CAR Group Limited (CAR) Earnings Call Transcript & Summary

Good morning, everyone, and thanks for joining us today on the carsales FY '23 Results Conference Call. This morning on the call, Will and I are going to run you through our presentation in around 30 minutes, and we'll read the slide numbers as we go like we normally do. After that, we'll have Kane Hocking, Head of Investor Relations, who's here with us as well to moderate a Q&A session on the second half of the call. With Kane, Will and myself, we've also got here Paul Barlow, MD of carsales Australia. SB Kim is on the line. He's the CEO of Encar in Korea. Lori Stacy, is also on the line. She is the CEO of Trader Interactive in the United States and Eduardo Jurcevic in the office here and with us in Melbourne, and he's the CEO of webmotors in Brazil. So let's make a start on Slide 5. And as you can see here, it's been a fantastic year for the business, and we're very pleased with what our teams have all accomplished. We've delivered excellent financial outcomes for shareholders, as you can see, whilst making really strong progress on executing our strategy and our long-term priorities. We also acquired controlling stakes in Trader Interactive and webmotors, which was a real milestone for the business as more than 50% of our revenue now comes from outside of Australia. Just to give the numbers and the pro forma results on this page are the best reflection of the underlying performance of the company as they rebase our FY '22 to fully include Trader Interactive and webmotors. And on that basis, it was great to see 18% revenue growth and 19% growth in EBITDA. Just as pleasing was the double-digit revenue and EBITDA growth across each of our Australian, U.S., Brazilian, LatAm and Korean operations. So in all a very good year. On to Slide 6. And -- we've also delivered very strong operational performance over the last 12 months. We continue to see good levels of trading activity on our vehicle marketplaces, which reflects the strength of our business model and the value that we deliver to our customers, particularly given that we're operating in a higher interest rate environment at the moment. And it's also a testament to our sustained investment in new product and marketing. Globally, what we're seeing is inventory levels are increasing as supply chain constraints they start to moderate, which is positively impacting customer growth and revenue. In Australia, used car prices have plateaued and are marginally declined, but they remain materially above pre-pandemic levels. audience activity and engagement on our nonautomotive vehicle sites in the United States are materially above pre-COVID levels, reflecting strong return on investment we deliver to 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. And you're seeing us consistently realize that potential once again this year. We've built an incredible business in Australia over the last sort of 27 years now, and it's complemented with what is an enviable portfolio of international assets. And we see substantial growth opportunity in these large attractive addressable markets over many years to come. On the right-hand side of that slide, you can see that while we've doubled our share of TAM over the last 8 years, we were still only holding around 9% share of the overall estimated opportunity that we have. So we're well placed to continue to grow that over time, given the strength of our capability and the quality of our marketplace businesses that we have. On to Slide 8. And look, we're very pleased with the progress of the Trader Interactive business since completing the 100% acquisition in September last year. So we bought the remaining 51%. We're ahead of our own expectations in terms of executing on the investment thesis and delivering against the synergies that we identified as part of that transaction. And this has included the delivery of new product, good customer acquisition and investing in tech and you have to really drive future growth for us. The strong execution of new product combined with the excellent customer acquisition seen our revenue growth rates to actually increase in half 2 to 16% on pcp and we really feel like we're only just scratching the surface still with plenty of opportunity to grow our customer base and the penetration of premium product. In particular, we're very encouraged by the performance of Premium Select, which is driving real value for our customers and helping them showcase the inventory to their potential buyers. And we're also beginning to see good early outcomes from deploying carsales media, technology and IP as well, but we'll discuss that in a little bit more detail in the presentation further on. On to Slide 9. And whilst we've only recently transitioned to a controlling stake in webmotors, we're already starting to deploy some great new product initiatives there. We launched dynamic pricing in May and have already seen a strong uplift in private yield similar to the experience in Australia and the U.S. and Chile. And our investment in increasing brand awareness in the regional areas that we've been talking about for some time, which are highly populated cities is also really starting to pay dividends for us, which you can see in the graph on the left-hand side of that slide. So our focus in early FY '24 will be on the media business as well, which I just mentioned where there's a significant opportunity to improve monetization through better use of our IP and product suite that we hold. On to Slide 10. And this slide captures the revenue and EBITDA performance of the business now -- and all the business that we've owned back on a pro forma basis since 2007. And the message here is that the company has consistently delivered growth through all economic cycles. The business actually has a lot of countercyclical attributes were more geared to used vehicle sell, buy-sell transactions. Dealers always need to move inventory and we offer a really good return on investment compared to other forms of advertising sources. So look, despite higher interest rates more recently, we're seeing good growth in both our operational and financial metrics, and this gives us a lot of confidence going into FY '24, which we'll talk about now as well. So on to outlook on Slide 11, and we've got excellent momentum heading into FY '24, which is really reflected here in our outlook statement. So on a pro forma basis, we expect to deliver good growth in revenue and EBITDA on an actual basis, given the inclusion of Trader Interactive and webmotors for a full year, we expect to deliver very strong growth across revenue and EBITDA and strong growth in NPAT. In terms of margins, we expect to see margins improve again in FY '24 on a pro forma basis as well. So that will probably cover that one. So now I'll hand over to Will to talk about the financial performance.

Thanks, Cam, and good morning, everyone. carsales has delivered an excellent result again in FY '23, generating strong revenue and earnings growth. The results outlined on Slide 13 are a testament to the ongoing strength of our business model as well as the long-term investments we've made in our people, brands and products. The results we've delivered here show continued growth momentum and demonstrate our resilience against what's been a more complex macroeconomic backdrop. And as you've heard from Cam today, we're confident in our ability to continue delivering good results given the size of the opportunities we have in front of us and our multiple levers for growth. Moving on to Slide 14, which shows a summary of our P&L. And look, the strong increase in revenue, EBITDA and depreciation and amortization reflects the impact of consolidating Trader Interactive and webmotors for the first time in FY '23. The underlying revenue and EBITDA performance of the business is best reflected on the next slide, which normalizes for those acquisitions. The increase in finance costs that you can see on the slide comes from additional debt taken on to fund the TI acquisition and also the increases in base interest rates we've seen over the last 12 months. The group's tax rate in FY '23 was lower than last year, reflecting minimal tax payable on Trader Interactive's earnings. This is largely due to Trader Interactive utilizing tax reductions after the amortization of purchase price intangible assets. The group delivered adjusted net profit of $278 million, which was 43% higher year-on-year. And adjusted EPS growth, which is a better representation of underlying performance of the business as it includes the increase in shares on issue from recent capital raise. On this basis, it was pleasing to see growth [ 7%-10% ] This strong outcome, combined with the excellent free cash flow generation that we've had this year, supported the Board's decision to declare a final dividend of $0.325 per share, which is up 33% from last year. As you can see down the bottom left-hand side of the slide, the group's adjusted results differ from reported statutory results largely due to one-off items relating to webmotors and Trader Interactive trajections completed in the last 12 months. We provided a more detailed breakdown in the appendix. Turning now to Slide 15. This slide shows the business on a pro forma basis, which, as mentioned, consolidates Trader Interactive, and webmotors both in the current and comparative periods. And we believe this view provides the best representation of the underlying performance of the business. I won't go into any detail here on this slide as Cam will talk to each segment in more detail later in the presentation, but it is fantastic to see double-digit revenue growth across all regions, which really reflects the strength of our operational performance in the last 12 months. Moving on to Slide 16. And we've delivered another strong margin performance in FY '23 with EBITDA margins increasing to 52.6%. This highlights the inherent operating leverage in our business model, our ability to deliver yield increases and also the discipline we have in managing our cost base in what's been a more challenging inflationary environment. We're continuing to invest in new products and initiatives to drive current and future growth. From a segment perspective, if you look at Australia and the U.S., it's been pleasing to see margin expansion in those regions. In Asia, we've got a strong EBITDA margin of approximately 50%, and there was a small overall improvement in that margin in FY '23. The small drag on margins from Latin America is a mix effect. Underlying margins grew in Brazil but because the margins there are lower than the overall group margin, it's had a negative impact in this view. There was also a small drag on margin from carsales investments due to the challenges we've had with higher freight costs in our Tyres business. Moving on to Slide 17. We generated strong operating cash flows in FY '23 with an EBITDA to cash flow conversion ratio of 99%. This highlights our strong working capital profile and discipline in cash flow management. It also supported the strong dividend that we mentioned before for the second half. From a funding view, we've delivered pro forma leverage of under 2x, which is where we feel most comfortable from an ongoing leverage perspective. And finally, looking at CapEx, the business continues to invest in key products and technologies to drive our growth. And as you can see, we've made some great progress over the last 12 months in terms of product development. And CapEx as a percentage of revenue has remained consistent over the last year. And look, thanks, Cam. And now I'll hand back to Cam to talk further about our operational performance and strategic priorities.

So if we just move on to Slide 19. So look, before we talk about financial performance by segment, just useful to provide a bit of context around our operating environment. So from a traffic and lead perspective, we've seen these metrics come off COVID pandemic highs, but they still remain nicely above pre-pandemic 2019 levels. And from an inventory perspective, we've seen inventory levels rise, as mentioned earlier, across all major markets. The Trader Interactive and webmotors are still below 2019 levels. Australia is on par pretty much while current inventory is higher than pre-COVID levels. On to Slide 20. I mean, this is the best financial result in our Australian business, we've seen, is around 2013, I reckon with double-digit growth in revenue and EBITDA, and we continue to invest in building an increasingly online buying and selling experience. And we've extended our market leadership from both an audience and inventory point of view reflected in the double-digit revenue growth in each of our key dealer, private and media revenue segments. So maybe just to talk a little bit about each of those segments quickly. So dealer revenue grew by 10%, which was a good outcome overall. Demand for new and used cars is robust and our dealer margins remain elevated versus pre-pandemic levels. Revenue growth of 10% largely came from yield uplift and increased penetration of premium product and pleased to see depth penetration increase in H2 as inventory levels have steadily grown and dealers look to move stock on. Just looking at private there, we've continued to deliver outstanding outcomes in private seller over the last 12 months, and that's reflected in the 30% revenue growth that you see here. Our competitive position strengthened in the last 12 months as we continue to invest in making the selling process as efficient as possible. Key drivers of growth have been buoyant private seller ad volumes, execution of our dynamic pricing strategy and increasing instant offer volumes. Our instant offer -- selling option continues to really scale nicely, which demonstrates the benefits of continued user improvement, better pricing, adding more dealers to the platform and developing consumer awareness through our advertising campaigns that we run. Media -- Media's impressive performance with good double-digit revenue growth once again was excellent, and this has been a real testament to the execution of that strategy that we put in place a couple of years ago to really broaden our commercial relationships with nonautomotive customers and to deliver innovative native and programmatic products, which we'll give you a little bit more color on a little bit later. And then just looking at Data research & Services revenue up there slightly by 4%, which we felt was a resilient effort and growth coming largely from our RedBook data business. On to Slide 21 and just look at Trader Interactive and outstanding performance over the last 12 months with revenue and earnings up 14% and 17% on pcp, respectively, on a constant currency basis with growth rates increasing in H2, like I mentioned earlier. EBITDA margins expanded through the benefits of continued operating leverage with margins growing from 57% to 59%, and we observed growth in all verticals with RV and Powersports to stand out through growth in yield, customer penetration in particular. Truck segment is improving nicely reflected in improving inventory levels that we're seeing there and consistent levels of growth in customer acquisition each month. In fact, across the business, we've added net around 300 paying dealer customers over the last 12 months, which across all of our major verticals. So that's been good. And there's excellent momentum at TI heading into 2024. The business is going to benefit from higher customer numbers, clearly, and the full year impact of recently implemented product initiatives and yield uplifts. And this includes the benefit of dynamic pricing, growing penetration of our premium selected product, deal yield uplifts and media product improvements that are all going to start to come online as well. On to Slide 22. And webmotors has had another outstanding 12 months with revenue of growth of 29% and EBITDA growth of 31% on pcp on a pro forma basis and on a constant currency basis as well. So we've increased our market share in large areas outside of Sao Paulo and Rio de Janeiro through acquiring new dealers, growing our audience and adding more private sellers. Webmotors is uniquely positioned to capture market share with exceptional buyer and seller engagement metrics and a sophisticated suite of digital products that some of -- you will get to see at some point in September. Implementation of dynamic pricing in May also showing positive signs with good yield growth being observed since its introduction. The results shown on the table there, as you can see, include the contribution of webmotors adjacent market subsidiaries being Car10 and Loop, which are both great businesses and have demonstrated really excellent growth in revenue and earnings over the last 12 months, too. On to Slide 23. And just looking at Encar, they have delivered another excellent performance this year with double-digit growth in revenue and EBITDA up 11% and 12%, respectively, on a constant currency basis. And this was driven by the continued expansion of the Guarantee inspection product with another 4 sites added and growing customer penetration within the existing branches. Encar also continues to make strong progress on its mission to facilitate online car transactions, which is reflected in the strong growth of its Encar Home digital retailing service. Dealer Direct volume improved in half 2 versus half 1 as the macro credit challenges that we've been talking about for a little while started to ease and that improvement is expected to continue into FY '24. On to Slide 24 and start with the left-hand side of that slide there. And this is LatAm, excluding Brazil. So we've seen a much improved 12 months performance for our Chilean operations as inventory levels have increased materially from the pre -- from the pandemic lows. And as a result, Chile has delivered outstanding revenue growth in the dealer and private segments in particular. The other thing to say about this slide is after 8 years or so, we've decided to exit our unprofitable Mexican business, SoloAutos and the thinking here is with COVID behind us and having acquired a controlling stake in webmotors as we felt our efforts were better served elsewhere in Latin America. On the right-hand side there, just looking at carsales investments, and these include businesses where which we consider to be stand-alone from our core marketplace businesses and include adjacent services. So the biggest contributor to this segment is our tyre business, which saw underlying revenue grow 8% on pcp which we thought was a solid outcome. Profitability, as Will talked about before was more challenging due to continued elevation in freight and labor cost. And our RedBook Inspect business demonstrated good growth in underlying inspection services and volumes, particularly in our prepurchase and rideshare segments. So maybe let's talk a little bit about our global priorities on Slide 26. And we're really passionate about delivering the most frictionless buying and selling experience for our customers around the world. And we remain very alive to the competitive dynamics in each market, and we're sharply focused on execution as we head into FY '24. And this focus is particularly targeted in 5 key areas that are articulated on that slide, as you can see. And over the next 12 months, we've made -- over the last 12 months, I should say, we've made excellent progress in each of these areas, which we'll -- I'll provide you some more details on in a second as we go through. So on to Slide 27. And just starting with market leadership and our goal here is to solidify and extend our market leadership position in all of our markets. And as you can see here, we're doing a good job in this area, as demonstrated by the audience, our lead versus our nearest competitor in each of our jurisdictions, and we're well placed as the network effects that we have continued to deliver the strongest possible value proposition for our customers and dealers going forward. On to Slide 28 and just looking at digital transactions. And given our huge global vehicle audience and digital capabilities across the group, we're very pleased with how this is shaping up for us, and we're well placed to facilitate increasingly digital buying and selling experience that people are looking for. And whilst most consumers probably aren't currently willing to complete the entire process of a car-buying journey online. We're focused on providing consumers with the option to pick and choose which part of the process they'd like to complete digitally. And as you can see here, we're making excellent progress in reducing the friction that we see across each step of the buying process on this digital journey in each of our key markets. Just a few key highlights to call out in terms of progress over the last 6 months. In Australia, we launched a digital finance application process in the U.S. We're now facilitating safe and secure payments. In Brazil, we're improving the finance integration with Santander. And we've integrated Car10, which is our repair and service marketplace business into webmotors. And look, I mean, overall, there's still a long way to go, but the benefits of this strategy are already paying off for us, and that's reflected in the growth we're seeing here, which is giving us the confidence to keep investing in these areas. I'm on to Slide 29 and just looking at dynamic pricing. I guess the thing to say is over the last 7 years, we've been able to evolve our pricing strategy for private sellers in Australia from a simple fixed price model to value in location-based pricing, and this has delivered strong yield growth. And more recently, we've included metro/rural based pricing to optimize volumes and yield in FY '24. Really pleasing to see the dynamic pricing strategies being replicated in Brazil and the U.S. with strong early results and plenty of upside still to be delivered there over time. On to Slide 30. And look, I mean, as most of you are aware, in Australia, we modified our media strategy a couple of years back now. And that was to diversify more heavily into non-automotive customer segments and introduce more innovative audience, programmatic and native product solutions. So the evolution of our carsales match in [ ID prox ] is really an extension of this more sophisticated product offering, which enables our advertising partners to better target specific audiences as well as purchase our media products in a much more convenient way. Both these initiatives have contributed to excellent growth that we're seeing in our Australian media business segment and have significant potential for further revenue upside longer term. We're also seeing the potential to deploy this tech that we have into our global markets. In Q4 of FY '23, we deployed our carsales programmatic advertising technology into Trader Interactive, which has driven a significant increase in ad viewability and monetization, and we expect this will provide decent financial upside for TI into FY '24. And this programmatic advertising solution that we have, we also think has potential to scale into other markets that we've got like Brazil and potentially Korea with minimal additional work. Just on to Slide 31 and we get future horizons. And I guess the vehicle industry we operate in is undergoing a lot of change, as you all know, including growth in EVs and the adoption of EVs, new OEM operating models and increasing digitization of the buying and selling process. And I think, as a business, we're uniquely positioned to respond and to benefit from many of these trends, which is the key thesis of our future horizon strategy where we're constantly looking to explore new ideas and opportunities to grow. So as shown on this slide, we think about 4 future horizons across 4 key pillars. So the first is ensuring that we're as a business continually fueling internal innovation through in-house product development. And you can see things like hackathons are really important to us here. Second pillar includes us extending our audience and competitive advantage into new markets. A good recent example of that is the release of our caravan and camping accessories e-commerce store. And you'll see more of that if that works well for us into other verticals over time. The third pillar is continue to explore M&A opportunities where we can deploy our IP and tech into attractive new markets. And finally, the fourth pillar is about making small investments into very select early-stage businesses to make sure that as a company, we are leveraging insights and trends from the most innovative early-stage businesses operating in our industry. So key focuses there are around electrification, autonomous vehicles and fintech at the moment. On to Slide 32, and just talk a little bit about AI. And look, I guess, for us, AI isn't anything new. As you can see from this slide, we've been investing in and using AI for a long time. The 3 pillars in AI are, strategy around enhancing our consumer experience on site, enhancing elements of trust and safety, and optimizing our business process. And you can see a number of use cases we currently have in play amongst the group today on that slide. I guess one thing to say is AI has become more topical recently, as we all know, given the prevalence of an increased adoption of large language models, there's undoubtedly a significant opportunity for us as a business to better utilize our data through AI. We see ongoing opportunity around assisted experiences for customers like personalized conversational search experience, our AI-assisted content generation for new ads and so on. Other areas that might be further optimizing our software engineering processes to help developers write code faster and more accurately or automating other manual processes that we have in a business. So looking -- I mean, in short, AI is helping us to build better solutions and improve productivity through the company. Now on to Slide 33. And I guess, as a business, we're committed to being responsible corporate citizens and taking action on environmental, social and governance issues, which is almost -- it's important in ensuring that as a business, we maintain our ongoing success. Our teams are dedicating more of their efforts to ESG issues given the growth in our group's global footprint. And as you can see from the slide here, we've made some excellent progress in this space over the last 12 months. This includes the publishing of our first TCFD report and implementing a subsidiary based Board risk management framework, which will be critical in helping us manage global country risk and business performance ongoing. So on to Slide 34, and this is the last slide in the deck. So look, just to summarize, again, we've had an excellent 12 months on all fronts. We're really looking forward to FY '24 and the opportunities that, that's going to present to us. Some of those opportunities include, but aren't limited to, our desire to continue to build on our market leadership positions, building competitive advantage and delivering long-term sustainable growth for shareholders. We're focused on removing friction points as you hear us talking about all the time in buying and selling. And you can see how that continues to play out for us in the context of the earlier slide around digital retailing. We know we've got a great opportunity in our international markets with new products being delivered and we're also focused on growing customer acquisition take rates over time there. And the last 12 months, you probably more noticeably seen our IP and technology transfers within the group, which isn't anything terribly new for us, but there'll be more of that to come. And finally, the last thing to say is we're a good generator of cash and as our EBITDA margins continue to expand over time, you'll see this continue to be a feature of the business whilst also investing in future growth and continuing to pay attractive dividends to shareholders. So I guess that's probably it, and we'll hand over to questions from there.

[Operator Instructions] Your first question comes from Eric Choi with Barrenjoey.

Good result as always. I just have 3. First one on private and maybe for pcp. Just wondering, could you give us a bit of a steer on the splits between volumes, price and IO in FY '23? And then in early FY '24, is at around 11% for price so far and volume still up pretty strongly on a weaker first half pcp base. Second 1 on Lori -- for Lori, sorry. It feels like that good revenue growth in FY '24 guidance could be delivered by price and product alone. But just thinking about the volume outlook we can see Powersports dealer penetration is really strong, but maybe RV inventories are softening ever so slightly. So I'm just wondering what you're seeing so far, Lori and what you've assumed into FY '24. And then the third one for SB. Just on Dealer Direct, just wondering if that's improving month on month now. And I ask because Dealer Direct was worth 5 percentage points to revenue growth in '22, but not much in '23. And I'm just wondering if those headwinds reverse in FY '24, could there be a bit of upside.

Thanks, Eric. I'll start with the private in Australia. So as you can see from the volumes on the site, the volumes were strong in FY '23. At yield, we had double-digit growth there and a good mixture between ad yield and IO, which continues to perform well. We've started the year well from a volume perspective, it's still strong. It's where we expected and we expect the same as what we saw last year from a yield and from an IO perspective, just a good mix there contributing to the overall private number.

Lori, do you want to take that second question? .

Yes. Eric. Yes, in terms of -- we've had really good momentum on the product initiatives that you mentioned and we've definitely had good customer growth as well. When we look at the inventory volumes, we do actually see the RV industry appears to be near the end of a destocking cycle and actually looking to be setting up for a growth year. So overall, we should expect shipments to pick up again and start to see inventory levels grow over the next year. That said, you know our model is not that sensitive to them. So that really isn't heavily reflected. But when we do set our annual expectations, we always look at the market, we take those dynamics into consideration and ultimately want to make sure we hit our outlook. So, that's kind of how we've looked at that.

And SB, do you want to take the third question from Eric?

Sure. The FY '23, the Dealer Direct was not as good as we hoped, particularly around the beginning of this year and the end of last year calendar year because of the financial market crunch. But if we look at the last few months, I mean, it has been improving month by month. So I mean we can't exactly predict the future, but in the next FY '24, we hope that it's going to be better.

Your next question comes from Kane Hannan with Goldman Sachs.

Just Dealer Depth. I think you guys were calling out the improvement in that through the first half. So just interested if you talk about how the Dealer Depth contribution tracked in the second half and how we think about that carrying into FY '24. And then 2 on webmotors. So obviously, a big acceleration in the second half revenue growth and you've called out finance dynamic pricing as tailwinds into '24. Are there any offsets we should be thinking about from a growth perspective that might slow things down outside of just a larger base. And then specifically on the associates, it look like they did nearly 60% top line growth. I mean, are they breakeven yet? Or how far away do we think they are from being EBITDA breakeven?

Thanks, Kane. Just on the Dealer Depth. Well, as we expected, we had a good lift in the run rates with the increase in inventory. We expect in FY '24, a 1% to 2% increase from a whole dealer perspective. So yes, as inventory keeps increasing and the market changes, we expect that to become more important.

Thanks, Paul, and I'll let Will take the second one.

Yes. Just on webmotors, yes, obviously, we've had a fantastic FY '23 and heading into FY '24, you can see the guidance is for strong growth in revenue and EBITDA. No headwinds there, Kane. We're just seeing continued momentum. They've just had an interest rate drop in Brazil, which we think is going to be helpful overall. And so all the things that have been driving growth around national expansion and some of the product development that we're doing, we expect to continue into FY '24. And then in terms of the associates, they're not actually associates. They're consolidated subsidiaries which is Car10 and Loop, I think you're referring to. As you mentioned, they're growing very nicely, quite strongly top line and their EBITDA performance is improving. So now combined, they are better than breakeven, and we expect that to have an upside into next year as well.

Your next question comes from [ Anshu Raykovski ] with E&P.

So my first question is on -- just on the dealer segment domestically. And I was wondering if you can provide us with the components of the 10% dealer revenue growth. Obviously, leads yields and other. And just as part of that, just on Dealer Depth as well, I think you've disclosed in your annual report the Dealer Depth growth accelerated to 12% in the second half, up from 7% in the first half. I appreciate you've given us sort of guidance about the dealer segment as a whole, but is that 12% indicative of the run rate for Dealer Depth in FY '24. Or do the comps make this more difficult to maintain. We've got a couple of others, but maybe I'll wait for the answer to that one first.

Yes. Thanks, [ Anshu ] So from a -- for this year from a revenue growth perspective, most of the growth has come to yield. The volume has been good. It's been pretty flat on pcp. So most of that came from yield growth. From a Depth perspective, yes, I think that 12%, we expect to maintain that for this year with the increased inventory and the added functionality that we have put into the Depth program.

Okay. Great. And second question, also domestic and private. Conscious that private listings are now sitting at over 100,000, which is, I mean, I think the highest you've had ever. To what extent is this driven in your view by market share gains given that Gumtree inventories are down since they started charging early this calendar year? And to what extent do you think it's cyclical. I mean you've obviously guided to further growth in private ad volumes in '24 but just interested to how you think about the risk to the private volume number going forward?

Yes. Well, I think from a competitive point of view, we've certainly taken a lot of market share, and we put a lot of it down to that. I mean it's also where the market has skewed since COVID to that private. So there's a good mix between that. But we're -- I mean the way we started this year is as expected, and we feel pretty comfortable where we're at for this year.

Okay. Great. And a final one, this is probably for SB on Encar. Why the guidance for slightly lower EBITDA growth versus revenue growth. You're obviously guiding to good revenue growth, solid EBITDA growth. Is there any specific investment that's required in FY '24 at Encar.

Well, there's no specific investment. But overall, I mean, going forward for us to lead our journey to the transaction model and digital retailing, we would like to enhance a bit of investment, I mean, to strengthen our market position in the longer term. .

Okay. Great. So nothing temporary, just more business as usual?

Yes.

Question from Darren Leung with Macquarie.

Congrats on a good results. I just had 3 as well, please. Maybe just the first 1 for Lori on Trader Interactive. It looks like you're getting some pretty good traction in terms of deploying [indiscernible] in terms of yield uplift and new products. Given where the market is sitting in terms of the RV market, how should we think about the balance of plan volumes as in further dealer penetration against further yield uplift? And then maybe as an extension of that, how should we think about the longer-term margins for this business, please? .

Yes. So I think as we think about as we're talking about with the prior question, in terms of the shipments in RV specifically, it's definitely been we had a lot of units that were pushed out for 2022. Those have been struggling. They're selling them. It's been a lower sales year, but we really do feel like we are at the end of that, and those are going to start to lift up. But there's a lot of uncertainty in the market. So we are conservative in our estimates around the forecast with that. But in terms of what that means. But we want to continue to grow on volume. We want to -- we've had great customer gains this year. We want to continue to push on that. But I would say we probably weren't aggressive in our model. And like I said before, we want to make sure we hit our outlook. We are sensitive to things going on in the market and want to make sure we take that into consideration.

And I might ask one or two in succession. Just on Brazil, the dynamic pricing piece in private, will we see the same amount of uplift that we've seen in the [indiscernible] so far? And I guess the question is, are we too conservative to assume it's only going to be strong revenue growth? And then the third one was just the question on Slide 23. We talk about market leadership, but if we look at sort of where the audience metrics are, how should we be thinking about the amount of increased investment in Brazil and Korea in particular.

Thanks, Darren. I might let Will tackle the one on webmotors and then Cam on market leadership.

So I think on webmotors, I think we see ongoing upside. We've only just started, Darren, in terms of [ volume ] dynamic pricing into webmotors. And so that's really just an early read on that deployment. I think we see a significant upside [Technical Difficulty] ongoing from a private perspective. Having said that, private in Brazil is obviously a much smaller part of their overall revenue mix versus Australia, but we're seeing very similar outcomes to what we've seen in other markets.

And just on investment in webmotors and Encar. I mean clearly, we see significant opportunities in those markets. They're great markets. And there's a lot of opportunity for us to win in those regional areas, in particular, in Brazil. And in the C2B space in Korea as well. So look, I don't see anything out of the ordinary. Over the course of the next 12 months, Korea is a market that is showing signs of improvement as SB had talked to. We want to make sure that we're at the forefront of that. And we're getting behind our Dealer Direct business there. But I don't see anything extremely out of ordinary, it will be ongoing investment.

Your next question comes from Siraj Ahmed with Citigroup.

I just ask 3 questions. The first one on dealer. The guidance was a bit weaker than you expected, especially when you think 1% to 2% from debt. So just can't understand how you're thinking about price and lead volumes into next year? Secondly, and also just level this year as well. Secondly, in terms of private, the volume guidance, is it fair to assume that your guidance assumes first half as volumes are up pretty strongly, but second half could be soft to slightly down. And thirdly, in terms of TI, the Premium Select the 400 dealers, I mean, what do the penetration be in Australia for the Premium Select offering?

Thanks. From a dealer perspective, we expect this year to be good. From a price point of view, from a yield point of view, we'll see similar sort of yield to what we saw this year. Volumes, we expect volumes to increase on pcp with an increase in inventory. So we feel pretty good about dealer for this year. The private volumes were strong this year, which we saw. We've started the year really well as we expected. We probably don't expect the same level of volume, but we do expect it to be strong. And where we are from a yield and from an IO perspective, we expect that mix to hold us in good stead. And from a Select perspective, we've really concentrated on the product side and the customer journey rather than trying to penetrate our dealer penetration. So that's still a duty we're undertaking, but it's more so on the consumer side rather than pushing volume on the dealer side.

And Siraj, I was just going to also add in just on your -- in terms of Premium Select penetration in comparison to Australia, it's probably not a great comparison because the product set is completely different. And so I think there's not really a meaningful way to compare strong penetration and U.S. penetration on that product.

Your next question comes from Lucy Huang with UBS.

I've also got 3 questions. So just firstly, in the private division. Just wondering if you can give us a sense as to where Instant Offer currently sits from a contribution perspective to private revenues? And then just 2 questions on TI as well. Just with the dealer subscription, I think you mentioned you've added 300 subscriptions this year. Any color you can provide on which verticals they're mainly coming from, whether it's trucks, RVs or motor sports. And then also maybe just some comments on the relative performance we've seen this year across trucks and motor sports that would be great.

Thanks, Lucy. From an Instant Offer perspective, we're not giving commentary around where the volume sits, but we are happy with where it's performing, and we're really happy with the way it mixes in with our private sellers that go from trade -- of the Instant Offer product to private. So it's performing really well.

And then, Lori, do you want to take the second question? .

Yes. So talking about the subscription gains that we've had. I mean, we've put a very concerted effort in growing our Powersports customer share as well as our truck customer share, and we're seeing good gains there. We've also grown equipment. I mean that's really where our focus has been. And if you look at the relative performance seemingly more industry-wide. As we are saying, RV definitely had a bit of a slower year, and we hope that, that's on the uptick. But the other verticals are performing very, very well. And particularly the truck segment has really started to kick off. It was one that was slow to rebound after COVID and is definitely strong right now.

Your next question comes from Roger Samuel with Jefferies Australia.

I'll stick with 3 questions as well. Firstly, in Australia for the Dealer segment. So Cam, you mentioned that the used car prices have plateaued right now. Just wondering, does that affect your ability to raise prices in FY '24? Or we should see the yield growth mainly coming from Depth? Second question is on Korea. Your penetration of guaranteed listings is very high now at 46%. Do you think there's much upside from here? Maybe it's getting harder to grow the penetration from this point onwards? And last one on your tax rate. Obviously, you've got a benefit from TI in its result. But I was just wondering if you can give us the guidance for your tax rate in FY '24.

Thanks, Roger. On the dealer, yes, used car prices have plateaued a little, but where they're -- I mean, we're still seeing dealers doing very well. From a price rise perspective, we feel we've got some room to move there. We're always focused on the value that we deliver the dealers. So that's at the front of our mind there. And we expect our yield increases to be similar or a little bit less than where we were last year.

And SB, do you want to take the second question? We might have lost SB. I might let Will take that question.

No, actually in terms of [indiscernible]

I was on mute, sorry. Do you want me to go first? Or Will do you want to go first?

You go first.

Okay, sure. Sorry about that, I was on mute. I mean 46% penetration of the guarantee, we do still believe that there is a room to grow further. Of course, there is a couple of efforts that we have to do. First one is we need to varietize branch format to go to the further penetration above the 50%, but at the same time in order to improve the yield of the existing branches of the guarantee. But I mean we do still believe that there is room to grow further.

And then Will on the tax rate? .

Yes. So just on tax rate, Roger, you're right. We've -- obviously, our tax rate overall is much lower than where it has been due to the upside we get from Trader Interactive. And into next year, we expect a similar tax rate as a percentage of profit before tax because we're going to continue to see upside from a Trader Interactive perspective.

Your next question comes from Sriharsh Singh with Bank of America Securities.

Three questions from my side. One on the Australian business. Could you provide some commentary on the changes in time to sell in the second half of fiscal year '23 versus first half on the private side? And then 2 questions on the U.S. TI from Lori, one, given the low level of inventory in RVs, have you seen any of the dealers downgrading their subscription tiers in FY '23? And how is the conversations flowing into the next year? And second, on the Powersports motorbike segment in the U.S. Can you talk about the competitive dynamics with Harley-Davidson's H-D1 marketplace. They have ramped up to 30,000 bikes on the marketplace and targeting Harley-Davidson dealers. How are you seeing that bit of competition?

That was the time to sell was in private. So yes, we've seen from the first half to the second half, a slight increase in the time to sell from private inventory, which leads to a little less churn and a higher inventory count, which you can see on the site, but just a slight increase in time to sell.

And Lori, do you want to take the 2 questions?

Yes. So in terms of the low inventory in RV, I mean, like we've talked about, we really don't -- we're not heavily impacted by the inventory levels. I mean, in COVID, it was very extreme in terms of inventory gaps. But in this kind of dynamic, it's just not very impactful to our subscription model. So it hasn't been huge. I think we're seeing the opposite in some of the other industries that they have rebounded from COVID like truck, we're able to get more new customers, but we're not losing the customers on the RV side. So we are handling that quite well. In terms of the HD, the Harley-Davidson side, I mean, we definitely don't -- we definitely watch them. They're an OEM partner. We work with them very, very well in a lot of ways. So from a dealer perspective, though, it is an option to sell their inventory. But what we're hearing is it's fairly low lead volume coming from them. It's not their only exclusive option. So they're promoting it as part of their OEM relationship and they're pushing their inventory over, but I think it's more not attractive to consumers at this stage. So I think that's -- we're watching them, but I wouldn't really say we're viewing them competitively at that same level right now.

Thanks Lori. We might have time for 1 more call, please, operator.

Your final comes from Wei-Weng Chen with RBC Capital Markets.

Just a couple of questions from me. So the first one on the Mexican business. Just wondering whether that was a sale process or you were just going to wind that business up. And then just on tyres, I guess, in light of your recent write-down, tyres was and I guess still is a pretty large TAM opportunity. How are you thinking about this segment of the market in the near and longer term? Yes, I'll leave it there.

Okay. Thanks, Weng, Cam. I'll let you take those.

Yes. Thanks. Great questions. So look, just with Mexico, I guess, we've been in Mexico for 8 years, burned a hole in our pocket for 8 years with the acquisition of the additional 40% webmotors, the view was taken with -- there are other things that we want to spend our time and effort on, and we decided to close it, whether we can sell it or not, it's a different story. But -- that's where things are at there at the moment. And then with tyres, and we still believe in that tyres business. It's a great way to keep consumers engaged outside of the buy and sell cycle. It's a $5 billion industry. It's worth ongoing investment in. But yes, I think we just took the position that given where things had been at recently that it was conservative to take that impairment there, but we still believe in the tyres industry. I guess that's it. Thank you for joining the call this morning, and we look forward to catching you all during the course of the next couple of days. Thanks, operator. .