CAR Group Limited (CAR) Earnings Call Transcript & Summary

Good morning, everyone, and thanks very much for taking the time to join us here this morning. For those of you that don't know me, my name is Cameron McIntyre, and I'm the Managing Director and Chief Executive Officer of carsales. Look, given the recent acquisition of Trader Interactive in the U.S. and the several exciting opportunities that we have as a business, we felt the time was right for us to spend some time and run the Investor Day today. In particular, we're keen to talk more about our medium- to long-term growth opportunities. We can sometimes get a little bit less focused on these with the biannual results that we have and the presentations associated. So we understand it's a busy time, and you all have a limited duration. So we've limited the time to 2 hours and 30 minutes of questions and answers. So we've got a great agenda for you. Lots of leaders here today from the business, and I hope you're going to enjoy the presentation that we've put in front of you. So look, what are you all going to get out today? What's in it for you? And how are we going to make it worth your while spending this time with us this morning? Look, the first thing I'd say is you got to walk away from this session with a clear understanding of how we see our growth opportunities and how they stand today, how we're going to execute on them over the medium term as well. We want to spend some quality time with the Trader Interactive business. We want you to have a clear picture for the strategic priorities that we have with that business and the growth opportunities that exist. And we want to do that by introducing you to Lori Stacy. Lori is the Chief Executive Officer of Trader Interactive, and we'd like to hear Lori speak about the business. So you get to meet Lori and hear it from her. We want to have a clear picture for some of the trends and the factors that are affecting the industry as we move forward. It is a dynamic space that we live in at the moment, so it would be good to go through that. We haven't spent much time in the past as a business talking to investors about our ESG credentials, and I think -- and we think it's a really important part of our business. So today, we thought it would be a good time to spend talking about what we're doing in this area. Finally, you're going to get the chance to hear from the leaders that we have at carsales. These are the people that have made carsales what it is today. It's an incredible business. And you're going to walk away, I'm sure, with a great deal of confidence about the ability of the leadership team to execute on the priorities that we all have for shareholders moving forward. So as you can see from the agenda we have this morning, the first part of the session is really focused on our International business, and we'll do a deep dive into Trader Interactive and a deep dive into Encar. And they're the 2 largest international investments that we have. We'll spend some time, as I just mentioned, talking about ESG. And then we'll focus on the Australian business, and we'll leave 30 minutes aside for you to ask any questions that you might have on what you've seen to any of the people in the leadership team. So if you go to the Investor website, you'll see how you can lodge your questions there. So just in terms of speakers today, some of you know some of these speakers. But I'll just quickly introduce them all to you again. So first up, we have Lori Stacy. Lori is the Chief Executive Officer of Trader Interactive. Lori is dialing in from Virginia in the United States. Paul Barlow, is the Managing Director of our International businesses. Nicole Birman is the General Counsel and Company Secretary of carsales. Will is our Chief Executive Officer -- Chief Financial Officer. Jason Blackman is our Chief Information Officer. SB Kim is the CEO of Encar. SB is joining us from Seoul in South Korea this morning. Mark Cripsey, Mark is our Chief Data and Product Officer; Jo Allan is our Chief People Officer. Ajay Bhatia is our Managing Director of our Australian business; and Kane Hocking is our Head of Investor Relations. So look, since we founded carsales back in 1997, we've worked really hard on developing world-class business culture and capability. That clearly has been successful for us. We do know that in terms of how this effort translates, in terms of what you're looking for as investors, we think is through, firstly, the strong leadership that we have in large addressable markets with ongoing opportunity to gain market share. We have significant growth opportunities in our Australian business, which is our largest market that we're in. We have an enviable portfolio of high -- some of the highest quality investments or businesses in our category in international markets anywhere in the world. And we've built global technology service platforms that can deliver speed to market and scalability with what we're trying to do. Our extensive data is also really important to us. It creates ongoing competitive advantage for the business. And finally, all this results in a highly profitable business and an operating model that delivers a strong balance sheet and strong cash flows to shareholders. Just looking at the evolution of the company over recent years through product development and innovation, and it's been really pleasing in terms of how we've seen these opportunities evolve for us. But we're also really pleased with the evolution in our high-growth international markets and the runway that we are creating with the scaling up that you're seeing in our non-automotive verticals. As a business, we do operate in large addressable markets, and we have seen, as we've spoken about over the past 18 months to shareholders, the COVID-related digitization over the past 18 months of the economy. And this has provided us with significant opportunity for future growth as these trends take shape over time. Just speaking to some of those -- these COVID trends and what are the major ones that we continue to see play out and how they're helping drive opportunity for us as a business. I think the things that we're seeing -- we are continuing to see strong demand for cars and driving as a preferred method of transportation for people. We continue to see strong demand for lifestyle assets as people change their recreation consumption habits over time. New people have entered the lifestyle markets, and this is driving great opportunity for us as a business, particularly in Trader Interactive. Now we're also seeing consumers' confidence in transacting online grow as a result of the pandemic that we're living through, and their willingness to look at purchasing used cars online has evolved as well. We're seeing some of these trends as we've discussed for some time and now potentially changing the shape of the automotive industry. As a strong participant in this industry, we believe we play an important role in supporting our customers and our consumers in these evolving trends and participating in that and as they evolve. So these -- I won't particularly go through and read them all, but these are some of the emerging trends that we're continuing to see. Looking at how do we think about our strong value proposition, the diversification of the sources of growth that we have within what are large addressable markets. With tailwinds trends, we have some of the best IP and technology in our class. I guess from my perspective and from the company's perspective, we're very confident in the diverse business model that we have and how it positions us as a company for long-term growth. We are taking -- as you can see on the slide, we are taking our traditional sources of growth and adding really material new growth drivers to meet the demands of a changing landscape that will continue to grow and evolve over time. And we're in a strong position moving forward to leverage these into the future. That's what my opening remarks are, and I hope you enjoy the next couple of hours. I'm going to introduce our first speaker now, as mentioned, Paul Barlow. Paul is the Managing Director of our International business. So over to you, PB.

Thanks very much, Cam. Before I hand over to Lori and SB to hear more detail on our operations in the U.S. and South Korea, I wanted to give you some background on our International businesses and strategy. We commenced our international strategy some 8 years ago now, and since then, we've built a portfolio of high-quality marketplace businesses across the world and demonstrated our ability to accelerate the growth of these businesses as a strategic shareholder. Our approach to adding value is not a "one size fits all" approach. We've been agile in adapting our method based on the intricacies of the markets and businesses with a combination of IP, technology, product sharing and integration. In 2013, our first acquisition was a 30% stake in Webmotors in Brazil after Banco Santander ran a competitive process to find a strategic partner to maximize the online finance channel for the bank, dealers and consumers. Since then, we've formed a very strong partnership with Santander with our expertise complementing theirs. We were instrumental in helping them implement our unique lead charging model into the business, which has been one of the key growth drivers and helps drive the online finance integration. Since we entered the business, revenue has grown some 3.5x and dealer numbers have doubled from 8,000 to 16,000. Whilst we've achieved strong growth in this -- in their business over the past 8 years, we feel we're just touching the surface in terms of opportunity. There is significant opportunity for Webmotors to continue expanding into the larger regions of Brazil, especially outside the state of Sao Paulo, where the population exceeds some 45 million, and our market position is very strong. The regional push will drive more dealers, consumers and inquiries and will support continued growth over the coming years. In 2014, we acquired 49.9% of the leading automotive marketplace in South Korea, Encar.com, from one of the largest Korean conglomerates, the SK Group. Similar to Webmotors, the SK Group were keen to bring us in as a strategic shareholder to drive the direction and future growth of the business. In 2017, we acquired the remaining 50.1% from the SK Group to move to 100% ownership. Whilst the Brazilian dealer landscape and structure is similar to other western markets like Australia, South Korea has a much more fragmented and unique market with much smaller dealership sizes on average and the prevalence of larger complexes where hundreds of dealers are co-located. SB Kim, our CEO in Encar.com, is going to share a great video later today, highlighting the different nature of these markets. Given the unique characteristics of the market, we have not deployed the lead model in Korea. Nevertheless, we have deployed our best practice IP product knowledge and technology into the business, which has supported approximately a 20% compound annual growth rate in revenue and EBITDA. Growth has been driven by the creation of a sophisticated range of value-added services, particularly the Encar Guarantee inspection product. Similar to Webmotors, the Encar business has strong momentum and a long runway for future growth through increased penetration of its suite of value-added services. Whilst Chile is our smallest market, we operate the clear automotive marketplace leader in Chileautos, which is good revenue and earnings and has grown nicely since we acquired the business in 2016. Mexico is a large but challenging market from a marketplace perspective, but we believe our soloautos business gives us an important presence in what may develop into a much bigger opportunity. And finally, this year, we made the transformational acquisition of a 49% stake in Trader Interactive. We love the structure of the nonautomotive leisure and commercial markets and run the market-leading equivalent versions of these sites in Australia. These businesses are generally 5-plus years behind from a digital sophistication perspective, which gives the Trader Interactive business a great platform for continued growth. Our international expansion strategy has been vindicated by strong consistent growth in revenue and earnings over a long period, and we don't see any reason why this won't continue into the future. The acquisition of Trader Interactive transformed the size of our international operations and adds another limb to our growing -- our growth, adding further diversity from a geographical and vertical perspective. As mentioned earlier, we feel there is still significant runway for growth in all our international markets. They are huge and undermonetized. This is validated by the fact that our fees as a percentage of dealers gross profit on a used car are still significantly lower than our Australian benchmark. The monetization gap between our International businesses and Australia has been narrowing over time, and this trend will continue. This doesn't mean the Australian business has been flat. In fact, it still is showing solid growth over this period. What it does mean is that our international businesses have been growing faster. Moreover, this doesn't mean you can simply charge more for doing the same thing. We need to keep adding more value for our customers to justify increases in monetization and the share of wallet. We have detailed plans on how we will execute our growth aspirations, and you will hear more from Lori and SB shortly on this. So I won't go through the points on this slide individually as they will be covered later. However, one point that isn't on this slide that is critically important in the continued success of our international businesses is the quality of the people we have running these businesses. And hopefully, you will see this on show throughout the day. It is now time for me to introduce to you, Lori Stacy, the CEO of our newest acquisition, Trader Interactive. Over to you, Lori.

All right. Thanks for the introduction, Paul, and very nice to be with all of you today. My goal today is really to give you a better understanding of the Trader Interactive business and to explain why the business is so well positioned for continued growth. So the Trader Interactive business has a very rich history with our online marketplaces launching 25 years ago back in 1996, which was 1 year before I started with the company 24 years ago. Our company operates leading marketplace businesses in the RV, power sports, truck and equipment sectors. And while we've achieved strong growth over the last 5 years, as you can see from the chart here, I'm very excited about the current position of the business and ultimately, our future growth opportunities. We are really pleased to see carsales acquire a significant stake in the business earlier this year and are very excited to see the value that they can bring to the business as a strategic shareholder. From a strategic perspective, we're very focused on providing our customers with the best possible experience. And we know that strong financial outcomes will ultimately flow if we achieve this goal. So we're already the clear leaders in our leisure verticals of RV and power sports, and we never take this for granted. We're constantly looking to invest in innovation and awareness to grow our influence in these verticals. Our commercial verticals are more contested, however. In trucks, our commercial truck trader site is a fast-growing #2 that is steadily making inroads into the lead of the incumbent #1 given our superior digital experience. So one of our goals over the next 12 months is to aggressively pursue the #1 position in the truck market. A key driver of getting to #1 will be continuing to enhance the ability for buyers to search and find different categories of vehicles. And reaching #1 in this huge market will provide a very strong runway for future growth. And we continue to deploy new products and services into market for consumers, dealers and manufacturers, which supports continued yield growth. One example of this is lead enrichment where we provide dealers with insights on consumer shopping behavior with every lead so that they can quickly close a sale. We also launched new communication tools, including text, chat and video chat to ensure our buyers and sellers can communicate effectively and in the manner that they prefer. And we recently launched our newest marketplace, Boatline, which serves the marine sector, and we're rapidly gaining listings and traffic. The value proposition and return on investment that we provide for our customers has never been stronger given the huge surge in demand and lead volumes we've seen on our sites over the last 18 months. In fact, our traffic is up 35% on pre-COVID levels and our lead volumes are up 114%. And the future of the business is about ultimately creating end-to-end online experience that will further enhance our position in the markets that we operate on. We've made excellent progress in this area, including launching buyer requested inspections, financing lead generation and vehicle valuations, and we'll continue to introduce additional elements of our digital retailing platform over the next year and beyond. The verticals we operate in have large and growing addressable markets with over $1.7 billion digital available across our verticals. And while our markets have been growing steadily over many years, COVID has accelerated this growth, particularly in our leisure verticals. So as consumers have been unable to travel internationally, they've been looking towards domestic leisure pursuits, which has driven this huge demand for RVs and motor bikes. RV sales have grown 21%, and motorcycle sales have grown 10% on pre-COVID levels. And this is important because this has enabled RV and motorcycle markets to attract new consumers into these lifestyles. And the evidence is really indicating that these new entrants will remain in these verticals. And that will ultimately provide sustained long-term upside in these industries. And the role of digital players like Trader Interactive and the influence that we're having on dealer marketing budgets continues to increase. The industries we operate in have significantly trailed the automotive industry in terms of digital sophistication, and that really provides ongoing upside as more spend continues to move towards digital. So as dealers continue to shift more of their spend to digital channels, our TAM is expected to increase. And we've built strategies for each vertical to take advantage of this opportunity to gain our fair share of that growth. Consistent with a number of industries around the world, a combination of strong demand and supply chain constraints have put pressure on inventory levels for both manufacturers and dealers. There are positive signs that some of the bottlenecks in the RV industry supply chain are somewhat being alleviated with OEM and listed dealer groups predicting that inventory could normalize really towards the back end of 2022. The motorbike and truck industries, however, are still facing significant supply chain challenges, and it may take a little longer for the conditions to improve in those markets. Despite these challenges, the business has continued to trade solidly from a revenue perspective. But nevertheless, we see significant positive upside for the business as inventory levels do improve over 2022 and beyond. This healthier inventory environment will really manifest an upside in different ways. It's going to make it easier to add new customers, we will reduce the churn of existing customers due to low inventory. It will support higher premium product penetration and yield uplifts. And finally, it will result in more advertising spend for manufacturers. And the last slide is really all about our partnership and how we, carsales and TI, are working together. So it would probably be a great time to bring Paul back in.

Thanks, Lori. We're really excited about working with you and the Trader Interactive management team. Our interactions so far have been fantastic, and I've really enjoyed them. As many of our investors would know, we've got a great track record of delivering growth even in environments where we've been a minority shareholder in Webmotors and Encar. We think there's a lot of value we can add to the business over the short and long term. Whilst it's still early days from an ownership perspective, Lori, where do you and the team see the value carsales can add to the business?

Yes. Thanks, Paul. And as you say, it is still early days, but we do see a lot of synergies between the businesses. And I want to start by echoing and agreeing with what you commented on in terms of the great interactions we've had. We've enjoyed them equally and have been excited to work with you and the team. It's been great to have carsales onboard as a strategic shareholder, and we do think there are great opportunities for TI and carsales to work closely together. We've spent quite a lot of time with different people across the carsales business to explore what services, products and platforms we may be able to leverage into the TI business. And as you can see from the items on this slide, there are plenty of synergy opportunities that we're excited about. And while they may not all be delivered immediately, there is plenty of upside from deploying these into the TI business over time.

Thank you, Lori. That's fantastic. And we're really enjoying the dynamic between the 2 teams, and thanks for a very informative session today. I know our investors will -- have got a lot out of hearing from you. Also for our investors, Lori will be joining the Q&A session at the end of the presentations to answer any questions people might have on the Trader Interactive business. It's now time to hear from SB Kim, the CEO of our Encar business, about some of the exciting opportunities we have in that business. Over to you, SB.

Thank you for introducing me, Paul. Encar has been a story of successful adaptation and growth since being founded by SK in 2000. Like all other start-up or growth businesses, we have had our challenges such as the separation of the physical dealership from a digital marketplace business and the evolution of vehicle trading environment and development of digital economy, which has helped shape the direction of the company over time. Where we find ourselves today is that Encar is transforming itself from a classified advertising marketplace largely for dealers toward a one-stop vehicle trading platform for all people. For example, when carsales first invested and I joined to Encar 7 years ago, more than 80% of our revenue was coming from very simple classified ad for dealers only. But now almost more than 60% of revenue comes from various value-added services such as Guarantee, Encar Home and Dealer Direct, which make us become more deeply involved in people's transaction experiences for both private and dealers. As a result, Encar has been evolving toward the one-stop digital go-to solution for anyone who want to sell the car and buy the car by providing services that offers unrivaled trust, convenience and value to our customers and consumers. For example, Guarantee and Encar Home leverages off the trusted Encar brand to deliver peace of mind and extreme convenience to individual buyers but on the other hand, while providing an opportunity for extra margin and faster capital utilization for dealers. Dealer Direct brings a transparent, quick competitive price to individual private sellers, at the same time providing an extremely easy and fair, transparent opportunity for dealers to acquire preowned vehicles. It will be very powerful once we are able to connect these value-added services into our seamless transaction. We have put together a short video. Given many people in our investor community haven't been to South Korea, we thought it would be a good context to visualize the dealership structure here in Korea and role of Encar played. I will play the video now, which will go through a couple of minutes, and then I will provide some contextual information on the video after it is finished. [Presentation]

As you can see, the dealership structure in South Korea is quite unique and very different to the dealership structure than in Australia or other Western markets, as explained by Paul before. In the first part of the video, we show the traditional old-style dealership complexes in Korea, which are very old, larger-scaled outdoor backyard parking lots. In these areas, there are a large number of subscale dealers with very small amount of inventories. They have mainly undertake their businesses by serving customers that physically visit the complexes. Therefore, their services and customer experiences tend to be less sophisticated and professional. In the second part of the video, you see a more modern style, newly developed dealership complexes. They are much closer to gigantic shopping mall, in large indoor parking display space with the assortment of businesses or services located nearby including inspections and refurbishment. This provides one-stop business support for dealers. Often, these complexes are developed by large property developers or physical vehicle-related industrial players. They aim to provide convenience and a better customer experience for customers and economy of scale, professional penetration and convenience access to important services to dealers. Encar, as you see, is the key online intermediary that has become a foundational player in this ecosystem of these newly complexes around the country. Our average range from, number one, building our branches and inspection facilities near complexes; and secondly, become an online partner for key stakeholders such as complex owners, dealers and customers that support their digital transformation journey. As time goes by, old-style complexes are being replaced by the more modern complexes. This supports the continued growth in our branch network given these new complexes often want to include Encar's branch as a selling point for attracting dealers to the complexes. Guarantee is our flagship product, where dealers' vehicles are inspected, photographed and located onto the Encar's web page within our branches. With 5x the yield of our simply listing product, it has been driving our recent revenue growth, with strong double-digit growth that will continue as we maintain the role of our new branches and increase the utilization of existing branches. More importantly, Guarantee is a strategic foundation, which enable Encar to begin its journey to become a genuine vehicle trading platform because it provides us with a detailed, verified, real-time, proprietary information on the vehicle. And second, these proprietary information is a source of Encar's competitive advantage by providing customers with a reliable, trustworthy digital vehicle trading experiences. Encar Home is in Encar's solution to take the first step to explore the possibility to become a genuine vehicle trading platform with 100% online transaction experience beyond classified advertisement. It enables customers to compete his/her purchasing through 100% online experience without any off-line experience with the dealers such as separate visit or phone calls with dealers. And it will also provide us with the transaction fee with more than 10x of a yield of a typical classified ads, along with access to additional cross-sales opportunities with adjacent products such as finance, warranty and insurance. We are continuously refine the processes supporting the Encar product to sharpen its value proposition and ensure the optimal balance in interest and risk among each and all stakeholders in transaction, such as individual buyers, dealers and intermediaries such as Encar. However, given it is a very early stage, the [ sign ] for this product is promising, and we will see it as a significant revenue for growth as the market continue to embrace online purchases. Dealer Direct is our solution to penetrate an emerging C2B market that has been recently shifting from conventional trading to online auction. The C2B market is financially important as an unexplored market with faster growth, but it is also strategically critical given it holds an upstream portion of increasing competition in B2C and an entire vehicle trading landscape. Encar is growing its position strongly in this market with smart marketing investment paired up with our strong existing audience and competencies. As a result, during the last 1 year, Encar has grown much faster growth than any other competitor despite a relatively smaller marketing spend than any other competitors in the market. We expect this market to keep growing strongly over the coming year; and also, we will continue to invest this area to drive our market share. Lastly, I just would like to add -- I mean, I want to underline that environment that Encar face every day, which may not be as simple as explained during the last few minutes and Encar's future may not be as beautiful as described. But I'm genuinely proud of Encar and have a faith with our future because -- not because Encar is perfect but because Encar is with warmhearted, hard-working people, and we learn every day to evolve to adapt ourselves in the new environment. So sometimes we make mistakes. Sometimes we're behind. Sometimes we are ahead, but we have a full confidence that we will continue to improve and thrive in the future. Going forward, I will hand over to the -- Kane Hocking to talk about the sustainability. Thank you.

Thanks very much, SB. Good morning, everyone. My name is Kane Hocking, and I'm the Head of Investor Relations at carsales. In this next session, we're going to explore how carsales is making progress on ESG. Joining me today in that discussion will be 3 members of our executive team: Nicole Birman, our General Counsel and Company Secretary; Jo Allan, our Chief People Officer; and Jason Blackman, our Chief Information Officer. Welcome to you all. Nikki, I might start with a question for you. What's carsales' approach to ESG? And how has that evolved over recent years?

Thanks, Kane. It's important to start by saying that carsales has always been committed to being a sustainable and responsible company. We foster a culture of compliance, and our strong ethics and values are really core to who we are. Our ESG reporting journey started a few years ago when one of our shareholders came to us and said they knew we were doing a lot, particularly in the governance and social space, but we weren't publicizing that to our stakeholders. Since then, we've significantly increased our investment and focus on sharing our sustainability journey. Recently, the environmental aspects of all companies' operations have garnered a lot more attention, and carsales has been delving into that area as well. The way we approach sustainability at carsales is by engaging with our stakeholders to find out what is of most importance to them. That includes our customers, our shareholders, suppliers and our employees. We use their feedback and along with our own internal goals, we determine the areas we're going to focus on. That's led to the 6 pillars to sustainability we've featured in our recent sustainability report: our people, customers, community, innovation, governance and environment.

Thanks for that summary, Nikki. It would also be good to understand some of our key recent achievements around sustainability and any key goals we have over the next year or so.

Sure. Well, from a reporting perspective, 1 of our key achievements this year was to report against 2 major global sustainability standards, GRI and SASB. This adds a significant degree of regard to our reporting and enables our stakeholders to more easily assess our progress and performance against other companies. We're also proud of our supplier code of conduct, which sets the standards we expect our suppliers to adhere to. And it covers topics like respect for the environment, employee safety, promotion of human rights and abolishing modern slavery. This year, we've also announced some of our sustainability goals for 2023, which include our commitment to becoming carbon neutral in our Australian operations and goals to increase gender diversity, both of which Jo can talk to a bit more. And finally, MSCI, which is a major global ESG rating supplier, assessed carsales ESG risk management in July this year as a AA rating, up from A last year. And AA is the second highest rating out of the 7 MSCI ratings. And with that, carsales has now improved by 4 ratings since June 2018.

Thanks, Nikki. That's a really good summary. Jo, it might be a good time to bring you into the conversation. From an employee point of view, how important is our approach to sustainability and having a strong social purpose?

Yes. Thanks, Kane. Well, whilst having a strong social purpose is the right thing to do for any company, it's becoming increasingly important that people feel connected to their company's social purpose and be proud of what they do, and we are certainly no different. As a business, we've always had a strong social purpose. This was demonstrated by how we managed through COVID. Every decision we made was based on protecting our people, supporting our customers and safeguarding the company. Our people knew this is how we're making our decisions, and this is how we were going to lead. And over 92% felt confident in the way that we responded through the pandemic as a result. We also provided circa $40 million to our dealers in order to support them during the height of COVID lockdowns in 2020 when their retail stores were closed. Whilst there are many reasons why this was the right thing to do, the feedback we received from our people was extremely positive and felt a sense of pride about the way we helped our customers during their most difficult time, especially given we were going through our own challenges as a company. We continue to invest more time and money into sustainability, dialing up our focus on climate change and continuing to expand our work in the community. Our sustainability focus is so important at carsales and even more important given the strength of competition in our talent market as well.

Thanks, Jo. That's a really good insight. Nikki mentioned previously that we're increasingly focused on environment and sustainability. It would be good to hear some of carsales' efforts in this area.

Yes, it's incredibly important focus area for us, our people and for all of our stakeholders. We've shared that we're currently in the process of attaining Climate Active certification previously. So our goal really is to be carbon neutral in all of our Australian operations by the end of FY '22. Working towards achieving these certifications is a really clear message that we're serious about addressing climate change. And whilst this is a significant undertaking, we are well underway in establishing our baseline emissions, setting a strategy to reduce those emissions and planning for purchasing offsets.

Thanks for that, Jo. And just one last question on -- for you about diversity. How important is that at carsales?

Yes. Look, diversity is a key focus area and has been for many, many years. The technology and automotive industries have a much higher participation rate of males, so achieving gender diversity is a key challenge and priority for us at all levels of our organization. We're focused on trying to lift our gender balance, and we're proud that we achieved 40% female representation of the senior leadership team level this year. But we have lots more to do. We have clear strategies in how we can improve our balance, including hiring practices, our approach to promotions and flexible work options. But we also have a really strong focus on increasing the pipeline of tech talent more broadly in the community through primary, secondary school and university engagements, partnerships and sponsorships. An example of these are our Swinburne Uni scholarships, which is designed to support females to study tech or our Go Girl, Go For IT partnerships, and our commitment and contribution to the incredible CS in Schools program. We also have a broader focus on our gender diversity strategy and those of belonging, all of our people, no matter what their background is, to feel that they belong at carsales. 87% of our people say they're proud to work for us. With this, over 90% of our people feel that their leader supports the quality and provides flexibility to manage work and other commitments. But we always have a lot more to do, and we know we do. We know, especially in this increasingly fragmented post-COVID world, that diversity and belonging is going to be even more important than it's ever been before.

Thanks very much for that, Jo. That was really interesting. Now moving on to you, Jason. One of the key things we've talked about from a sustainability perspective is trust. How, as an organization, do we ensure we protect our customer and consumer data?

Thanks very much, Kane. First and foremost, as a digital technology organization that generates and stores a huge amount of customer data, we take data security very seriously and see it as one of our most material business risks. We match this risk though with significant investment in both internal people working on protecting our data, but we also engage third-party experts to ensure we are staying ahead of the curve. The COVID pandemic and the changes to how we work has only increased the risk of incursion of our data, so we are more alert than ever.

Thanks, Jason. And what are some of the techniques and strategies we use to maintain the security of those systems?

Whilst we don't disclose our specific security defenses and techniques, but some of the broad approaches we use are continuous penetration testing, both internally and externally, using automated and nonautomated techniques and importantly, external experts; using our own proprietary systems developed in-house, along with external solutions to avoid attacks; using a defense in-depth strategy, which means that data is stored behind multiple layers of defense; and finally, conforming to internationally recognized frameworks, such as the NIST cybersecurity framework. And Kane, I think it's also worth mentioning that whilst everything I've talked about so far is about data security, which focuses on protection against external attack through systems and software, we are equally focused on data privacy which means that we ensure we correctly handle personal information provided to us by our customers. We have a strict data governance framework, including permissions, handling, management, communication, security, compliance and, importantly, monitoring.

Thanks, Jason. That's really good insight. And maybe one final question for you before we finish up, which is particularly your area. How important is innovation to carsales? And how do we continue to foster a culture of innovation?

Thanks, Kane. At carsales, we are proud of our history as one of the original innovators and disruptors in the technology space. Given we disrupted incumbent business models, we have a healthy paranoia about ensuring we are not disrupted ourselves. And this drives a culture of innovation and imagination in the business. Given the amount of change happening in the automotive industry around EVs, the agency model and digital retailing, we are committed to remaining at the forefront of innovation. Innovation manifests itself here in the business in different ways. We look for day-to-day enhancements to existing systems and operations to improve our customer experience. We seek out and develop new products and services. We capture a huge amount of feedback from our customers and feed it back to our technology and product teams to ensure we are meeting our customers' requirements. We use hackathons to bring people together from across the company so that they can collaborate to improve existing product, develop new ideas or create something to support teams. We are also well connected to other automotive and digital organizations across the world and make sure we are across all the innovations happening in our market.

Thanks for that, Jason, a really good response and really interesting. Thanks also to Jo and Nikki as well for a great discussion. I'm now going to hand over to Ajay Bhatia, who's our Managing Director of Australia, and he'll talk more about our domestic. Thanks. Ajay?

Thanks very much, Kane, and good morning, everyone. It's a pleasure to be with you today. We're going to spend the next 30 minutes focusing on some of the key opportunities in our domestic business. And joining me today for the discussion is Mark Cripsey, our Chief Product and Data Officer. Welcome, Mark.

Good morning, Ajay. Good morning, everyone.

Good morning, Mark. One thing we never get complacent about is our position as the leading automotive marketplace here in Australia. The start of the pandemic, we acted decisively to protect our people, customers and the company. By doing this, we've emerged as a much stronger business, which is reflected in our strengthening market position. But not just that. It's also reflected in the pleasing financial performance of our Aussie business, something that I'll talk to a little bit later today. All of the investments that we've been making recently in technology, in product, in marketing are paying dividends. The number of people using carsales is at record levels; and our competitive position, frankly, has never been better. Now moving to the next slide, I want to talk about the multiple growth drivers that are available to us. The key takeaway from this slide is simply the breadth of growth opportunities that we have in our domestic business. At carsales, I've been here 13 years, and there's never been any shortage of good ideas. But we've identified these 5 items as our biggest focus areas from a tech, from a product and from a general market investment perspective. While many would say that our customer penetration of the dealer market is relatively mature, we also hold a very strong position in the private market. There is significant scope for us to increase yield, both in private as well as dealer through many of these products and services on the screen. Moving to the next slide around the digital ads segment. To me, it's really pleasing to see the positive momentum that we're generating in our Australian business, in the various segments of our domestic business. It's perhaps the first time in my many year history here at carsales that I've seen all of our key lines grow at the same time. Dealer, private, as well as media, they're all growing nicely. And we're confident that we can continue this trend, particularly given an abundance of growth opportunities at our disposal in the Aussie business. From a dealer perspective, we -- you guys have seen this, and we've delivered consistent growth over a number of years through a combination of what we usually tell you about, volume, yield, product penetration and particularly promote or in other words, depth. I would, however, also like to comment around dealer used car transaction volume since the pandemic started. While used car prices have been really strong, dealer used transaction volumes haven't materially grown faster than recent history. Media, in particular, has been one of those challenging areas for our business over the past many, many years, but the good news is that our strategy is working. The team is working and the recent results in this area have been very positive. I already believe that we're past the bottom from a revenue perspective in this area, and our strategy positions us really well to grow revenue nicely over the next few years, particularly as the ad market improves. Now is perhaps a good time for me to hand over to Mark to take you through some of the key products that will drive this growth in our Aussie business. Over to you, Mark.

Thanks very much, Ajay, and good morning again, everyone. Cam talked earlier today about some of the trends in the auto industry. COVID, no doubt, has changed consumer purchasing behavior. And like many retail experiences, the digitization of used car buying is also evolving as consumer expectations change. We saw this in the early stages of a pandemic in a relatively organic way with dealers showcasing their remote selling capabilities through dealer badges on our site indicating the fact they can show the cars through video or home delivery, that type of stuff. This trend has developed pretty significantly and the increased appetite for digitization really positions us well as we look to partner with retailers to bring more of a car buying journey online. As you can see on the next slide, we believe that this trend for digitization has increased, and it's accelerated a number of really, really exciting growth opportunities for carsales. The 3 biggest, which I'll talk about today, are digital retailing, digital trade-ins and a continued growth in online finance penetration. As you can see from this slide, each area has a significant addressable market opportunity, and carsales is really well positioned to be a key player in all of its markets and have strong market share. We will now talk through how we are progressing on the execution across each of these 3 markets, starting with digital retailing. The trend towards digital retailing continues to be strong. As evidenced, as you know, around the world through the continued strength in digital used cars retailers such as Carvana, Cazoo, Autohero and Vroom. Now we've designed what we call our SELECT product to make sure that our carsales dealers have an online platform to compete against the emergence of these pure-play digital used car retailers. A number of these retailers will, over time, come to Australia. And we take our role to prepare the industry for that arrival very, very, very seriously. Now we've got a distinct competitive advantage against online dealers in that we already have the biggest car buying audience in the country and the greatest choice of inventory. So it positions us as well to support our current dealer base, facilitating the digital car buying experience that people are beginning to look for. Now it's important to look at kind of how ready are customers for buying cars online, and we're obviously spending quite a lot of time and effort researching this. And we're seeing already that 37% of consumers are willing to purchase a used car online, and this is a growing amount of consumers as the industry matures. Now the interesting thing, though, is whilst there's quite a lot of people who are willing to do this, the number of percentage of transactions, which are currently being completed today, is still relatively small globally. But for our research, we know the key factors that will drive an increased adoption of online purchasing such as confidence that there are no hidden issues. How can I get the confidence that I, in the old days, would have got from coming to visit the car when I can actually touch and feel the car. Our customers are also telling us they want to know they're getting a fair price. It needs to be competitive or guaranteed. It doesn't necessarily need to be the cheapest deal, but they need to know they're getting a fair price. And of course, when buying cars online, it does ultimately need to be a means to form -- some form of test drive or drive before you buy a truck, before you commit or some form of guarantee, coupled with home delivery. As previously mentioned, we used this research to develop a new digital used car offering called carsales SELECT, which we launched on carsales a few months ago. We know that this offering will evolve over time, but the strategy is about bringing many of our existing digital product capabilities together and over time developing the seamless online car buying experience, which will be a compelling offering for our dealers to put their buyers under the promise of carsales SELECT. Now the opportunity for the consumer here is a better and more confident car buying experience. The opportunity for the dealer is to continue to become more efficient by having more of the car buying journey online. And the really exciting opportunity for carsales is to transition over time from being an advertising platform to an advertising and transactional platform. This opportunity, we think, is meaningful for our customers and ourselves over the long term, and we're starting from a strong position of being the largest and most trusted engaged automotive marketplace in the country. In terms of progress of the product, there are some promising early signs. We've gone over 20 dealers signed up and advertised over 100 cars since launch. And of course, as we'd expect with a minimum viable product, there are some [ tepid ] operational issues for dealers to load their stock and to identify imperfections of the new features that we're asking dealers to leverage. The overwhelming response from dealers that we have targeted has been positive. Now I mentioned a few numbers a second ago. Now we're nowhere near where we want to be in terms of scale in the medium to long term, but we are confident we're building a compelling value proposition for dealers and for customers. And yes, proof is in the pudding in terms of time to sell. So cars we're currently listing in SELECT cars right now are selling significantly faster than non-SELECT cars. So it shows there's appetite there for customers. We just need to work to continue to evolve product and help to build the market so that more and more people take the final step and reserve and ultimately buy online. Now over the next few months, our focus will be twofold: firstly, scaling the number of dealers and the amount of inventory on the site in order to obtain a critical mass to maximize our learnings and to build momentum; the second focus will be to continue to enrich our products and we've got a focused team developing [ out a ] product right now, initially focused on integrating trade-in and finance into that integrated online experience. And I want to talk a bit about Instant Offer. In a similar vein to the rise of digital selling of cars, there's been a strong shift in preference for customers who want to conveniently sell their car for cash in an online and transparent way. And this is where our market-leading Instant Offer product fits in and where it's benefiting from a shift in behavior, as you can see from a growth in quarterly transaction volumes. Now whilst Instant Offer was partially suspended during the most recent lockdowns, activity is now rebounding nicely. But we still have a lot of opportunity to continue to grow this product. In terms of executing on our growth strategy, we're looking at optimizing each stage of a selling funnel for a consumer. Firstly, we need to attract as many people as possible to the top of Instant Offer funnel. Over the last 2 years, we are primarily focused on using our existing private seller audience to advertise our Instant Offer product. And whilst this is a really large and attractive pool of potential sellers, these sellers are often very price conscious as they're looking to get a retail price of their used car. Alternatively, whereas approximately 600,000 cars a year that have physically traded in each year, these consumers are less price sensitive, but they're looking for a convenient and transparent way to sell their vehicle. So in the second half of this year, we're going to more actively pursue this market for increasing brand awareness of Instant Offer to a broader audience, but those people who are already going through the carsales private sale funnel. We believe there's a really huge opportunity to bring more people through the funnel of this approach. In the second stage of the funnel, we need to increase the conversion from quote to the consumer accepting the quote. The key driver at this stage in the process will be optimized pricing to improve conversion, whilst being very conscious that we need to keep the equilibrium and the balance right between consumer and dealer. We're currently in the process of a detailed upgrade to our proprietary pricing engine, which will improve the accuracy of our pricing. As you can imagine, getting the consumer to accept the quote is extremely sensitive to relatively small changes in price as there is a trade-off between convenience of an instant sale and higher price you can potentially receive for selling your car privately. We expect this new pricing engine to be in market before the end of the financial year. Finally, we're continuing to optimize the last stage of the funnel where the consumer goes to drop off a car at the dealer and get paid. Most importantly, we need to ensure that the dealers are not [ cheating consumers unnecessarily ] on price, and this impacts conversion, sentiment and reputation of a brand. Adding more dealers to the IO program and managing their conversion rates will drive improvements in this area. So in summary, whilst we've seen excellent growth in IO over the last few years, we're also really excited about the significant untapped potential from an audience and a conversion perspective. Finally, I want to talk about dealer finance. Our strategy around dealer finance to date has been to integrate finance into dealer listings, which should increase the rate of finance penetration for dealers on used cars. Finance penetration on used cars is pretty low at around 30%, so increasing the awareness of consumers at the top of the funnel has the potential to materially improve conversion. Now many of you who have been following carsales for a while would have heard us talk about dealer finance for some time. It has taken us a while to build scale in a number of listings that have finance integrated and also quality of a product offering. Now there's still a huge amount to do, but we're starting to see some promising signs from both a listing volume perspective as well as commercialization opportunities. As we increase the number of cars that have financial listings, other dealers are more inclined to want to join the program for fear of missing out or having a less attractive listing. We now have more than 10,000 dealer cars with finance listings with opportunity to continue scaling from here, and we continue to bring our new finance partners over time. Moreover and quite recently, we're excited to launch a more integrated pre-approval product with one of our partners, Driva. All of these things are driving improved commercial outcomes. And whilst it won't be a material contributor to dealer revenue this year, the run rate is strong, and we see opportunity for dealer finance to be a strong growth driver in FY '23. I'll now hand back to Ajay to talk about dynamic pricing. Ajay?

Thanks, Mark. It's really exciting to hear about all of those 3 opportunities that you've described, be it Instant Offer over the short to medium term, be it dealer finance over the medium term or be it carsales SELECT over the medium to long term. It just shows the depth of opportunities that are available to us in the Australian business. But it doesn't end there. As you said, dynamic pricing has been a really interesting proposition for us over the last many years. Perhaps over the last 5 years, we've been evolving our private pricing strategy. 5 years ago, we used to charge $68 to sell a car, and that was a fixed price model. We've moved quite away from that and what -- to what we call more market-based pricing or some people call it tiered pricing model, which has given us really steady and good growth in yield. I call this internally Phase 1 of dynamic pricing. Phase 2 of this strategy, we can continue to evolve our capability even further based on factors such as location, micro bracket pricing and demand for particular cars. I see dynamic pricing as an opportunity not only to continue to build yield, but I also think there is a benefit to volume we can potentially get under certain criteria. We've started pricing based on location already, which has had good results both from a volume and yield perspective. In fact, our current -- in our current iteration, we reduced price in Western Australia where the market is a little bit more competitive for us; while we increased prices in the Eastern Seaboard, where the market leadership position for us is much, much stronger, so effectively matching pricing to demand and supply. The result has been an overall increase in both volume and yield, which is exactly what we were hoping for. In the next iteration of this particular product, we will start to think about pricing based on the percentage of the cars or the inventory's value rather than the broad pricing bracket. With the broad pricing bracket, not only does it limit our ability to execute a clean user interface, but it also causes bracket creep much the same as what happens with our tax brackets. This next iteration, for us, is being called algorithmic pricing, and I can't wait for it to happen. But there is a little bit of platform work that is needed for us to make this happen. And we expect that, that will start to see benefits for us in the second half of the current financial year. And I'm very optimistic about the potential upside from all of these changes. Now moving to the next slide, which is on media and membership, but particularly talking from a business perspective around our media business. While this area has been somewhat challenging for us over the past few years, it was very pleasing to see that with a renewed focus from the team, we've grown the media business in the second half of FY '21. And I'm confident that this growth can continue into FY '22. In fact, the current results absolutely indicate that this growth is continuing. The first limb of our strategy has been continued diversification into nonautomotive advertising categories. So some of you might have seen, for example, Commwealth Bank advertising for home loans on our home page. And they want to target a particular cohort of people with a certain income, with a certain portfolio. And we can help Commwealth Bank make that targeting happen. As we go more and more into the nonautomotive advertising categories, what we're finding is we're building a more resilient business to the volatility that exists in the automotive marketing segment. We've achieved this diversification by 2 things: one, making it easier for our nonautomotive customers to purchase the nonpremium inventory programmatically as well as selling the inventory directly to these customers where it makes sense, for example, with CBA. The next limb -- 2 limbs of this strategy are all about increasing our relevance of audience for our clients and the quality of insights for our advertisers by implementing what is called a customer data platform or a CDP. This strategy, combined with a focus on growing engaged members on carsales, will help us grow even in a cookieless world. The final component of our media strategy is to enhance the way our advertisers interact with carsales through the implementation of a self-service buying platform. I've spoken to you guys over a number of years about how we've done that with depth through self-service tools inside our dealer AutoGate program. And that has met with a lot of success for us. So I have a lot of hope that the same will happen with the media business. This is also increasingly the more that advertisers like to purchase media through as it provides a frictionless, transparent and a very accountable way to buy media. Accountability is something that's in the DNA of carsales. It is something that we do for our dealer customers, for our private customers, and they're very proud that we will now be able to do that equally competitively for our media customers as well. Now to the next slide, which focuses on tires. In Q1 of this year, we acquired 100% of an online tire wholesaler called TyreConnect. This is a pretty important progression in our tire strategy to combine the leaders in both the B2C and the B2B tire markets. And this particular acquisition helps us build scale while pretty much doubling our current volume. But most importantly, what it's doing is it's driving significant synergies in terms of supply, particularly through improved purchasing deals with many of our larger OEMs. In simple terms, what it means on average, we will be buying tires more cheaply, accessing better volume rebate agreements and putting more volume through these rebate agreements. This transaction also positions us well from a competitive perspective because we can now, from a consumer pricing perspective, be more competitive and thus build more scale and therefore, get more volume rebates in the longer term. And as shown on this slide, we think, from a financial standpoint, we now have a clear path there to both strong revenue growth. But not just that. Also, we're now well positioned to deliver decent and sustainable profitability from our tires business. And that's it from me today, guys. And I would now like to hand it over to Bill to take you through the financial performance. Over to you, Bill. Thank you.

Thanks very much, Ajay. And good morning, everyone. Today, I'm going to cover a few topics in my update, including our track record of financial performance, our capital management approach. I'm going to provide some information on segment reporting changes. And finally, I'm going to reiterate our FY '22 outlook statement. As you can see from the next slide, carsales has a long track record of delivering excellent financial performance. These results are testament to the ongoing strength of both our domestic and International businesses. as well as the long-term investments we have made in our people, processes and technology. Our business has proven to be resilient across multiple economic cycles and has been adaptable to meet changing market conditions and new competitive dynamics. And look, as you've heard today, we are really confident in our ability to continue delivering this growth through all the opportunities we have in front of us. One other thing worth noting on this slide is our presentation of look-through financial performance. Many of our investors will be familiar with the concept of look-through. And for those who are not, it essentially provides an economic ownership view of revenue and EBITDA rather than the accounting concepts of consolidation. And given the size of our minority investment in Trader Interactive, look-through revenue and EBITDA are the most meaningful metrics by which to assess our performance. And they also provide the best comparisons from a relative valuation perspective when comparing us to our peers. And on to capital management. Our focus here is on generating the best long-term return for our shareholders. And we achieved this through both a balance of investment in new growth opportunities and acquisitions whilst also continuing to provide good dividends to our shareholders. The carsales business model generates exceptional cash flows, and this is underpinned by the inherent operating leverage in our model, a strong working capital profile and also the lighter capital investment requirements of our business compared to other industries. We've got a very robust balance sheet, and this provides ongoing flexibility for us to pursue new opportunities in the future. Now turning to the topic of restating our financial statements. With the rationale behind changing our reporting segments was to better align our reporting to our structure and to separate our stand-alone investments in tires, RedBook Inspect and Placie. This makes sense as these investments are largely independent businesses that are much lower margin. Retaining these business within our current segment view could potentially misrepresent the underlying performance of our higher-margin core marketplace businesses. We have also consolidated our investments in the U.S., Brazil, Chile and Mexico into one segment called the Americas. Although from an EBITDA perspective, you will not see the U.S. and Brazil as these are accounted for as equity investments. And on to the next slide. To enable prior period comparison, this slide shows the historical financial performance under the new segment view. There is additional detail in the appendix, and we've also provided an Excel version on the investor website. And then on to the final slide. Look, this slide is here just to reiterate the guidance statement we provided with the AGM around our FY '22 financial performance. That now concludes the financial update, and so I'll hand back to Cam. Thank you.

So look, just before we move into Q&A, I thought I'd summarize what I hope you've taken out of the presentation you've just seen this morning. So I'm hoping that you've got a clear understanding of the size and scale and the direction of some of the opportunities that we're executing on today. I hope you're impressed as we are with the Trader Interactive business and then the clearer picture of the nonautomated marketplaces, some of the trends in how we position ourselves for future growth here. I hope you've connected with more -- with the South Korean business that we have and the potential that we see in Encar. ESG, as I mentioned earlier, is very important to us as a business. It's part of our business culture. It's one of our foundational building blocks. And as a company, I hope you've got a clear understanding for that as well. Our Australian business today are very strong, but we have many great opportunities ahead of us with these and really to take carsales to a whole new level over time that we're all very excited about. And then finally, I hope you've enjoyed hearing from the broader carsales team. So without further ado, maybe what we'll do now is we'll move into opening up for Q&A.

[Operator Instructions] Your first question comes from Entcho Raykovski from Credit Suisse.

I've got 3 questions, 1 on TI and 2 on Korea. So maybe I'll ask them each in turn. So in TI, RVs and powersports, I'm just interested in whether more recently you've seen volume growth which is approaching the market or whether we should be thinking about volumes being most closely linked to inventory levels. I mean it sounds from Lori's comments, like inventories are most relevant. But I guess if that's the case, is there a reason why you're not capturing more of the volume growth in the market? And then as part of that answer, any sort of outlook for volumes at TI into calendar year '22 would be helpful. I might hold off on the other questions post the answer to this one.

Yes. You happy to pick that one up, Lori?

Yes, absolutely. So I think in inventory, it is a little bit different in each vertical. We've started to see inventory start to stabilize more in RV, and that is just starting to get above prior year levels. It's taking a little bit longer on the powersports side. So we're watching that very closely. But really, what we're thinking, we're really expecting some of the supply chain issues that are causing the inventory challenges to start to ease into the second half of next calendar year. So that's really what we're looking at right now.

Okay. And just to clarify because it sounds like market volumes are quite strong. Is there a reason why you're not capturing more of that growth within the market? Is there -- I mean, are there more sort of direct transactions being done outside of being advertised on site, for example?

So really, the market volumes are happening in the industry, but essentially, they're selling as quickly as a dealer can get a unit, whether it be a trade-in or a new shipment. So that's really why inventory level seems to be flat, but sales are happening very, very quickly. So they're just selling as fast as they come in.

Okay. And just to be clear, are you seeing a whole heap of that volume going through the site? Or is it being done directly?

So really, on our sites, we are lead providers. So we're providing the lead and then the transactions happening within the dealer, but a lot of that inventory, if you look at our inventory levels and the conversion of that consumer into a lead, it's higher than it's ever been. So those conversions are definitely happening through our sites at record levels.

Okay. Got it. And then maybe I'll follow on with my Korea questions. You've given us, on the Guarantee product, some good detail around the ambition. I guess how do you think about the time frame to achieve that ambition? You've sort of indicated $53 million to $75 million revenue from $32 million currently. So what's the sort of time frame to achieve that? And what's the incremental margin that you're thinking about given the need to roll out into new complexes? And given this one is for SB, I might throw my second one on Korea as well. At Encar Home and Dealer Direct, is your expectation that the market opportunity will be split amongst a number of players? And how do you think about a realistic penetration into the opportunity that you've detailed?

SB?

Sure. Regarding the time frame for the Guarantee, to be honest, it will be a little difficult to gauge exactly when will be the time that we'll be able to achieve 50% or 70% penetration of our total listing. But I mean given that during the last few years we have been growing at a 2 digit in Guarantee, I think at least over next few years, we will continue to grow at that level of speed, I believe. I think the critical independent factor to determine how fast we will be achieved is basically how much branch network we will be able to expand over next few years. Of course, if we believe that we have opened our branches from the most attractive complexes or locations, there must be kind of likely diminished marginal utility of adding on new branches. But at the same time, we have been experimenting and innovating different branch channels, branch format so that we can achieve both economics as well as addressing customer needs as well. So I think we will be able to continue to grow at least over the next few years as we have been doing, although we do not know exactly when will be the 50% penetration itself per se. Regarding the home service and Dealer Direct, I think regarding the competition wide, relatively, this domain is new to this industry, particularly given that digital transformation for the vehicle trading market in itself is new. And at the same time, online auction from the off-line trading in itself, also new. So that currently is a bit of a competition to achieve. First mover's advantages is happening among different players. One of the strategies that we would like to leverage in this particular field is, number one, is to do not get disadvantaged from initial investment efforts to educate the customers being a first player to take a headwind because given this market is changing pretty radically and newly, there, a bit of time and energy is required for us to make the customers be educated, be adaptive. I think that being with other competitors, other players in this change will be partially beneficial as well in educating the customers in that domain. But at the same time, given that Encar has had significantly higher traffic in vehicle trading domain, I think the second strategy is to leverage our existing reputation and trust in it as well as traffic so that we can be -- quickly be a frontier player in this change of the industry as well.

Your next question comes from Eric Choi from Barrenjoey.

Very excited to finally get you -- to ask you some TI questions, Lori. I might copy Entcho and ask my 3 questions 1 by 1. The first one for Lori. The market and myself, we're just trying to work out the leverage to your eventual inventory rebound. And I know you've lost some smaller dealers because RVs are selling themselves, and you've seen some dealers sort of spin down the subscription tiers. My question is, if those subscribers came back to pre-COVID levels and at the same tier, how much higher would your revenues be? And I realize it's probably not the 40% inventory loss number. But is it 10%, 20%, 30%, if you could just give us a rough idea?

For Lori.

Yes. So I can say that all of our tiers, specifically on the recreational brands, are tiered by inventory levels. So we, without sharing specific percentages, would say there's significant up gains that we'll be able to get in stages as it starts to come back. We don't have to wait for it to get all the way back. Every tiered level, we're going to be notified when the dealers start to grow their share of their inventory so that we can get that back and over time expect to be able to make up a significant amount of the revenue that would have been lost by decreasing inventory levels. So we're very optimistic about that over the next couple of years as being a key lever for dealers, but we'll probably stay away from percentages right now.

Okay. And could I ask that first question maybe a different way, Lori? If I look at your sort of historic -- last historic number, you guys kind of grew revenues by 3%. I mean have you guys run any sensitivities where that 3% would have been ex that COVID inventory loss?

So the 3% being in terms of -- can you clarify the 3%?

I think CY -- was your last sort of CY '20 versus CY '19 revenue growth number.

Got it. So the -- Yes. Okay. So yes, I think that if we look at the inventory levels, coming back alone, it could be double-digit percentage levels just off of that one lever if that's what you're asking.

Beautiful. That's very helpful. And then the next question, just on trading. We track the inventories on TI websites every week, and they've sort of picked up quite substantially in the September quarter versus the June quarter. So I'm just wondering whether you can comment on whether September trading has improved on that LQA $139 million revenue [ when you LQA ] $80 million EBITDA number that you guys quoted at the result?

Yes. So I'll say we're performing well, and we are on track with the 2021 forecast. Some of what you started to see in September is the ability to start capturing new customers coming on to the platform as well as we launch the new go-to-market strategy. So that's really helping offset some of the other inventory declines, which has been very positive. So we are definitely tracking to our forecast.

Got it. And then a last question, just wrapping it up together maybe for Cam and Will. I guess the market kind of still thinks of carsales as maybe a lower gross stock versus some of the other online classifieds and maybe some of the more conservative estimates have revenues growing at 7% to 9% over the next 5 years. I'm just thinking about Korea, which will grow double digit presumably and then the new digital TAMs, which will be additive to the sort of mid- to high single-digit growth you've done historically. So I guess on that basis, Cam, would you be disappointed if you can't beat that sort of high single-digit revenue CAGR over the next 5 years?

Yes. I mean, Eric, I mean, firstly, I'd say we are a growth company. We see ourselves as a growth company. And I think the second thing I'd say is, I mean, if you look at how we're all awarded as executives, yes, I mean, we're awarded based on achieving double-digit growth at the top end of our variable remuneration. So I mean that's how we set our objectives, and that's what we go after every year.

Your next question comes from Roger Samuel from Jefferies Australia.

I'll stick to 3 questions as well. Firstly on Trader Interactive to start with. Based on our recent channel checks, it sounds like the pay-per-lead model could be quite challenging in that market. Lori, can just maybe comment on if there's any planned transition from a subscription model to a pay-per-lead model?

Lori?

Yes, good question. So we have not committed to implementing the lead model yet. We are reviewing whether it is appropriate in any of our markets. We think there is potential there, but we're really learning that the changes take a lot of consideration, and there's a lot of things we want to consider both on the technology side and on the go to market. So we're really taking our time, and there's nothing imminent at this time in terms of launching that.

Okay. Great. Second question is on carsales SELECT. And I mean pushback sort of got from -- consequently in the financial market is that the customer experience may be quite tricky given that carsales doesn't really control inventory, definitely rely on your dealers to provide the inventory. So yes, just wondering how would you address this concern around the customer experience.

Are you happy to talk to customer experience, Mark?

Yes. Yes, that's something we're very, very conscious of and managing this through our dealer partners. We have extra criteria that our dealer partners need to adhere to for a SELECT car such as highlighting and photography of any imperfections and also certain price guidelines. We've got levers that we use to manage quality. And I guess probably the other thing I'd say is we've got experience of this with Instant Offer as well where the carsales brand is behind Instant Offer, and we rely on partnership by dealers to deliver a great experience. So it's something that we've got track record in.

Okay. Great. The last one is on Korea. So your competitor K Car has IPO-ed, and its share price has done pretty well since the IPO. And I'm just wondering if you can comment on any change in the competitive landscape in Korea. Yes.

SB?

[indiscernible] Yes.

Sure. IPO of K Car itself won't have that much impact on our business or our strategy in the future. Of course, the growth or the working together with K Car is always an opportunity as well as a challenge depending on the context, depending on the business line, depending on the services. But it's a good competitor as well as a good client base. But the IPO itself won't have any impact for us.

Can I just -- before we go to the next question, there's a couple of written ones that have come in. So maybe we'd just do one of the written ones and then move back to the voice questions. So one's come in asking, Lori, please provide some more color on dealer penetration metrics on Slide 24. What are the impediments achieving greater than 50%? And what's the likelihood of converting the main competitor in RVs?

Yes. That's a good question. So if you think about these verticals, they are very fragmented and there is low digital marketing penetration. So there's still plenty of room for growth, and we are best positioned to be able to capture that in each of the verticals. So really, what we've done is develop vertical specific go-to-market strategies that we're launching in 2022 to help grow that market share moving forward to mirror our position in RV in our other verticals in the upcoming years. So that really is a main mission as we head into 2022 right now, and we feel very well positioned to capture it. In terms of the main competitor in RV, I'll say that we are the clear market leader in RV. So we know all of the other players in our market very, very well. We have great relationships with them. And certainly, we can always explore deepening those relationships if and when it makes sense.

There's a few more written ones, so I'll just do a couple more if it's okay. So next one is we understand you've just undertaken a price rise in the Dealer business. Please provide a summary of the price rise impacts on your financial performance. And what's been the reaction from the dealer network? Maybe, Michael, you can answer that one.

Yes, no problem. Thanks, Cam. It was a $4 price increase issue. When we look at that as a weighted percentage, it works out at 4% across our entire Dealer business. It's safe to say dealers never enjoy price increase. We're always pushing to the feedback from the market. But I think, by and large, I understand the value that we bring and, of course, all the support that we provided over the last 2 years. And yes, we're working very closely with our network day by day. Nothing has changed on that front.

Yes. There's another one here now on SELECT. So what's -- how has the dealer response been to SELECT? And are cars selling faster? Maybe they are selling faster, but are they selling at a lower price for a dealer? Maybe, Mark.

Yes. And Michael might want to add to that as well. But we're seeing SELECT cars selling really well, approximately twice as fast as non-SELECT cars. And around 100 cars are being sold through SELECT at the moment. Now just to sort of reiterate, this current phase of SELECT is a learning phase. So we're viewing this as a long-term opportunity, not as something that's material this year. So we've been pleased to see we've got 100 cars on the site at the moment. And those dealers who see kind of where the direction of travel of digital retailer, they're really embracing it. So we've got some really, really positive conversations with them, and we are pleased with the response so far and the rate of growth.

There's more written questions, but maybe if there's another question from the line, operator, you want to prompt.

There are no questioners at this time. [Operator Instructions]

Okay. So there's another written question here just asking about competition. So we understand Adevinta's selling carsGuide and Gumtree and Autotrader. What's the impact on carsales? I don't know if Michael or Ajay?

Yes, I'm happy to answer that, Cameron. Obviously, we've done a few iterations over the years and different owners have been involved. But we always treat any competition with respect; but at the same time, we're heavily focused on our own strategy and -- but certainly, we'll always be watching carefully of any developments.

Yes. There's another one here on tech talent. So what's the -- what impact is on the -- sorry, what impact is a war for talent having on turnover in the technology space? How are you responding how you're responding -- how are you responding to this? And how is it impacting on costs? Jo, do you want to and maybe Jason?

Sure. Thanks, Cam. So from our perspective, we're experiencing significant pressure in attracting and retaining talent, and we're not unique in this challenge. It's impacting the business globally, especially in digital, and increased demand for digital talent and the shrinking supplies as a result of border closures and lack of skilled migrations put salary pressures on all digital businesses. So what we sort of embarked on was very early into sort of COVID recovery, for want of a better word. We started to look at our workforce and set a strategy around attraction, retention and augmentation. So we knew we needed to be competitive to attract talent, double down on keeping the talent we have as well as look for talent in geographical locations that are outside of Australia given the pressures. So whilst those salary pressures remain, our augmentation strategy through additional suppliers of talent help us bridge the Australian supply gap, which will help us grow and manage our cost base. And in the attraction and retention space, we've been working on our -- really working on our EVP leadership benefits as well as we've just launched our autonomy to choose approach, which will go a long way in helping us achieve our traction and retention targets. Jason, I might hand over to you if you want to talk about -- a little bit more about the tech talent augmentation strategy in a bit more detail and how we're looking at that from a turnover perspective.

Sure. Thanks, Jo. So 4 years ago, we set up our Chile tech hub. And because of the time zone, it needed to be -- they need to be autonomous teams working on lines of product themselves. So the augmentation approach sort of started earlier this year and largely took into account the Philippines, which is a far more favorable time zone for operational purposes. We've now extended that through partnering with businesses in India as well. And the augmentation model itself for us is where we have our existing teams, and we look for talent density here locally and obviously, seek the highest of talent locally and then utilize the augmented capacity from partners in other geographical regions in order to expand or scale up and down our teams as and when required.

Thanks, mate. I think that's prompted another question in that same space. So how is remote working impacting your business? How do you remain connected and inclusive in this environment? Maybe another one for you, Jo?

Sure. Thanks, Cam. So I guess we're a digital business, so we moved to working from home in sort of March 2020, which seems a long time ago. We did that sort of seamlessly. Our tech worked. Our ways of working sort of pivoted really quickly. And whilst we've had times where we've gone through different iterations of asking people to come back into the office, and then largely the last 2 years, everyone has been working from home. So what we've learned is that our people can work from anywhere and productivity has been maintained, even accelerated. So our focus has been more around managing mental health and connection and actually encouraging people to switch off. So it's actually, from a productivity perspective, the reverse. So supporting this experience that we've had with hybrid working sort of informed our new autonomy to choose approach, where our people now, moving forward, can sort of nominate what -- where they can do their best work, so either work from the office, hybrid or anywhere, which goes a long way in building to the previous question, building on our EVP attraction, retention goals as well as highlights the success we've seen in sentiment, engagement and productivity as a result of this. So moving forward now, now that we've firmed up those plans, our focus will be on ensuring that any office work is about connection, not collaboration, managing inclusion and belonging no matter where people choose to work from. So we'll achieve that by being prescriptive, deliberate on how we collaborate, communicate and how innovation happens across the business and do things that -- through ways of working updates, working groups and closely monitoring everything that we do through sentiments, surveys and -- thanks, Cam.

Maybe, operator, if there's any more audio questions, maybe we can go to them before you go back to written.

We have a follow-up question from Eric Choi from Barrenjoey.

Sorry, thought I'd have another go since there's no one else on the line. Just on Slide 42, you give some addressable percentage shares for SELECT, Instant Offer, finance sort of in that 15% to 20% range. Just wondering, especially for SELECT and Instant Offer, whether you think you guys can take the bulk of that 15% to 20% or a few of the main competitors like you sort of see like the CARS24, like a Cazoo like entity kind of taking a more material share of that 15% to 20%.

Will?

Thanks, Eric. Look, I think in both digital trading and digital retailing sector, we think we're well placed to get a good share of the market there. I think with dealer finance, we've also identified and defined that market as the commission pool available to online channels for finance. And so again, we wanted to put something meaningful in there that we think that we're going to get a good share of. So I think in all those 3 emerging opportunities, we're well placed to get a good share. That's not to say there's not going to be competition. As you say, there's digital retailers out there, but I think the thing that we will offer that others might struggle is the scale of inventory, the scale of choice. And so that's why we think we're in a good position to get share in those markets.

Awesome. And I also had a follow-up for Lori, this time on the yield. I guess we've had a lot of chats with sort of RV dealers and the like, and that sort of comment has been they probably make like $15,000 to $80,000 of sort of gross margin per RV transaction. It's probably a bit less in powersports. And their sort of comment is the ROI on advertising on your website is quite high given your low cost versus that gross margin. So Lori, I'm just wondering if you can sort of, in layman's terms, kind of help us translate the average cost per ad today. Maybe compare that to where you think we can get to it in the future.

Lori?

Okay. Yes. So we actually measure cost per lead, and we look at the take rate that the dealers have based on those units. And we have significant room. That's something we've definitely spent the last year realizing and spending some time on. So our cost per lead is at record lows right now. So even though there's been steady lifts in both upselling of customers and pricing levers, we continue to -- because we're performing so well and delivering so many leads to the dealers, the cost per lead continues to go down. So we have lots and lots of room to do that as a lever. At the same time, we really do understand that if you're going to use that lever, you need to constantly make sure that you are providing the right value to justify the yield increases. So we continue to do that by improving products, technology and traffic. But we definitely recognize that opportunity. It's something that we'll be working with our shareholders to make sure that we maximize while continuing to drive value to our customers.

And my last question, Lori, just to clarify your answer to one of my other queries. I think you mentioned you were tracking well against your budget. Can I just clarify that your budget would envision growth versus sort of CY '20 and June '21 annualized numbers?

Yes. So the forecast would be through -- actually through December, the way that we look at it. But what I can say is for -- since that time, we have grown month-over-month every single month. So if that helps kind of summarize, we continue to grow from those places.

Your next question comes from Entcho Raykovski from Credit Suisse.

I had a couple of follow-ups on media if I may. The first one is, obviously, you've detailed what you're doing around targeting non-auto advertisers. I guess just trying to work out whether there's any concern that the CPMs for those nonauto advertisers could be significantly lower and whether you're potentially eroding the premium associated with being an auto site and how you deal with that, I guess, how you balance that up with that push towards nonauto. And then secondly, I'm just interested in how reliant you are on cookies at the moment. I guess is there a risk that the move to a cookieless world will ultimately be negative for media revenues? Or do you think you can manage it pretty well? And do you -- I mean is what you're doing essentially defensive? Or does it provide you an opportunity to grow over time?

Ajay, do you want to do that one, mate?

Yes. Thanks, Cam. Entcho, good question. Just the first one on nonautomotive. We've got some very smart people running our media team, and one of the things they've done is really segmented our audience, but not only our audience but also advertisers as well. And they've gone through and looked at who are the premium automotive advertisers and white listed them. And then there is a list, which says these other advertisers are on a gray list where they can advertise with us through programmatic means. So nonautomotive examples of that -- nonautomotive advertisers who normally not spend any money with carsales would now be able to spend money programmatically. So all of that comes incrementally. The white list of the premium advertisers cannot deal with us through that mechanism. So that's sort of -- but even within nonautomotive, there's premium and nonpremium. Nonautomotive is not just the one category. There's the example that I gave in the presentation with someone like CBA still premium, and they deal with us through the normal means and -- but there are other advertisers who come through. For example, maybe the Australian government would advertise with us, for example. And typically, they wouldn't advertise with us during an election, for example, but they can now advertise with us through the programmatic means. Typically, that money would go to Fairfax, et cetera. So that's the strategy around nonautomotive. And in terms of -- just remind me the second question, sorry.

It was around cookies.

Yes. So around cookies, 2 things. One, our revenue that's dependent on cookies is a portion of the media revenue. It's absolutely not the majority. Secondly, we are already planning for that [ role ]. And what you see with our membership strategy, our log-in strategy is, if anything, we'll be in a better position. We're going down the route of what we call a differentiated experience. So consumers who log in will get a much better experience than consumers who don't log in. And that is our strategy around understanding our audience a lot better in a cookieless world. So we've been planning for this for quite a while. This is nothing new to us. I would say it's actually become more offensive rather than defensive. It probably started defensive, but we saw a plethora of opportunities through the process, and it became more offensive.

There's a few written questions that have just landed, so maybe we'll do a few of these quickly. So first one is a TI question for you, Lori. So can you give us a sense of how much revenue in the TI business comes from new versus used? And is there -- is the pricing model the same for new and used?

Yes. So our pricing is around the number of units you have, not around whether it is new and used. So it does vary. New and used inventory does vary by vertical. So the B2B vertical tends to have a lot more used as those units are getting turned over, as jobs wrap up and businesses need different units for their next job. On the enthusiast category, however, consumers tend to hold on to those units longer. So unlike a car where an owner is going to turn that unit every 3 to 5 years and buy something new, in the enthusiast categories, they're really holding on to their units much, much longer. So we really took a stand where our inventory is based on number of units. Each vertical can be different, and it doesn't change the monetization. It's just all about the inventory.

Thanks. Next question is probably for you, Will. It's referring to Slide 16, and it's asked -- the question is asking what's the current take rate percentage in Australia. So it's -- I think it's a chart on the right-hand side.

Yes. No, look, I think take rate has been -- probably come down a fair bit more recently because Dealer's gross margin has increased quite a lot. And so it's more around that sort of 7% to 8%. I think we put a benchmark in there of more like 8% to 14%. It obviously oscillates depending on where Dealer's gross margins are. But I think the point of the chart was to really show that the opportunity for us to grow internationally is significant given the gap between the take rates of the international businesses versus where we are from an Australian perspective, and where are the international benchmarks are as well.

Yes. The next one is in relation to CARS24. So have you seen CARS24 advertise any of its inventory on your site? Ajay maybe or [ Holmesy ]?

Yes. Thanks, Cam. Yes, CARS24 is advertising inventory on carsales. And they're advertising both as classified customer but also as SELECT customer as well. At the end of the day, we're the marketplace. CARS24 is just a dealer. It's a different type of dealer. It's a digital dealer. Over in the U.K., Cazoo, which is similar to CARS24, is one of Auto Trader U.K.'s biggest customers. And we think CARS24 will be a big customer for us, too. we have the advantage of scale. They have the advantage of being a disruptor and being a new player in the market, but we are quite synergistic to whoever wants to play in the digital market be it CARS24 or new entrants or our more traditional dealers.

Thanks, mate. PB, next question is for you, mate. So how are you thinking about pricing across your international businesses in the medium term? Could they do similar to Australia in the form of mid- to high single-digit revenue growth?

Yes, sure. Across the whole portfolio, I think it's probably more reflecting on the non-Korea, non-TI, so Lat Am maybe.

Yes. If we look at Chile, I think we've got some really good opportunity in Chile delivering just our #1 position there. We're the same as everywhere else. Our inventory is low there. We've got some challenges from a subscription model. But as that rebounds, we're in a great position. We've been doing a lot of work around our brand health, and that hasn't waned. And all private sales are really going well in Chile and that's going to -- at the moment, that's underpinning our growth. And so as Dealer starts to come back, I think that'll be quite strong. Mexico is seeing -- Mexico has been challenging from a COVID perspective and from an inventory perspective, but we're starting to see that come back now. We've got [ Carvac ], which is similar to the CARS24 model, which has been a big client of ours in Mexico. We've just taken them to a lead model, which has been positive. So I think all in all, we're looking pretty good.

Thanks. And then the third part of that question overall was -- so for the Australian media business, this is for you, Ajay, I think. In the event of a rebound in overall OEM spend, do you think that you'll be able to hold market share?

Yes, absolutely. The answer is yes. If anything, over the COVID period, we've increased our market share. And with all the work that the media team has been doing in setting our business up to be much more resilient and growth focused, absolutely, the answer is yes.

And then there's one more that's come in, too. So this is for you probably, Nikki. So why didn't you mention Placie today? What's happening with Placie at the moment? And what's -- what are the plans for Placie?

Thanks, Cam. Obviously, we couldn't talk about everything today, but we're definitely still very much committed to Placie. It was -- it had a delayed launch due to the lockdowns in Australia over COVID, but I'm pleased to say that we did launch nationwide in November. At the moment, the surge pricing in the ride-share industry is a significant pain point for many users. And that makes Placie's value proposition even more relevant now as it aggregates both ride shares and taxis, giving consumers the opportunity to assess pricing at the time they want to travel. As expected, ride-share usage is high during off-peak times; and during peak times, taxi usage is higher due to them not having surge pricing. Big user base is growing week on week. And we'll see -- you'll see significantly more marketing and partnerships going live over summer. So I encourage you all to download Placie and take a trip. Experience it for yourself. And I'm sure we'll give a further update at the half year road show.

Thanks, Nikki. One other question has just come through. Can you give us an update on the latest trends in Dealer depth? Is there still more penetration upside here? And what's the opportunity to raise price points for depth product? [ Holmesy ]?

Yes. Look, depth is certainly -- we're looking at more of the recurring line for depth. But dealers are now -- we're working with dealers in terms of their dormant inventory. We're certainly looking at those cars that are probably not moving as quickly as they'd like. So yes, there's certainly opportunity for penetration there. Lockdown had its impact. But yes, the team is certainly starting to see good signs of improvement now in terms of depth takeup. Always looking at price, looking at the opportunity further down the track. But at this stage, we are reviewing our price points for -- across our depth range.

Another pricing question's just come in, probably for you, Ajay. It's -- so what's the update from dynamic pricing over the next -- sorry, what's the upside in dynamic pricing over the next 3 to 4 years? Is it similar to what you've achieved historically in the last 3 to 4 years?

Thanks, Cam. I'd say the upside is greater than what we've achieved in the last 3 to 4 years. Last 3 to 4 years have been really good for us, double-digit growth. But what we're seeing now with the tools starting to become available to us with dynamic pricing and just the number of variables that are available to us, we should be able to accelerate that growth.

Yes. Another question's just come in on just Dealer, [ Holmesy ]. So what's the sentiment of the dealers at the moment given the tough trading environment during the lockdowns?

Yes. Look, dealers are pretty good at understanding when we have that conversation. But again, lockdown had its impact, but dealers are pretty resilient, and they have been for many, many years. They know when to rein it in. But again, for us, we've worked so closely as partners with them that we've looked at -- and we've been a big part of some of that GP that's being made, the better time to sell. So generally, sentiment is okay. And what I'm really pleased with is there's some really strong focus on used car strategy. How do they source more stock? How do they write off finance. We all have issues around new inventory, and that's probably unlikely to find a solution for some months yet. So used car strategy is at the forefront, which is certainly something we're working closely day by day.

Thanks, mate. There's another question for Lori that's just come in. So where is audience lead today across key verticals? And what other strategies do you have in place to bolster and grow those where you're not #1 in market by traffic already?

Yes. Good question. So traffic continues to grow. And while we're kind of maintaining our peaks of 2020, we're well above 2019 and any other prior year. So we continue to capture more and more of the available share just due to really solid SEO. Not only did we put really good SEO practices in play at the end of 2019, which was great timing. So we were able to capture a lot of the growth that came from lockdowns and people wanting to get out and ride and get an RV. We also put in really good conversion measurements and ways for people to convert, which helped with our lead volumes. So I think we've had a lot of good strategies there. I think as we look at what it's going to take to be #1 in our other verticals, we have been making really good progress on our commercial side, both in truck and equipment, moving into the clear fastest-growing solid #2 positions in those verticals over the last couple of years. And even in truck, we are nearing the #1 position in traffic, and we're already #1 in listing count. So we're making very, very good strides there. And I think really, as you look into 2022, we're going to remain focused on investing in product and technology as much as we are in marketing just to make sure that we're capturing not only the audience but the conversion of that audience as well. Feel we're really well positioned against what's really a print-focused incumbent. So we feel really good about the commercial space and getting into that #1 spot.

Next question is probably for you, [ Holmesy ], again. So a quick comment on whether you expect the dealer -- sorry, the dealer agency model to grow from here and what are the implications for carsales?

Yes. It's probably early days and we're watching the evolution of agency, where it goes. You've clearly got the Mercedes model that they're embarking upon at the moment. Honda does it -- become a hybrid version of that into the future electrification and the part it will play in the broader dealer network. But I still think we've got many parts that we can play along the consumer journey, which then, of course, flows into the agency piece. It's -- for me, it's about that consumer into whatever they want to purchase. And whether we're dealing in an agency model or dealing in a more traditional dealer model or something in between, I always feel that we have a part to play in that consumer space through the vendor.

This next one's probably still with you, mate. So how long did it take dealers to get comfortable and scale with the -- sorry, how long did it take for dealers to get comfortable and scale Instant Offer. Will scaling SELECT take as long? Or will COVID accelerate the adoption?

Yes, it's a good question. Look, dealers certainly, you're always going to get the pioneers and those that jump in boots and all, and we saw that. And that's obviously given some comfort to many other dealers around the country. We've had some dealers on that Instant Offer program now for 3 years, I think. So that's certainly giving comfort. It is about mass and footprint, and I think we'll see that too with SELECT. I will say about SELECT that many dealers around the country, if you look at their websites, have got SELECT in a widget form anyway. What we have done is taken all those widgets and we're making it a process for the consumer a little more seamless in that regard. So there's certainly some excitement in the market about SELECT because we've touched on that scale piece this morning, and that's what we bring. It's that extension of what dealers are trying to achieve on their own websites in a much bigger space. And again, it's bridging that gap with consumer.

And this is probably the last question that we can do out of time. For you, Lori, though. So can you comment on the cost base for Trader Interactive and the need to -- whether it needs to increase materially? And can you also comment on margin growth into the future?

Yes. We feel good that we have done a good job creating a solid baseline of our expenses. And so I think that we will be able to scale revenue at a faster pace, and we feel really good about that. I think as you think about how leveraging some synergies across the portfolio with carsales now could help us do that even further over time, so we're really excited about that opportunity. But we feel really good about our revenue opportunities, our expense control opportunities and obviously, margin growth as well.

Excellent. I think that's all we've got time for today. But just on behalf of the whole carsales management team, I'd just like to thank everyone for joining us this morning. Your questions have been fantastic, and we hope you got a lot out of today. So thank you very much. Hope you have a Merry Christmas. And I look forward to seeing you all in -- next year. Thank you.