow another 30 minutes for Q&A. In the room with me today, I've got Ajay Bhatia, so Ajay is the MD for Australia; Paul Barlow, who's the MD for International; Will Elliott, who's our new Chief Financial Officer; Kellie Cordner, who's our Chief Marketing Officer; and SB Kim, who's the Chief Executive Officer of Encar in South Korea. I'll call out the slide numbers as we sort of go through it. So if you turn to Slide 4, which is just the highlights slide. And I guess from my point of view, the result really does continue to demonstrate the market leadership and the strategy that we've been executing over the many years now to build the diversified business that we've got. And revenue up 5%, EBITDA up 6% and NPAT up 7%. Domestically, it has been a tougher automotive market with softer new car sales. But what we've really seen is continued resilience in the used car market and improvement in our key operational metrics over the past 6 months, which has been pleasing. Internationally, looking at what's been going on over there, we are continuing to see the long-term investments that we make in these markets through product and through innovation really continue to come through in a meaningful way with Korea and Brazil, in particular, the standouts. And they've obviously once again delivered a strong half 1 performance outcomes for us. Just looking at Slide 5 and some of the key operational highlights. And what you see there is we continue to demonstrate the strength and the capability that we've been building as a business in terms of how we're serving our customers and consumers around the world these days. Many of the metrics on here, I won't go through because most of you have seen them before and you're familiar with them. One of the ones that we added this time around, which I'd like to call out a little bit, is just what we've been seeing with our virtual member garage here in Australia, which is now up to around 420,000 cars in this virtual garage. And it's up 36% year-on-year. The growth that we've been seeing there really reflects the trust and the value that we deliver to our members outside just the buy/sell cycle. And as we get through the presentation, I'll talk to you a little bit more about some of the things that we're doing in that space that are really -- have really been a great catalyst for the step-up in engagement that we're seeing in our virtual garage. On to Slide 6. And as I mentioned, first half results were -- we really continue to demonstrate the strength of our market leadership and the diversified business model that we have. And while the portfolio of international businesses we've been really nurturing now for a number of years are really continuing to build scale as we -- and size, obviously, as we continue to invest in those. And all that combined with a little bit of strong cash flow and balance sheet positions that maybe some of you have already seen as you've gone through the deck really do set us up for long-term continued shareholder value creation. So looking at just some of the group performance numbers and a little bit of explanation around that. So if you go to Slide 8, it has 3 charts. And so speaking about long-term shareholder value creation, if you look at those 3 charts, you can really see from those that we've continued to deliver once again on sustained growth around revenue, EBITDA and NPAT. Slide 9. And this is looking at look-through revenue and EBITDA, which from my perspective, it really better reflects our true performance as a business because it's picking up Brazil, and that's obviously becoming a bigger part of the overall business that we have. But as this slide demonstrates, our strategy and diversification of our business model across those high-growth international markets that we've been focusing on is really continuing to perform well for us. And really pleased to see the significant contribution from those investments we're now making to the group as a whole and now contributing around 23% of look-through revenue and 18% of look-through EBITDA is coming from those international investments. On to Slide 10. And look, I won't go through the -- talk about revenue on this table because we'll dive into that in a little bit more detail in a minute. But just looking at the EBITDA performance by segment, and as you can see there, the Online Advertising segment was up 4% on PCP, and that was achieved predominantly through what we saw in growth in terms of private seller and dealer growth as well as the continued focus that we have as a business and always have had as a business on our cost management. Data, Research and Services. EBITDA performance on PCP, that largely reflected the exit of some less-than-profitable business or product that we had. We talked about that in August last year that are still cycling out. And obviously, that part of the business continued to focus on cost as well. I'm very pleased with the continued growth that we're seeing in our international earnings, as I mentioned, up 24% on PCP on a look-through basis. But the standout there is Asia, which is largely driven by Korea, up 16%. But we also had good performances in the other parts of our Asian portfolio as well, which is largely RedBook. And then if you look at Latin America, so we've continued to invest in Mexico, Argentina and Chile. The market's been quite disruptive, particularly over the last 6 months in the Chilean and Argentinian markets. But we'll talk a little bit more about that as we go through the slide deck, too. On to Slide 11 and just looking at our margins. So overall, our EBITDA margins expanded for the first time in a number of years, which is pleasing to see. If you look at the domestic core business, that grew by 1.1% -- or added 1.1% to our margin. And that was really as a result of the cost discipline that we've had in the business, exiting those low-margin products that we've talked about, growing our high-margin products where we can, where appropriate, exercising the operating leverage that we have and navigating all that through the tougher display market conditions that we've seen. In the other domestic investments, that's RedBook Inspect and tyresales, and overall, we saw a margin reduction impact of 1% there. Korea, margins improved by 0.2% despite the ongoing investment that we're making in our branch operations. And again, that was off the back of good cost discipline impact of a price rise in a guarantee inspection product that you're aware of last August and some great growth that we're seeing in display advertising, too. So pleased to see that. And then in Latin America, our Latin American margins improved on PCP. And that was as a result largely of watching our investment, particularly in Argentina given the challenging environment that we've got there and making sure we're not overinvesting in a weaker part of the cycle. On to Slide 12, which is looking at our adjusted NPAT. And we'll look -- just looking at the movements below EBITDA. It's probably the place to concentrate. So D&A, depreciation and amortization, increased by 22% on PCP or $2.4 million. And that really reflects the ongoing investment that we're making in the globalizing of the company and supporting the generating of all the high-growth initiatives that we've seen domestically, too. Net finance costs were actually down 9%, and that obviously ties into the deleveraging that some of you might have seen as we go through the pack, so obviously, with reduction of debt and improvement in working capital, which has been helpful. Profit from associates was up 54%, and that really reflects the incredible growth that we're continuing to see out of our Brazilian investment in Webmotors. And probably the final point to note there is that the Board has declared an interim dividend of $0.22, which is a 7% increase on PCP and represents an 85% payout ratio this time around. So a slightly higher payout ratio, but really reflects the positive outlook that we've got. And it's underpinned by the strong cash flows that we're generating at the moment and cash conversion which I'll talk about now. So on to Slide 13 and talking about cash flow and balance sheet. You can see there, really pleasing to see the cash flow and cash conversion very strong, and that's largely a reflection of improvements in working capital over the past 6 months and the growth in earnings. Our leverage has continued to come down, and we're now prudently below 2x at 1.7x debt to annualized EBITDA. In the middle of the slide there, you can see CapEx was up on PCP by 22%. And that represents, obviously, the investment in the technology platforms that we're making to support our international markets and the expansion in our domestic product investment. And if you back out, so we've -- some of you might have been to the Cremorne office and seen the renovation work that we've been doing there. So if you back out the [ brief ] through to that business or the office there, you can see that net CapEx is up 5%. And the investment that we're making in our office is really to ensure that as a business, we're providing our employees with the best value proposition that we can. Over to carsales Australia and let's drill into some of those revenue lines. So on Slide 15, just looking at dealer. So dealer revenue was up 6% to $79.4 million, which was a solid performance given the tougher new car market conditions. But as we've mentioned before, the resilient used car markets continued and we've seen that flow through in terms of traffic. Unique audience was up 7% on PCP, and that also flowed through to lead volumes. So if you think about the 6% growth that we saw across the board and you think about where that growth came from, so about 3% of that 6% growth came from volume growth in leads, which is great. And the other 3% of the 6% came from the price rises that we did, particularly in March last year, and some other minor price rises that we've done over the past 6 months. I'd also probably say that despite the great growth that we've seen in used car lead volumes, we did see some offset with some -- the new car market finance conditions were obviously tougher, but that doesn't flow through to here. But what we've seen is dealer discretionary spend has been a little bit more challenging over the past 6 months as dealers maintain their profitability in the tighter market conditions. And that did flow through to our depth product. But pleased to see towards the back end of the year that improved and also pleased to say that our depth automation product continue to grow in terms of numbers of deals that are using that. One of the things that we did do over the course of the last 6 months to try and support the industry with new car sales, and you can see on the right-hand side of that slide, we did invest in a new car sales campaign called Epic in November. And that was really to drive consumer interest in purchasing new car vehicles, particularly leading into December where dealers like to try and de-stock. We've seen that sort of campaign work really, really well in Brazil, and our Webmotors business runs these sorts of campaigns regularly. So we think it's probably a good example of IP actually flowing back to carsales Australia from some of our international investments, which is good. And we're pleased with how the campaign ran as a first trial of it. The other thing I'd probably say is just in relation to the bushfires over the past couple of months. We have been supportive of our customers in those bushfire affected regions to help them get back on their feet. And the other thing I'd probably say as well is with the strength in our Instant Offer product, we've been really conscious of trying to get used car stock into the hands -- back into the hands of our dealers. And we've seen some great success in that over the past 6 to 12 months, too. So on to Slide 16 and just looking at private seller. So private seller was up 7% to $44.3 million. Just looking at where that growth came from, our core paid private advertising product was up slightly on PCP. We saw premium advertising services like our Instant Offer product continue to grow really strongly. Time to sell was actually down again, and that reflected the strength of the current used car market, and it's why -- another reason why customers value the services that we deliver to them. tyresales was up double digit as well in what's been a more challenging market for tires, and the rebranded website that we launched is performing well. And we continue to invest in price and retaining our competitive position in that market. Display. So the market for display overall, it continues to remain challenging. And that's almost entirely the result of the new car market conditions being challenging. We did continue to see improvement in performance run rates. And we have released a successful new product over the course of the last 6 months and continue to evolve the way that we're actually going to market there. We also think we've outperformed the broader market in display advertising. And I think as a business we're really quite -- we're set up quite well for when that market actually starts to recover. On to Slide 18 and looking at our data and services business. And the reported data services number was flat there, but that was largely reflecting the exit of those unprofitable products that we've talked about in August last year. We did continue to see some good demand in some of our proprietary data and research products. So we saw really good growth in our vehicle appraisals product as dealers sort of look to build their used car inventory supply. And RedBook continued to grow quite solidly on a consistent basis throughout the half as well. So the underlying growth in our data business was around 5% for the half. Just on to international and Slide 20. And I guess what I'd say is the overall comment on international would be that we're really starting to see a pretty meaningful contribution from our 2 biggest international investments or businesses in Korea and Brazil. And the strong revenue and earnings growth there over the past several years is actually a credit to them. Just looking at Korea first. And very pleased to see the performance of the Encar business over the past 6 months in what's also been quite a challenging macroeconomic environment in Korea as well with the new car market and some of the issues around trade that they've dealt with. But the strong growth in the popularity of our premium products there such as Guarantee inspection for dealers combined with opening several new branches over the past 12 months is playing a really important role in the organic growth that SB and the team are delivering there. And we also did that 10% price rise that I mentioned in August last year, which was also supportive as well. The other things to sort of talk about in Korea is some of the longer-term product that we see has some incredible upside over the years to come, which is more in that premium space, particularly products like the home delivery type services, which really catered to customer and dealer convenience. We also -- with display, we saw a more targeted sales approach for key OEM, finance and insurance clients. And we saw really good growth there. The native product that the team have built and mobile advertising product have all supported really quite strong growth in display over the past 6 months, which has been excellent to see. And operationally, the other thing I was pleased to see was all of our operational metrics that you'd expect to see, including inventory, all up nicely December on December. On to Slide 21 and looking at Brazil. And it's been now actually close to 7 years since we invested in Brazil. And I guess the pleasing thing for me is just to see how that long-term investment in Webmotors and the patience that we showed in those first several years is really starting to play out now. The -- probably the key highlights there are the 21% growth in dealer revenue as a result of increasing dealer numbers and subscriptions and improved yield on a per dealership basis. The new Cockpit platform for dealers is continuing to perform very well and has been a key driver in growth in that area. We saw some significant growth, and you'll see that in a later slide as well, in finance and insurance, that part of the business. And that's as a result of the integration work that we've now done back with Santander to integrate seamlessly credit assessments, including approval through Cockpit, and now that makes up about 15% of our overall revenue in Webmotors. So good operating leverage. So EBITDA margins expanded from 42% to 44%, which was excellent. And all the key operating metrics all up double-digit on PCP. The other thing I'd probably call out is, over the next 6 to 12 months, we are going to push harder into some of the regional markets in Brazil because we think there's significant opportunity there for us. So that's going to take a little bit of additional investment in marketing. But what we'll see is good response in revenue pretty early on, I think we all anticipate. On to Slide 22 and just looking at the rest of Latin America. And I mean these are all pretty small businesses by comparison to Korea and Brazil, but there's good upside potential from these businesses in the longer term. And we'll continue to pace our investment in each of them over the short term to ensure that we're not burning a hole in our pocket. And we'll ensure that they give us all a good option for growth into the future, just like Brazil has done. The additional comments I'll probably make just around Argentina, you'll all be aware of a tougher macro environment there. And we're obviously conscious of not overinvesting in that market at the moment. Chile, we were doing really well up until the riots of sort of November, late November into December. And that had a negative impact on performance, but looking into H2, we're feeling pretty confident that things will get much better there. And Mexico was probably the other one that was a real standout for us and performed well across all the key operating metrics, customers, visits, leads, et cetera. Good growth in terms of revenue off a much lower base, obviously, but 44% revenue growth was excellent to see there, too. On to Slide 24 and just a bit of a strategy update. And so we talked about this at the August presentation. And as a business, we are focused on our key strategic priorities being digital marketplaces, those value-added services. And we're exploring new opportunities to position the company into the future as market trends and consumer preferences sort of change and evolve. Other thing to probably say is, as a business, we do have a culture of backing ourselves and taking calculated bets where those -- they make sense to us. And we're not afraid to make change where we think we need to make change across our strategic priorities or enablers. Probably the other thing to call out just before I move on is, speaking of change, we did make a change in our org structure. Late last year, we saw Ajay step up into the role of MD of Australia. And PB is obviously maintaining his role in international, too. Just talking about people. On to Slide 25. And again, we talked about this at the August presentation, where are our key strategic objectives and what are our key focus areas by segment over the coming 12 months. And I don't want to go through each and every one of those focus areas given up there, but I thought what I'd do is just call out on 3 of them in the subsequent slides. So maybe if you just move to Slide 26 and talk about -- let's talk about dealer finance product. So traditionally, as a business, we've only really integrated finance advertising on private seller cars, as you all know, and mainly focused on cars above $20,000. And Stratton has been the key integrator that we've integrated with. But the thing we're conscious of is as consumers evolve their thinking when it comes to buying cars away from just a sticker price to a more a cost per week or a cost per month, we think it's important that the dealers get the opportunity to present their individual finance offers on the vehicle listings that they're selling and enable them to effectively do things like differentiating their cars from -- compared to the cars around them. So one of the things that we've done is we've launched an integrated finance offering, which effectively connects the dealers' financial service provider through to AutoGate to allow the dealer to apply their finance offering to each of their stock items if they choose. Obviously, the objective there with this product, as I mentioned, is to enable dealers to differentiate their cars. But the other thing it does is it helps dealers improve the qualification of a customer when it comes to finance, which would hopefully improve the conversion of those finance -- or improve the conversion of sales of finance through dealerships and increase their conversion rates. The other thing to say is we know this product works well. We know it works well because we see it working well in Brazil and we see it working well in other markets around the world and we think it's got great potential here for our customers and for ourselves. On to Slide 27. And this sort of connects to the earlier comment that I made earlier around the growth that we've seen in the past 6 months with our Australian members and their virtual cars going into garage. And we're probably now pushing closer to that 0.5 million milestone in terms of cars in that virtual garage. I guess the value proposition of this sort of product is -- for members is to provide them with more contextually relevant information and offers when they're outside the buy/sell cycle, and things like not just fuel -- and the fuel offer is excellent, and we're very pleased with how that's going in partnership with our friends from Viva and Shell. But the other opportunities around helping consumers and customers and members sort of maintain vehicle valuation updates and understand what new product releases are coming and when they're coming, things like discounted tire offerings are also helpful as well. So we're encouraged by how this is heading for us. But I guess the other piece of the value proposition which is more for us is it helps for ourselves in terms of developing a deeper relationship with our members, particularly when they're out of the cycle, and understanding what their needs are. On to Slide 28. And most of you on the call are going to be familiar with Instant Offer, so I'm not going to talk to the mechanics of the product, but very pleased to see the product that we've got evolve as it has. And we've continued to increase our coverage of dealer buyers in parts of the country to cater for the growth that we've been seeing here in this product. The other thing to say is as much as Instant Offer helps private sellers get out of their cars in a really expedient fashion, it also plays a really important part for -- in helping our dealers stock up on used cars, which is an important part of the market, as I mentioned, and helping dealers get stock. And that's one of the biggest challenges that they have at the moment, is finding good quality used car stock. So this is -- this product is helping us on a number of different fronts. And the growth there, as you can see, has been excellent. In terms of international on Slide 29, again, similar to domestic, we outlined what the key strategic objectives are and the FY 20 focus areas are. So I'll just call out a couple of those on Slide 30. And no doubt, we'll talk a bit about this having SB on the roadshow with us over the next couple of days. But as we spoke about, the Guarantee inspection product in South Korea, and it's important to the Encar business, is fantastic as consumers really look to increase their trust in the vehicles that they're purchasing and attain peace of mind, while dealers are looking to maintain margin and sell vehicles at a much faster rate. It's serving a dual-purpose there. So we'll focus, I'm sure, no doubt, over the next couple of days on that a little bit more. But -- and then on Slide 31, just looking at Webmotors and the finance product there, as we sort of talked about earlier. The growth that we're seeing here has been excellent as we've got that integration with Cockpit going and connecting that to dealers. So you see a lot more opportunity there. But the application process for finance is quite seamless in Brazil, and it's less complicated -- the pre-approval process is less complicated than it is here in Australia, but the principles are all very much the same. And -- but looking forward to seeing how that product evolves over time. On to the outlook statement. And I'm not going to read that. You guys can all read that yourselves. But yes, we're -- the guidance is consistent with the guidance that we had at the AGM in Jan -- in October, and January's been a good start to the year. So I'll leave that to you guys to read. And that's it. So 2 minutes over the 0.5 hour. But Christian, if we can open up the call to questions, that will be fantastic.

[Operator Instructions] Your first question today comes from the line of Kane Hannan from Goldman Sachs.

Just 3 for me, please. Firstly, display, can you give us a bit more detail around how that business has been trading since the AGM and whether you think you need to have new car volumes grow again before that you can stabilize the revenues there? Secondly, on dealer, given the price rises that went through the improving exit run rate in your depth products, should we be expecting the second half growth rates to accelerate from here? Or are we expecting a bit of a slowdown in the volume growth? And then finally, the Instant Offers product. I think you've previously spoken to a target of reaching about 10% penetration there. Comment on how we should be thinking about the timing of this rollout and if you were to hit that 10% number, what sort of financial impact that could have.

You want to do display?

Yes, I'll do display. So on display -- this is Ajay here by the way. Display has been sort of solid, as you can see. The market last half was sort of negative 16% if you look at the SMI data. So the team have done a great job to get us to where they've got us with display with a really, really challenging new car market. And we continue to sort of have a solid performance in display in relative terms. We're also starting to think about how we close the gap through a combination of our strategies around product, continuing to build great video product. We've had some really good take-up of our video product. A combination of native and programmatic is going really well for us, too. And on top of that, we're starting to now think about not just the automotive market, but with -- it's much like when you're flying and you see an ad for Rolex. Rolex has nothing to do with travel, but you see an ad for Rolex in the Qantas magazine. Similar to that, we're starting to think about how do we sell our audience to related parties such as travel, such as luxury goods, et cetera. And we're starting to get some good traction. We just signed [ some money ] with Tourism Victoria, for example, [ with some money ] with Qantas. It's the sort of thing that we didn't think of before. So we're thinking innovatively about how we manage those challenges, and those things are reflecting in the results.

Dealer, just on Dealer, Kane, so we have done a price rise, as you saw from January. So from the outlook statement, January was solid, too. So theoretically, yes, you should see better PCP growth in H2 for dealer than you saw in H1. All things being -- all else being equal. And on the 10% penetration for Instant Offer, we're not there yet. We've got a fair way to go when we get there. I'm sure that will be -- I mean that will be a good day. But I mean it's going to be reasonably material when we get there because just the yield on that product is much better than it is on a private ad.

We're continuing to deliver on our plans. So we're very happy with how IO is going. And it's a growth area of the business, but one step at a time.

Your next question comes from the line of Ivor Ries from Morgans Financial.

My question revolves around the dealer finance ads. I'm just wondering how are you pricing that product at the moment. What's the sort of the revenue potential of that line of business?

So Ivor, we're not -- it's in trial at the moment. So we aren't commercializing it yet. But -- so we haven't landed on a final commercial model for it. Probably August will be the best time for us to talk about what the model actually looks like. But yes, if you look at Brazil or U.K. Auto Trader and you look at what they're doing with their marketplaces, that's probably a fairly good lead indicator as to what you could expect to see from us. Does that make sense?

Yes, that makes sense. And if I can just have a follow-up, just on the quantum of the January price rise.

Yes. Will, do you want to do that?

Yes. So the January price rise on lead was $4. So that was from the starting point lead price of $50, but across the board, we haven't increased prices on other products. So the overall yield increase would be slightly lower than that. That price rise is a little bit higher than what we've done the last couple of years. But on average, by the last sort of 3 years, it's pretty reflective of an average price rise of around that 4% to 5% mark, sort of consistent with our track record.

Your next question comes from the line of Entcho Raykovski from Crédit Suisse.

I've got a couple. The first one, just following on around the price increase and looking at the potential yield benefit into the second half. I guess if we look at the first half, you've spoken to a price benefit in dealer of 3%, which was a little bit lower than, I think, the increase that you put through, which was 4%. Can you talk to why that was lower? Is that because of the mix of new and used, then there was no price increase in new? And then as a follow-on, I guess, is 6% to 7% a reasonable kind of price increase we should be factoring into the second half given the increase from $50 to $54? And then the second question on display. Ajay, you spoke about display revenues now coming from some non-OEM customers. Can you give us an indication of what percentage of display is now coming from those customers and where you think that can get to over time?

So Entcho, it's Will here. I'll take the price rise on dealer. So I think that when I was talking before, the price rise is just on lead revenue, which is probably about 2/3 of our dealer revenue, and we didn't increase prices on the other products. So that's why you would see a slightly lower overall yield increase than just the pure price rise. And yes, your thinking is correct for the second half. That would apply similarly in that the price rise is only on a portion of the revenue.

Entcho, on display, we certainly see non-auto as a growth area, but the contribution at this stage is small because we've sort of only pivoted to that in the recent months. But we've had some good success. We've signed a couple of significant numbers in the last sort of couple of months. This is absolutely going to be part of our strategy, but it is early days at the moment.

Okay. Got it. And just maybe a follow-on, on -- follow-up question on display. I appreciate this is a bit of crystal ball gazing, but looking longer term, do you think display revenues can get to previous levels? Or do you have a feeling that we're maybe in a structurally lower spend environment for OEMs?

Look, display is certainly challenged structurally. There's no doubt about that. But just like I mentioned, getting into non-automotive revenue, thinking about video model, every time we put video products out, it's 100% sell-through. So there's a lot of innovation left. And yes, it's challenging circumstances, but the team thrives on that. And I'd say, yes, absolutely, we should be able to get back.

Yes. I mean where we are, too, Entcho, has a lot to do with where the new car market is, I mean, and it's not just in Australia. It's globally. When you talk to anyone around the world, they'll say to you that manufacturers have reduced their marketing spend to cater for the lower volumes that they've been seeing. So I think when that starts to turn for us, I think that puts us in a really good position as well. So, yes, having the product, having -- that we do have now -- things like our visibility of our ads is above the benchmark that we want to have with what I just mentioned about some of the other markets that we're sort of looking at and having new car sales pick up again and OEMs come back to the table around spend, I think, certainly can get back to those levels.

Your next question comes from the line of Fraser Mcleish from MST Marquee.

Just wondering if I could get a couple more stats on South Korea. I mean, Cam, you talked about inventory growing, which is obviously good because that had been flat for quite a while. Are you able to put a kind of percentage number on that in the 12 months? And also Guarantee penetration, which I think you said on the slide, is now 20%. How much has that increased over the 12 months? Just so we can get an idea of the trend growth. And then just on Australia and the dealer depth kind of having stalled, you think you're sort of at sort of full penetration of dealer depth now? Or can that start to contribute to growth again?

Yes. So SB, do you want to...

Sure, yes. I mean if you look at the macroeconomics in Korea, I mean, unlike Australia, the new car sales in premium vehicle, they all went down slightly, about 3% to 4% during the last 1 year. Despite that, I mean, we have been maintaining our overall listing volume. So I mean in terms of that, I wouldn't say that we have been growing, we have been increasing our listing volume, but we have been maintaining. But in addition to that, our guaranteed volume has been increasing in terms of the volume more than 2 digits significantly. And if you think about our ARPU, I mean, the advertisement revenue of the guaranteed is almost 400x of our generic ordinary listing. I mean the contribution from the guaranteed into the revenue has been significant. I think as Cameron pointed out, overall industry in Korea is quite tough as well in the new car and the vehicle trading market is soft, but we have been fairly good in that. In addition to that, the display has been fairly good. I mean this year might be a little bit difficult but still has been very good.

You want to talk about depth?

Yes. Fraser, on depth, the challenging circumstances have been around discretionary spend. So it's sort of anything that's discretionary for dealers at the moment, they are holding back, which is the reason you see the kind of growth rates that you see today. The positive news on depth though is our exit run rate into this half was better than what it looks in the Investor Day. On top of that, it is still a big opportunity for us sort of in the medium term. As economic cycles turn, depth will absolutely go up. At the moment, lead volumes are quite resilient, and they continue to be resilient even in the second half. That's where dealers kind of go, "We don't need to spend the extra discretionary amount. We need to bank that." But that will absolutely change.

Great. Sorry, can I just follow up just on the SK Encar penetration. So 20% now. Where was it 12 months ago, the guaranteed penetration?

Really, I mean about -- we have been continuing to grow roughly about 5% per year, 5% growth.

Your next question comes from the line of Paul Mason from Evans & Partners.

Just one for SB first. On the home delivery products, could you tell us a bit about what the relative pricing on that is and maybe a bit about the initial penetration that you've got from that? I had a look on the website, right, and it looks like it was sort of close to like 3% of your cars. So I'm just interested to hear a bit more about that.

Let me explain in your question about -- in 3 different elements. The first one is the home delivery itself is at very early stage. We are in the pilot stage. I mean -- so we haven't been commercialized that much. But I mean we do have -- it has a very bright future. In terms of the second one is because the value proposition of the home delivery, if you think about why the guaranteed gets appreciated, that is it provides a customer with a peace of mind in buying a vehicle. But at the same time, it helped the dealers protect their margins, right? So the home delivery is kind of an extended version of these value-added services to provide the customer with not only the peace of mind but with a very complete sense of convenience as well because we just delivered the vehicle to their home with the guarantee that the vehicle is okay, right? And it was at the same time, I mean, the dealers are able to charge even extra margin for that. So given that value proposition to the both parties of the transaction, we do believe it has a bright future as well as during the pilot, we began to see quite a good traction from the both side as well. And also, if you think about the price or the margin that we charge from the both side, it's a much -- I wouldn't say much more but quite higher than we currently charge to the dealers in terms of the guaranteed products. So again, I mean, still, it has a lot of uncertainty in terms of the arrangement or agreement with the dealers or to make sure the delivery service is good enough to the customers so that we can avoid the, sort of, the claim rate. But I mean we do believe the value proportion is solid enough to be attracted to the both side of the transaction so that we see the pretty bright future in the longer term.

Could I just clarify on that? So you're not charging for it yet. It's just in sort of a pilot trial phase.

Sorry, we do charge. But what I mean by that, we try to piloting or experimenting different schemes of the prices. So not only the price level, but it's a different way to charge it, I mean, in different dealers and different customers. So we try to find out what is the best way to commercialize in a sustainable way to be helpful to the customers and dealers as well as to be helpful to ourselves as well.