CAR Group Limited (CAR) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us today for the carsales FY '23 Half Year Results Conference Call. Just before we start, I'd just like to take a moment to just acknowledge the traditional owners of the land on which we're on here in Melbourne. We're on the land of the Wurundjeri people, and just want to pay our respects to the elders past, present and emerging. So on the call this morning with me we've got Will Elliott. Will's our CFO; Kane Hocking, who's Head of Investor Relations; Paul Barlow, who's the MD of our Australian business; SB Kim is here in Melbourne from Encar in Korea; and Lori Stacy is on the call from Virginia Beach in the United States. So what we normally do, we'll run through the slides in hopefully about 30 minutes, and leave about 30 minutes for any questions that people have. So I'll call out the slide numbers as I step through it as well. So maybe we start with Slide 5. And look, as you can see here from the metrics on this page, we've had an exceptional first half performance, which is really a reflection of our market-leading positions and brands in really attractive markets, along with our continued discipline in the execution of our strategy. The pro forma results are really the best reflection of the underlying performance of the company, and they include the 100% of Trader Interactive, and that's in both the current and the comparative period. So really pleased to see 15% growth in revenue and 17% growth in EBITDA on that basis. And the double-digit here also reflects double-digit growth across our Australian business, Korean business, U.S. and Brazilian operations' revenue levels. Just other things to call out probably on the slide, very happy with the pro forma EBITDA margin expanding to 54.4%. Our Australian Private revenue growing by -- about 39% on pcp. We've had strong customer acquisition in the United States. We've reached a record 10,000 trade customers there. We've seen outstanding Guarantee growth in Korea, achieving more than 40% of inventory penetration now with Guarantee products. And we've seen exceptional outcomes come from our regional expansion in Brazil, all of which we'll cover off in the slides to come. So if we move to the next slide, Slide 6. Along with our strong financial results, we're really happy to see the continuation of excellent operational performance metrics apart from inventory, which is getting back to pre-pandemic levels, and we've seen vehicle marketplaces continue to trade well across the world. We're seeing steady improvement in global inventory levels as supply chains constraints sort of start to ease, and that's positively impacting revenue overall. In Australia, used car prices have remained elevated and were up around 40% on pre-pandemic levels, and we'll go into that in a little bit more detail further on into the deck. Audience-wise, activity and engagement on our non-automotive vertical sites in the United States are also materially above pre-COVID levels, meaning we're providing a strong return on investment for our dealers and private sellers there. On to Slide 7. And as a business, we've invested in markets with significant long-term growth potential where we can leverage our IP and technology to create sustainable long-term value for shareholders, and these markets we operate also have significant TAMs. On the right-hand side, you can see that while we've doubled our share of TAM over the past 7 years, we still only hold around 12% share overall. But as a business, we're really well placed going forward to continue capturing additional value over time, given the strength and capability of our marketplace businesses that we have. On to Slide 8. And just building on the previous slide, you can see here by market against our nearest vertical competitors in traffic and inventory that we're really well placed. As market leaders with network effects, we have to continue really delivering the strongest possible value proposition for our consumers and for our dealers. And that strength in our market positions being supported by our abilities to deliver yield increases across all of our businesses, and that's reflected in the strong revenue growth and margin expansion that you'll see and have seen already in the -- over the last 6 months. On to Slide 9. And look, we published this a few times but important just to refresh on our strategy, and that is to drive growth through innovation, product yield optimization, corporate development. And that growth is within the domains of our digital marketplaces, value-added services and what we call our future horizon, so by leveraging our people, our data and our technology. And we try and do this and deliver all this all with the purpose of trying to make buying and selling a great experience. On Slide 10. So with our strategic framework in mind, over the last 6 months, we've been largely focused on these 5 strategic priority areas, and we've made excellent progress on each of them, which we'll step through more in the presentation. On to Slide 11, and really pleased with the execution of our Trader Interactive synergies over the past 6 months. We've talked a little bit about Lead Amplifier product. We launched that several months back, and this product provides the dealer with the ability to control the inventory presented to the consumer in a post-fleet e-mail that's sent by Trader Interactive. And the product is performing exceptionally well, and that's reflected by a low opt-out rate that we've seen. We've also announced a price rise to the dealer network, and that will be effective from March, April this year across all of our major verticals. And the yield impact, we anticipate there will be a 7% uplift. Also, really pleased that we've launched our first phase of our dynamic pricing in private seller in RVs, and we've done that over the last couple of weeks. And we're seeing an excellent uplift in yield there, similar to what we saw when we first deployed it into Australia in FY '17. We're also getting ready to launch Top Spot products and we'll do that in Q4, and that will work similar to how it works here in Australia. But I'm very pleased with how all that activity in TI is going. Now on to Slide 12, and this slide really captures the revenue and EBITDA performances of all of our businesses we now own on a pro forma basis since 2007. And I guess the message here is that the company has consistently delivered growth through economic cycles. On to Slide 13. And again, very pleased to reiterate the guidance we provided at the October AGM, which is supported by the excellent results that we've achieved in this first 6 months, and the guidance is that on a pro forma basis -- a pro forma constant currency basis that we expect to deliver good growth in revenue and EBITDA in FY '23. It's also been really pleasing to see the excellent momentum that we have with Trader Interactive and that business since we took full control in October last year. I'd go so far as to say things are going better than we expected. Lori and her executive team are doing an outstanding job, and we're seeing the benefits of a number of the synergies that we were -- had identified being delivered now. And positive momentum continues there through January and February, and with growth expanding versus H1. And now I'll hand over to Will, and Will, take us through all the financials.

Thanks very much, Cam, and good morning, everyone. Look, as Cam has mentioned, carsales has delivered an excellent financial performance over the last 6 months, and the results here on Slide 15 reflects the strong track record of growth that the business has delivered over a number of years. And look, it's really pleasing to see that the growth rates in these financial metrics are increasing more recently, and this reflects the long-term investments that we've made in our people, product and technology. Moving on to Slide 16, which shows a summary of our P&L. The strong growth in adjusted revenue and EBITDA you see here reflects the impact of consolidating Trader Interactive for the first time in October 2022. And from a presentation perspective, we've included a pro forma view on the right-hand side, which normalizes for the impact of the Trader acquisition to best show the underlying performance of the business. And on this basis, we delivered revenue and EBITDA growth of 15% and 17%, respectively, which is a really impressive result. Just moving down to P&L. The increased finance cost reflects the additional debt taken on to fund the TI acquisition and the increases we have seen in base interest rates over the last year. The group delivered adjusted net profit of $122 million, which was 37% higher year-on-year, which reflects the strong underlying growth of the business and also the incremental ownership of Trader Interactive. The Board has declared an interim dividend of $0.285 per share, which is up 12% on last year. The adjusted results differ from the reported statutory results, which you can see in the table in the bottom left, largely reflecting the exclusion of some one-off items, which relate to the Trader Interactive transaction. A more detailed breakdown is provided in the appendix. On to Slide 17, which shows the summary of our financial performance by segment. Look, I won't go into any detail on this slide as Cam is going to walk through this a little later in the presentation, but it is fantastic to see double-digit revenue growth across all of our regions, are reflecting the strength of the operational performance over the last 6 months. Now on to Slide 18. Look, the group has delivered an excellent margin performance, with EBITDA margins expanding over the last 6 months. This highlights the strength of our market positions, the operating leverage we have in our business model, our ability to deliver yield increases and also our strong discipline in managing costs in what's been a more challenging inflationary environment. And really pleasing to see the good margin expansion we've had in Australia and the U.S. And in Asia, we've got a strong EBITDA margin of 50%. There was good growth in underlying margins in Asia, which was partly offset by an uplift in brand marketing to support the continued growth of the Dealer Direct product into the future. There was a small drag on margins from carsales Investments, which was largely through incremental investment in Placie and Mobile.de and higher freight costs in our Tyres business. And also, I just want to call out that we expect cost growth overall to moderate in the second half. Moving on to Slide 19. We generated strong operating cash flows again in the first half of FY '23 with an EBITDA to cash flow conversion ratio of 97%. That highlights both our strong working capital profile and also our discipline in cash flow management. From a funding perspective, as you can see, we delivered pro forma leverage of 2.5x, which is a little bit better than what we said our leverage was going to be post the Trader Interactive transaction, and we plan to delever to under 2x within the next 18 months. From a CapEx perspective, the business continues to invest in key products and technologies to support our ongoing growth. And as you can see, we've made slight progress over the last 6 months in terms of product development. Given there was a step-up in CapEx in H2 last year, we expect the growth in CapEx on pcp to moderate in the second half of this year. I will now hand back to Cam to talk further about operational performance and strategic priorities.

Thanks, Will. And look, just before we launch into the Australian business segment performance, I just wanted to get -- thought it'd be appropriate to make a few comments on how we're observing the Australian car market at the moment. So look, on the supply side of the market, we've seen inventory gradually returning to pre-pandemic levels, and I guess that growth is being driven by improving new car supply, more trade-ins and people wanting to really leverage the strong used car prices that are being achieved at the moment. On the demand side, we've seen consumer car buying intent holding up over the last 6 months, and we observed that through site traffic and lead volumes. And that's meant overall as an outcome is to date, we haven't observed any noticeable decline in used car pricing across either private seller or dealer, with pricing holding up at around about 40% above pre-pandemic levels. And that pricing plateaued probably towards around September last year, and we've noticed continued to hold to these levels today. So on to Slide 22, and I just wanted -- we talked about market conditions, how that sort of translate into performance for our dealer and private businesses. So starting with dealer on the left, and growth of 10% for the half was a good outcome overall. Demand for new and used cars has remained robust, as already mentioned, and dealer margins have remained elevated versus pre-pandemic levels. The revenue growth of 10% came from yield uplifts, increased penetration of premium product and volume growth, and pleased to see the penetration in Q2 increased as well as inventory levels have steadily grown. On to the right-hand side, and we've continued to deliver really outstanding outcomes for private sellers. That's reflected in the 39% revenue growth that you see here. Key drivers of the growth have been a buoyant private seller ad market, execution of dynamic pricing strategies we have and increasing Instant Offer volumes as we try and build consumer awareness there, too. On to Slide 23, and just looking at the left-hand side of the slide there, media performance. And it was great from our perspective to see another half of double-digit revenue growth for the fourth half in a row in the media space. And it's a testament to the execution of the strategy that we have, which is to diversify into non-automotive customers and to deliver innovative, native and programmatic products, and we'll provide a little bit more detail on that further into the deck. And on the right-hand side, Data, Research and Services revenue up slightly by 2% on pcp, which we felt was a resilient effort. And that growth largely coming from our Redbook data business. On to Slide 24. carsales Investments, and these include businesses we consider to be stand-alone from our core marketplace businesses and includes adjacent services. So our biggest contributor here to this segment is our tyre business, and we saw that grow on an underlying basis by 8% on pcp, which was a solid outcome in a more challenging market. Our RedBook Inspect business demonstrated good growth in underlying inspection volumes, particularly in our pre-purchase and rideshare segments, and Placie, which is a longer play, has made good progress too. On to Slide 25, and just following on from some of the comments made on the Australian market and reflecting on our major international markets now. We're talking about international and inventory supply dynamics. So look, from a traffic perspective, we've delivered -- or we are delivering materially more traffic across each of our key international markets versus our pre-pandemic levels, which is a testament to the market positions that we have and the strong consumer focus. As mentioned at the AGM in October, our traders -- our business has been -- that has good countercyclical market characteristics. And while we've seen metrics like traffic and lead volumes come off pre-pandemic FY '21 highs, they still remain well above pre-pandemic FY '21 levels. So other things that we have observed here is that our inventory levels, as mentioned before, are all rising in all of our international markets here, with the exception of Korea. As in the case of TI, deal has -- inventory has grown, they become clearly a more important partner for dealers, and pleasing to see our customer levels surpass 10,000 for the first time. In relation to South Korea, activity on the site there continues to be strong, albeit our lead volumes have been marginally impacted by a drop in purchasing intent due partly to local credit timing, which we anticipate is going to ease in H2, and this has resulted in higher inventory levels on-site and time to sell has increased there as well. In Brazil, strong acquisition of new customers in regional expansion of the business has supported rising inventory levels there. And despite higher interest rates and inflation, we continue to observe a strengthening new car market and sales are up there [ 14% ] on pcp in the last 6 months. On to Slide 26 and looking at Trader Interactive, and they've had another excellent 6 months, with revenue and earnings up 11% and 15% on pcp, respectively, on a constant currency basis. And EBITDA margins expanding through operating leverage from around 57% to 59%. All our verticals grew, but RV and powersports were the standouts through growth in yield, customer penetration and rising inventory levels. The truck segment is also starting to improve as inventory levels recover from those pandemic lows. I'm really pleased also with how the Trader Interactive business is going. They've got good performance momentum heading into the second half with the full year benefit from the Lead Amplifier products and products like dynamic pricing, Top Spot coming online and dealer yield uplifts of around 7%, which I mentioned before. So a lot there for us to look forward to in H2. On to Slide 27, and another excellent financial performance from Encar, with revenue and earnings up 12% and 13% on pcp on a constant currency basis, being underpinned by continued strong growth in -- across their 3 key products, being Guarantee, Dealer Direct and Encar Home. Guarantee continues to be a key growth driver in the business, with an additional 3 sites and growing customer penetration there within the branches that we have. 42% of Encar's site is now covered by Guarantee inspected cars, and the opportunity to continue that continues over time. And other solid revenue growth was achieved largely through traditional advertising product. On to Slide 28. And just looking at Webmotors and it's, again, had another outstanding 6 months, with revenue growth of 23% and EBITDA growth of 8% on pcp on a constant currency basis. Eduardo, who market hasn't met yet, has an excellent executive team, and we have a fantastic first-class business in Webmotors. Dealer revenue there has been underpinned by new customer subscriptions across the country and yield growth that we've seen over the last 6 months as well, and an improvement in chargeable leads and the sale of premium dealer products, such as our Cockpit CRM product that we have. Our regional expansion campaign, as I mentioned a little bit earlier, is seeing exceptional results, with our market share versus competitors in Tier 2 cities increasing significantly through organic investment in brand and traffic. And the investment we're making in marketing here is temporary as we capture more market share and see significant and revenue margin upside here over the long term. In relation to the inventory, like we're seeing in Australia and other parts of the world, inventory levels are recovering and getting closer to pre-pandemic levels as well, and you saw that earlier in the slide deck. So on to Slide 29 and talking about the rest of LATAM. And we've seen much improved performances in Chile and Mexican operations as inventory levels have increased materially from pre-pandemic lows. As a result, Chile's delivered outstanding revenue in dealer and private segments. Also, pleasing to see us leverage the dynamic pricing product that we have from Australia into Chile, with significant uplift there in yield provide us with additional confidence regarding the implementation of dynamic pricing in other markets including the U.S., which we'll again discuss a little bit further. Mexico, whilst a number of metrics are improving there, market still remains a bit challenging with new cars still below pre-pandemic levels. And so the focus here remains on really trying to minimize cost while market conditions continue to improve over time. Just onto the strategy and some of our priorities in Australia, and we'll go through this by geography. So I just want to remind you all of our key priorities in Australia and the progress we've made across these areas over the last 6 to 12 months, and where we'll be focusing our efforts. So along with our outstanding financial performance in Australia over the last 6 months, we've achieved a number of key milestones as outlined on this slide. So a few to call out, that would be the integration of our new digital financing capability, executing an excellent brand awareness campaign for Instant Offer and launching innovative media product. Plenty of growth to come over the next 12 months from our key focus areas, including improved trade-in capability, adding more instant offer dealers and executing on more sophisticated dynamic pricing options over time. On to Slide 32, and our competitive position in Australia has strengthened across the board over the last 6 months, but it's been particularly evident in the private seller space. Over the coming months, our focus is going to be to continue to look for ways to add more value for private sellers, and we anticipate that will be rewarded through increased market share and in add volume and further yield uplift. And what we intend to look at with dynamic pricing are options that would be based on things like post-COVID time of year, time to sell and so on as well. On to Slide 33, and just looking at media. And we modified our media strategy a couple of years ago, as you'd probably remember, and that was to diversify more heavily into non-automotive customer segments and introduce more innovative programmatic and native product solutions. And that evolution of our carsales is reflected here in the carsales match and the ignition products that we have, and they are an extension of that strategy and a reflection of a more sophisticated product offering that we now have. And that enables our advertising partners on the left-hand side, with the carsales match to specifically target audiences as well as to purchase media products in a more convenient way, which you'll see on the right-hand side with our carsales ignition. Both those products have got significant future potential in terms of revenue and scale, and we see them as products that we could potentially offer into our international marketplaces as well. On to Slide 34, and we continue to focus on our -- on the long-term opportunity to digitize the car buying and selling process. And as you can see here, we're making solid progress in reducing the friction points in each of the steps of the buy and sell process on that digital journey. And there's still a long way for us to go, but the benefits of this strategy being reflected in the accelerated growth we're seeing, which is giving us the confidence to keep investing in this area. On to Trader Interactive on Slide 35. And look, as we've already mentioned, we're making excellent progress in executing on our strategic priorities in the U.S. and our confidence in our investment thesis is stronger than ever, which includes the progress that we're making on executing the synergies identified as part of our move to 100% ownership. Just a couple of things to call out on this slide. So from a market leadership perspective, we've strengthened our market leadership position in our Recreational RV and powersports verticals. And with trucks, we're continuing to bridge the gap with the major competitor there being TruckPaper.com, and that's being reflected in the strong customer acquisition and yield uplifts that we're seeing. Also I mentioned the launch of dynamic pricing here, and we're also working on our approach to media and the opportunity that we have, and we've already captured the cost -- many of the cost synergies that we mentioned late last year. So overall, we're in a great place with our initiative execution in that business. Turning to Slide 36 now and Encar priorities, and SB Kim and his executive team are continuing to execute well. And these are -- they're all familiar strategic priorities, and they'll continue to be all leading to an end-to-end digital retailing experience over time, which is what we're all chasing and working towards as an organization. Now on to Slide 37, Webmotors priorities. And the Webmotors business is an outstanding business. Brazil is 1 of the largest car markets in the world, and we are, as a business, in a great competitive position there, and we have a great team of execs as well and made great progress over the last 6 months in organic growth and our regional expansion. So given the outstanding results in the regional expansion campaign, I mean, this will continue to be the focus over the next 12 months, and it provides us with a great opportunity to organically grow the Webmotors brand and deliver long-term growth potential that we see from that campaign. Given the investment that we've been making in our media business and the evolution of that strategy here in Australia, we expect Webmotors to take advantage of that at some point in time for the Brazilian market. And we'll also continue to optimize yield. And as the interest rate environment improves, there's significant potential to drive incremental penetration of our world-leading finance product that we have as well. So that completes the formal presentation. So just quickly, to summarize, we've had an excellent first half with double-digit revenue growth across all of our geographies, and we're in a strong position to deliver on our outlook. Strategically, we're executing well. We have significant opportunity for ongoing growth ahead of us, and we're in a business in a position where we have strong countercyclical attributes. Trader Interactive is performing very well for us, and their product and initiative execution is ahead of our expectations. And finally, just on balance sheet, yes, our balance sheet is in good shape. Our leverage is also lower than where we thought it would be, and we're confident in our ability to continue to deleverage organically over time. So I'll leave it there and open it up to questions.

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

So my first question is around the guidance and where you're tracking in the first half. I see you've delivered constant currency growth when we look at pro forma EBITDA of 15% in the first half, and that seems to be tracking ahead of your full year guidance for good growth. Just interested whether you've being conservative, or are there any areas that you expect will potentially slow down into the second half?

Entcho, so I think the -- I mean, we've retained our guidance around pro forma, which is obviously for good growth. And I think the trajectory of the business is excellent into the second half. The only comment around comparatives is, obviously, the private revenue in Australia did step up in the second half of last year. So from a comparative perspective, there's a tougher comparative there, and so that's probably the only call out in terms of half-on-half comps. But heading into the second half, as you can see, a lot of the commentary we've made is that consumers' in good shape in Australia, and we've called out some positive trajectory into the U.S. as well. So I think the second half is looking good at this stage.

Okay. And maybe if I can just pick up on those comments around the positive trajectory. It seems like -- well, obviously, 1 of the contributors is the Lead Amplifier product. Are you able to tell us what the contribution of that product was in the first half, or if there was any given it was introduced in October? And then just within that answer, are you able to give us an idea of what was the take-up of the product post [ tax ]?

Yes. Look, I'm happy to take that one, Entcho. So the call out we made to FY '23 on that product is that it would have low single-digit percentage contribution to revenue, so I think that gives you a pretty good steer in terms of its overall contribution. Take-up of the product has been excellent, well north of 50%. We won't give out exact numbers, but it's been better than what we're anticipating. And then obviously, second half, that will have a bigger impact because we'll get the full half worth of the benefit rather than just 3 months.

Okay. Great. And final 1 for me. Just if I look at your dealer lead volumes growth of 1% in the first half. Can you give us an idea of how perhaps the growth rates tracked Q1 versus Q2, given that you're comping a lockdown in Q1? I mean, I'm assuming you saw some slowdown in Q2, but if you can comment whether that was significant and how you see the outlook for lead volumes into 2H?

Yes. Thanks, Entcho. Yes, as you said, the lockdowns in 2021 gave us a softer comp from -- in the first quarter. We haven't seen -- in the second quarter, we didn't see the activity come off, consumers were still looking for cars, still bouyant. There is a skew towards private, but the consumer hasn't fallen away. And at the start of H2, this has still held up. So I think we're still in pretty good shape.

Okay. And sorry, just a very final one, a very straightforward one. How are volumes in Instant Offer tract versus that 3,000 monthly volume number you gave us at the end of FY '22?

They've been tracking well. We're not going to give a running update on volumes, but the business overall has performed really well. The advertising that we did through H1 has had a positive effect, both on our IO and our private overall. So yes, we're very happy where it's at right now.

Your next question comes from Eric Choi with Barrenjoey.

I just had 3 as well. First 1 maybe for PB or Cam. Obviously, private is going to have a cracking year this year, but that potentially sets us up for a tougher comp into next year. So my question is just how much scope, PB, is there for you to pull on dealer levers such as dynamic and maybe debt next year to offset any slower private growth? .

Yes. Thanks, Eric. I think there's a lot of scope. As you said, there's a lot -- there is a skew to private now. And as private slows, if it slows, we're not seeing any sign of that right now. But the dealer inventory will grow, and we think that will provide an ups from a lead perspective. We're also expecting services like depth, main event, et cetera, to increase as that dealer inventory pool increases. So yes, we think we're well positioned from a product SKU perspective and our dealer team's ready to help the dealers when that inventory pool does grow.

And PB, if you were to -- I guess, to the second iteration of dealer dynamic. Would it be like private where it can be quite kind of constant and iterative, or would you have to kind of wait for your January or November price reset points to look at changes to dealer dynamic pricing?

Yes. I don't think it will be as dynamic as what we see in private. But certainly, I think over the half, as we watch the inventory, where it goes as we watch the consumer demand, I think that will dictate what we do from a pricing perspective there in dealer.

Awesome. And then just kind of Lori. Lori, just looking at our scraping data, it shows new listings are flat to up for powersports and trucks, but maybe new listings down for RVs. So it sort of implies that high single-digit price increase is a bit more material for RV dealers on a per unit sold basis versus the other verticals. So I'm just wondering, does this have any implications, so how you push prices between the different verticals going forward?

Yes. So thanks, Eric. So I think the first thing to remember is that revenue is not really linked to inventory in a very direct way. But to your point, I mean, if you think about the per unit sold, I mean, we reviewed our take rate in some prior presentations, and you'll remember it being quite low. So while it made a little bit higher than it would have been in the past, there is still a lot of room before we get to the take rates where carsales or other leading marketplaces are based on the price point of those units sold today. So we definitely see that there's still room in RV, but we also are really optimistic and see significant opportunity to accelerate revenues, particularly in powersports and trucks. So I think you'll see those being a bigger contributor over time just because of the headroom and the opportunity we still have available there.

Makes sense. And Will, someone's going to ask you about this press speculation on M&A. So just wondering, I mean, we all think you guys have a good international track record. It's probably just a matter of timing. So I guess we're gearing at 2.5x. Do you think there's balance sheet capacity now, or do you kind of wait and dig here a bit before you look at other M&A?

In terms of gearing, I mean, we made some comments in the presentation just around that we delevered to 2.5x, which was better than where we said we were going to be after the transaction, and that our plan is to continue to delever organically to under 2x within 18 months, and we're on track to do that.

Next question comes from Darren Leung with Macquarie.

Just 2 for me, please. Just on the Trader Interactive business, so obviously a good outcome with the price increase, particularly in the core software environment. I just wanted to unpack that dealer volume contribution piece as to how much is inventory levels versus dealer penetration? And if it's dealer penetration, is there much more to be held on this front?

Lori?

Yes. So if you look at the penetration, we still were below about 70% penetrated in RV, so we still have a bit of room. But when you get to powersports and even truck, we're in the 30% to 35% range. So while there's still a lot of room to be able to increase the yield, there is so much opportunity to continue to grow market share. So even though we're the market leader, there's still a lot of opportunity as these customers continue to move more advertising dollars from traditional advertising into digital. We're seeing that accelerate, so there's really a lot of room on both sides.

Great. And sorry, just to be clear, is the upper limit 100%, or is upper limit closer to like a 75%, 80% for RVs?

No, I actually think there's -- if you are a serious dealer, meaning more than 5 or 6 units on your lot, you should be a trader. So very, very few, small, small, small, more mom-and-pop kind of dealers that may have a few units. But outside of that, if you're in the business, you need to be a trader. So I would say it's very close to the 100% in terms of opportunity.

And then just last 1 on trader. You guys have provided that slide in the past around what the revenue profile looks like, and particularly through an economic cycle. But I think some of the sort of skeptics in the market was sort of pointed out and say there was a big structural element the last time we had it big recession, which is during the GFC. So I guess my question is, how can you be so confident that, that persists if we do enter a bit of a softer macro environment over the next 12 to 18 months?

Yes. So I've said that we've looked at all different -- yes, all different business cycles over my 25 years here. Really, regardless of the conditions that we encounter, we are able to grow through all cycles. And I think it's because of -- what gives me confidence is not only that we've done it in the past. But I think, first and foremost, the subscription model is very resilient in tougher times. The second thing is when consumer demand goes down, dealers need us more than ever, so we typically see low churn and are typically the last thing that they cancel. So we might see some downgrades, and we've seen that historically based on particularly branded products. The very low cancels as the dealers want to keep the inventory in front of interested consumers. And then I think the third thing is the balance of new and used inventory as well as the balance between dealer and private seller. In tough times, private seller accelerates, and that helps protect the business as well because it's -- we push on that lever from a revenue driver. So there's just so many levers in the business to make sure that we can scale and grow regardless of the cycle.

And just my second question was in relation to private. It looks like Instant Offer is a pretty big contributor to volume growth here. I just wanted to check if we backed out IOs and volume, is it fair to say listing volumes is close to that mid-single-digit positive growth mark?

Do you want to do that, Will?