CAR Group Limited (CAR) Earnings Call Transcript & Summary

Good morning, everyone, and thanks for joining us today for CAR Group's FY '24 Results Conference Call. This morning, on the call, Will and I are going to run you through the presentation around 30 minutes like we always do. You'll hear us read out the slide numbers as we go. And after that, we'll have a Q&A session in the second half, and we'll introduce -- then we'll bring the rest of the team into the conversation as well. But in the room with Will and I, we've also got Paul Barlow from carsales Australia; SB Kim from Encar in South Korea; David McMinn from Trader Interactive in the United States; Eduardo Jurcevic from Webmotors in Brazil; and Rachel Scully, our Head of Investor Relations. So looks like we'll start with Slide 5. And as you can see, it's been another great year for the group with excellent progress from our financial, operational and strategic perspectives. This year's result really does build on the consistent growth that we've delivered over many years now, and it reflects the strength of our global marketplaces and engaging consumers and the value that we're delivering for them. Look, over more, our more Eastern acquisitions in Brazil and the United States are doing really well for us, and we're confident these businesses will continue to deliver and drive significant long-term value for shareholders. I mean you can see here, the pro forma results on this page are probably the best reflection to the underlying performance of the company as they re-base our FY '23 to fully include Trader Interactive and Webmotors. On a constant currency basis, so group diluted, 15% growth in revenue and 16% growth in EBITDA, which was an excellent outcome. We delivered a strong margin performance of 53%, which was slightly up on last year. And adjusted NPAT was up 24%, which was also a strong result. We reached a good milestone for us of revenue to $1.1 billion, and we delivered double-digit revenue and EBITDA growth across all of our regions once again. Turning to Slide 6. And as you can see here, we've continued to see strong levels of trading in our marketplaces across the globe. And it's an excellent result given the ongoing high interest rate environment that we see has demonstrated the strength of our market positions and the resilience of our business model. Inventory levels overall, they continue to rise, which reflects a strong competitive position and the normalization of the new car vehicle supply and time to sell. And these high stock levels, they have helped to drive good levels of depth penetration that we've talked about for a while as customers seek for more inventory and differentiate their vehicles online. And I'll talk through a little bit more about this later in the presentation. We continue to grow at dealer customer numbers, which is a great testament to the strength of the value proposition that we have for our dealers. We delivered 22 million leads for dealers, which was similar to last year, and this was a good result in a more subdued environment with growth in leads in Australia and Brazil, which is great, offset by softer demand in the United States. And we saw consistent demand in Korea over the last 12 months as well. On to Slide 7. And as you can see here, the business is significantly more diversified across geographies and verticals than it was 5 years ago back in 2019. Our new group operating structure is working really well, enabling the team to execute strongly in each business as well as sharing products, intellectual property and technology across different markets, wherever it makes sense. Looking at Slide 8, and this shows the breadth of the retail brands that we operate across multiple jurisdictions. The strength of these brands is reflected in the $15 billion of addressable markets that we operate in, which is shown in the bottom of the page there. You can see that. All these are large markets with attractive attributes, and our current penetration is still under 10%, which provides us with a significant long-term growth opportunity in each market that we're in. Moving on to Slide 9. And our purpose and strategy remains consistent. I mean the purpose and ambition of the business are what really drive us, and that's about providing an outstanding experience for buyers and sellers, which help us to maintain and grow our #1 digital marketplaces for vehicles around the world. And look, to deliver this, our first focus area is to simplify everything about buying and selling vehicles. And we basically want to remove friction points, open up new opportunities to monetize and extend our role in the buying and selling process. Second focus area is to make sure that we continue investing in new opportunities, which are -- they're going to drive future growth and mitigate the risk of disruption. This includes house product development, innovation, which has always been at the core of what we do as a company. It also includes launching new verticals like we've done and talked about with marine in the United States. We're acquiring new businesses in underpenetrated high-growth markets like Webmotors and investing in emerging technologies like AI or electrification, for example. On to Slide 10. And this slide here clearly demonstrates the benefit of the compute investment that we've been making. We've delivered an uplift in organic growth in Australia over the last few years. Some key drivers here have been our reinvigorated media strategy, dynamic pricing, higher depth uptake and improved Instant Offer product. And organic momentum has been clearly complemented with the acquisitions of Trader Interactive and Webmotors and synergies that we've delivered in those businesses more easily as well. Turning to Slide 11. And this summarizes the first 12 months of our ownership of Webmotors. We've made really strong progress across the business, which is resulting in excellent financial outcomes. And you'll see in more in a moment, but some highlights here that we want to talk about on this page are the fact that we've extended our market leadership position through a national expansion strategy. In finance, if you look on the left-hand side there, we're seeing strong growth momentum with our new finance integration with Santander. That's delivering a 35% uplift in auto finance contracts written in the second half for us. And this has been bolstered by improving macro and credit environment in Brazil. Look, our partnership with Santander has never been stronger, and it's great to have [ Jimmy Kim ]. He is the Head of Consumer Finance in Webmotors in Brazil. He's going to be in Australia this week, so going to be on the road show. And he's also on the Board of Webmotors. He's been pivotal in our partnership with Santander as that continues to move forward. Look, at the time of acquisition, we did identify the diversification of Webmotors revenue base as a key synergy with our change in ownership. And given this, it's really pleasing to see strong growth in private media and finance revenue. We've deployed dynamic pricing in the private segment, which has really driven strong uplift in yield. Whilst in media, we've implemented some programmatic ad cap from Australia, which is also delivering a significant uplift in monetization for them. And we're building a larger dedicated sales team to engage direct with OEMs. And finally, I guess the thing to say here is that we've got great momentum going into FY '25 as well. Slide 12. And look, our strategic priorities are consistent here and they're pretty clear. FY '24 was the year of significant progress, which I'll take you through over the next several slides. So on to Slide 13. And our ability to deliver a large and engaged audience to our customers is critical to our success as a business. And as you can see here, we continue to hold very strong market leadership positions in each of our four key markets. Our market leadership is driven by a compelling combination of audience, CAC and data. And over the past 12 months, our audience position has strengthened in both volume and engagement of buyers has increased. Now turning to Slide 14. And from a digital retailing point of view, we've made a lot of progress here, increasing the digitization of transactions in each of our markets. I guess the first call-out is South Korea, which is at the forefront in terms of digital retailing for used cars. And this has been reflected in the continued evolution and growth in the Encar home product over the last 12 months. And this product has got significant potential over the next few years we see and -- as the consumer experience improves and more people become comfortable with purchasing through digital channels in South Korea. On the right-hand side there in the U.S., we've seen a 220% uplift in our powersports direct leads in what's a more challenging market right now. Powersport is a key vertical for providing a fully digitized transaction, giving us lower average inventory value. So an increase in transaction volume here is a pleasing result. On to Slide 15. And look, as I mentioned earlier, we've seen strong adoption of our depth products and services. And this is a great slide and just shows one of the countercyclical elements that we have as a business. And with global inventory levels growing and time to sell back to where it was pre-COVID levels, our depth product offerings for dealers are a way for them to really differentiate their inventory and reduce time of sale and improve their own cash flows. We introduced our new products or simplified packages to address this increasing demand, which has contributed to a strong uplift in the penetration in all our key markets. On to media on Slide 16. And it's great to see the performance of our media business continue to be very strong. The global new car market is very competitive, particularly with new Chinese entrants. Our unrivaled audience data and technology helps OEMs to drive increased engagement in their new model launches. But we continue to execute well on our media strategy in Australia, which has a little bit excellent growth in revenue. But even more pleasing is that we've seen the Australian IP and tech leverage into North America and into Brazil. And this includes deploying new programmatic technology and growing our direct go-to-market approach with OEMs and agencies in those markets. On Slide 17 and just looking at some future horizon stuff. And we've been working hard since the launch of our new marine brand late last calendar year in the United States. Stats are all trending in the right direction for us since launch with a significant uplift in dealers, inventory visits and leads. And the marine market in terms of total addressability is very large in the United States, and we're pleased with the progress we're making, where we're looking to start commercializing this over the next 6 months. Slide 18. And look, I just wanted to highlight and reiterate the multiple growth levers that we have in each of our businesses. We've never had more growth levers than we do today. And our traditional growth drivers continue to deliver good growth this year as you see, and our new growth drivers are continuing to more and more add more value to us year-over-year. On to Slide 19, there's a lot in this slide. This slide captures the revenue and EBITDA performance of the company. We now have on a pro rata basis since 2007. You can see here the group's consistently delivered growth through multiple economic cycles. Our businesses have a lot of countercyclical attributes. Where we're more geared to used vehicles, dealers always need to move inventory. And we offer a good return on investment compared to other advertising sources available to them. Despite interest rates, I guess, remaining high, we are seeing good growth in both our operational and financial performance metrics, which gives us great confidence as we think about the longer-term potential and the positive outlook that we've got on FY '25. So just while we're talking about the outlook on Slide 20, and as you can see there, on a constant currency basis, we expect good growth in revenue and in EBITDA once again in FY '25. In terms of margins, with some reinvestment into the business and some significant growth that we expect to see come from some business with lower margin, we'll see similar group EBITDA margin in FY '25. Just looking first at the Australian business on the left-hand side there, in the dealer, we expect to see a good growth in dealer revenue in FY '25. And this growth is expected to be supported by growth in leads volume, used and new. In private, we anticipate solid revenue growth supported by dynamic pricing optimization and Instant Offer growth. In media, we expect to see good revenue growth supported by continued expansion of our native ad products, programmatic capability, and nonautomotive advertising diversification. And then looking at the investments there, we're expecting solid growth in revenue and similar EBITDA in FY '24. Looking on the right-hand side of the slide there at our international business, and all these are on a constant currency basis, so North America expected to see good growth in revenue and good growth in EBITDA in '25. Lat Am, which is our Brazil and Chilean operations, we expect to see strong growth in revenue and strong growth in EBITDA. In Asia, we expect to see good growth in revenue and solid growth in EBITDA. And then just an additional comment, thinking about the start of the year, the 6 weeks trading so far started well and our execution is strong. And that gives us confidence in the outlook statement that we're making today. So with that, on Slide 21, I'll hand you over to Will to talk about the financial reports.

Thanks, Cam, and good morning, everyone. The group delivered another great result in FY '24. On Slide 22, you can see the consistent growth that we've delivered across four of our key financial metrics. And this reflects the large investments we've made in improving consumer experience and also growing our audience. And given the large markets we operate in and the multiple growth levers, we've got -- we're confident in our ability to continue delivering great outcomes. Moving on to the P&L summary on Slide 23. The large increase in revenue, operating expenses and EBITDA mainly reflects the impact of consolidating Trader Interactive and Webmotors for the full year. Pro forma revenue and EBITDA normalizes for acquisitions, and I'll talk to this on the next slide. On this slide, I'll just go into a little bit more detail about the items below EBITDA. Depreciation and amortization largely comprise the amortization of software development investments that we've made over the last few years. And normalizing for acquisitions, this is largely growing in line with revenue. The increase in finance costs you can see here is driven by the higher interest rates that we've all observed over the last 18 months. On tax, the group's effective tax rate in FY '24 was similar to last year at around 19%. This reflects the corporate tax rate that we have in each of our jurisdictions, except in the U.S. where we currently pay them tax. This is due to the tax deductions for the amortization of purchase price intangibles as well as utilizing prior period tax losses, which we inherited through the acquisition. Adjusted net profit of $344 million was up 24%, and this benefited from the Webmotors and TI acquisitions. Adjusted EPS growth is probably a better representation of underlying performance. That includes the increased shares from recent capital raises. And on this basis, it was great to see us deliver growth of 17%. This growth, combined with strong free cash flow generation, supported the Board's decision to declare a final dividend of $0.385 per share, which is up 18% from last year. And as we show just in the bottom left-hand corner of the table, the group's adjusted results given from reported results due to excluding one-off on noncash items. And in FY '24, this was primarily the noncash amortization purchase price annuals. And we've also got a detailed reconciliation of this in the appendix. Turning to Slide 24 now. We show the business on a pro forma basis, which I mentioned before, and it consolidates TI and Webmotors in both the current and comparative periods. I'm not going to go into too much detail on this slide as Cam is going to talk to the segment in more detail shortly, but it is great to see the double-digit revenue and EBITDA growth across all key regions. And this really does showcase the resilience of our business model in a higher interest rate environment. On to Slide 25, in what's been another great margin performance from the business, with group EBITDA margins slightly increasing over the last 12 months to 52.9%. It really does emphasize the operating leverage earned in our business model and whilst we continue to invest in new products and initiatives, which are going to be the drivers of our current future growth. Margins increased across all of Australia, North America and Latin America. And now we will continue to invest into marketing our Dealer Direct trade-in products as credit conditions continue to improve in Korea. Moving to Slide 26 now. Our business has had another good conversion of earnings to cash this year due to strong working capital profile of the business. The balance sheet is in really good shape. Very nice to see leverage reduce to 1.7x EBITDA. And then finally, CapEx as a percentage of revenues remained pretty consistent over the last 12 months. We continue to invest in key products and technologies to drive our growth. And some of these areas are highlighted on this slide, and they really do position us well for future growth. Now I'll hand back to Cam to talk further about our operational and financial performance in each market.

Thanks, Will. Look, before we talk about Australian financial performance, I just think it's probably useful to provide a little bit of context around the operating environment that we're in. So we're going to say despite some concerns about the broader macro environment here, the automotive industry in Australia has continued to be robust, reflected really by the strong audience engagement that we've seen and the demand for cars on the carsales platform. New car sales, they were strong in FY '24 as the manufacturers' supply improved and then back orders were really cleared. But over the last several months, probably seen new car demand moderate a little bit. As a result, we've seen more offers and discounts for manufacturers into the market. Demand for the used car does remain healthy. Used car supply is increasing, as you can see on the car sales side, which is okay, but pricing has probably reduced a little bit but still well above pre-COVID levels. And while time to sell has also normalized, dealers are, on average, still making good gross margins on used vehicles they're selling. On to Slide 29. It's been another great year for our Australian business with revenue and EBITDA growth up 13%, supported by continued strength of our marketplace and audience metrics. We delivered good double-digit growth across revenue and all of our revenue statements. Just focusing on each of them, we had deal with [ firms ]. So it's going to be dealer, up by 12%, driven by good demand for used cars, yield and increased penetration of depth products. It was really pleasing to see depth penetration continue to increase as inventory levels and time to sell both normalized. Private, we continue to deliver good outcomes for private sellers and have continued to increase our market share there as a result over the last 12 months. Also, seeing our ability to grow overall private yield through further optimizing dynamic pricing and continuing to scale in some offer. And that's resulting in good revenue growth of 10%. Media, strong media revenue growth of 20% is indicative of a healthy new car market with strong production and new car model launches, and this is supported by a significant investment that we've made over time with our media business to deliver more innovative and personalized advertising solutions for our customers. And then DRS, or data, research and services, up by 10%. Was good on [ PPP ], and that was driven by our Redbook data business. So looking at Slide 30 in North America, and it's been an excellent year for the TI or Trader Interactive business with double-digit revenue and earnings growth, which is a great outcome given the more challenging macro conditions, particularly in recreational vehicles. Growth continues to come from multiple sources. This includes higher customer numbers over the last 12 months. RV trader customer numbers were stable, which is a great growth outcome given RV demand has been subdued over the -- other key growth drivers include a significant uplift in Premium Select transactions. We're seeing yield increases, dynamic pricing and growth in our media revenue. On to Slide 31. And yes, the Latin American segment includes Webmotors in Chile, what I had mentioned before. Latin American segment delivered an outstanding result with revenue growth of 25% and EBITDA growth of 34% on a constant currency basis, and that's largely the reflection of the performance of Webmotors. National expansion strategy that we talked about sometimes continue to deliver excellent growth through adding new dealers, growing our audience, and increasing private seller values. The implementation of dynamic pricing delivered significant growth in private seller, as you'd expect to see. Finance volumes also grew strongly, as I mentioned that earlier. And media is starting to become a key growth driver of the business. Results also include the contributions of those other adjacent markets, so being Car10 and Loop. Both those businesses have demonstrated excellent growth in revenue and earnings over the last 12 months. And then I'll just point out, the Chile autos have had a good year too, and they've successfully implemented the dealer leads model across the Chilean market. On to Slide 29 and just looking at Asia, Encar there largely. And Encar had an excellent year with revenue and EBITDA up 15% and 11%, respectively, on a constant currency basis. Market conditions in South Korea continued to improve over the last 12 months, which is supporting the growth that we've seen. We actually added eight new branches over the past year, which was a great result. And this has supported another significant increase in penetration for Guarantee Inspection products. Revenue growth, supported by a 10% price rise on standard ads that was introduced at the end of the first half of the year. Encar also continues to make strong progress on it's mission to facilitate online car transactions, which I mentioned earlier. And that's reflected in the strong growth that we've seen in Encar Home digital retailing services. Dealer Direct also continued to improve as the macro credit challenges experienced in FY '23 also alleviated. So Slide 33, and we'll turn to some strategy stuff now, so maybe we'll go straight to 34. And on Slide 34 there, you'll recognize our strategic priorities. On the next few slides, we'll go through each and walk through a couple of the key focus areas, the growth as we come into these 12 to 24 months. So maybe starting with Slide 35. And depth products here are an excellent way to engage potential buyers and deliver value for our sellers. In Brazil, Webmotors in partnership with Santander, they've launched an incentive program that we're very excited about. It's called Wallet, where participating dealers can redeem Webmotors products through Cockpit, which is our CRM system that we have. Santander can add credits to dealers of Webmotors as well as an incentive to use them as the main finance channel. This is an exciting development as it's going to drive increased revenue, but it also enables our dealer customers to trial different depth products and value-added services that we have. In the middle there, looking at South Korea, we are evolving our Guarantee Inspection offering, where we're adding new inspection centers in regional areas. We're extending operating hours to service more customers and introducing new Guarantee Inspection products. In July, Encar communicated a price rise on Guarantee ads of 10%, which is going to be implemented gradually from the first of August in 2024. In North America, on the right there, following the successful launch of Premium Select in FY '23, we've launched a new reporting model or modules for the dealers to get the full view of the ROI from depth utilization, and this should improve acquisition and retention to customers. And these are just a few examples of depth products that we're launching to help dealers reduce time to sell and to achieve better gross margins over time. Maybe turn to Slide 36 now and just talk about private seller experience. And in Australia, consistent innovation in user experience has delivered private yield growth CAGR of 11% since implementation of dynamic pricing back in 2016. And as a percentage of the average value of the cars sold on carsales, what we're generating there yields about 0.5%, which is good value given the amount of money that a private seller can save versus accepting a wholesale price. From an IO perspective, we're looking at expanding our Instant Offer eligibility criteria to address a greater proportion of the market at each end, particularly in the upper end and the lower end. And that's going to be achieved through our third-party partnerships and better use of data and pricing models that we have. We are constantly enhancing our trust and safety and trying to remove friction points in the private buyer and selling process, which is critical to our ability to continue to grow yield. And some key focus areas here include launching of photo assist using generative AI to offer suggestions around how to best present photos, the car online and attract more buyers. We are verifying ID documents to highlight, instill greater confidence in verified sellers, introducing a new messaging platform to keep people in the carsales environment, which reduces the potential for fraud and the need to share private phone number details, et cetera, which is good. We're also adding private test drive bookings platform to enable bookings that best fit the seller's schedule. And then finally, we've just launched a C2C payment [ speed up ], which we think could be a bit of a game changer in safely and securely selling -- private selling of cars for people online with -- we'll talk a little bit more about this one in a moment. But there's plenty going on in this space for us. And then from a synergy perspective, it's been great to see us bring some of our -- that private seller IP and tech from Australia into trading [ interacting with web margins ] now. The mission focus was on deploying dynamic pricing, which is going to continue to be optimized, but we're also now focused on enhancing private sale ad creation process. In the U.S. and Brazil, simplifying the process and reducing the number of steps it takes to create a private ad listing needed. So looking at Slide 37, and we've talked about it before. But in Australia, we've made important decisions to progress our media strategy a couple of years ago and to diversify more heavily into nonautomotive customer segments and introduce more innovative audience and programmatic and native advertising solutions. So it's been great to see media being an excellent growth driver in all our key markets over the last year. And media was an area of significant potential growth we identified as part of Webmotors and Trader Interactive acquisitions. And given both businesses had limited offerings in the media space at the time that we up-listed our investment port into the U.S. market, so media TAM in North America and Brazil, they are huge. And we're very well placed to capture the market share of these large markets, given our strong market leadership in each of our businesses. We have a clear strategy to help us in this goal and I'm pleased to see executing on this strategy. We're establishing, as I mentioned before, dedicated sales teams in each of our geographies to enable the engagement directly with OEMs and agencies. And we're clearly looking to diversify into our advertiser bases in those countries. We've deployed programmatic technology in both. Again, I mentioned that earlier, for Webmotors and Trader, which is driving a material increase in ad viewability and yield, which is important. And we continue to deploy our new technology that's going to benefit each individual market. We're also starting a journey to penetrate these significant international markets and gain some of the benefits already. And there's plenty of runway here as we continue to move down that path. So on to Slide 38, and -- this has been great. Looking at what I mentioned a little bit earlier, we are on the cusp of trying to roll out our C2C payment solution that provides a more secure option to buy and sell a vehicle and transfer funds from one party to another. That clearly has applicability in the private-to-private space. It's going to really help instill buyer confidence that the seller of the vehicle has been checked verifying ID documents. And this is just a great example of how the carsales business is differentiating itself in that private seller market. Look, this is the last slide in the deck. So just to summarize, we've had an excellent year. We've got good growth momentum heading into FY '25. We continue to build on our market leadership positions, building competitive advantage and delivering long-term sustainable growth for you, our shareholders. We remain focused on removing friction points in buying and selling, which is creating new monetization opportunities for us. We know we've got a great opportunity in our international markets with new products. And we're also focused on growing customer acquisition and take rates over time as well there. We're very happy with the rate of our IP and technology transfers, and you can see from our results that we're effectively leveraging these competencies across our different markets, and there's going to be more to come here. And finally, we're a good generator of cash. We've got a very strong balance sheet. You'll see this continue to be a feature of our business and then whilst also investing for future growth, as we always talk about, and paying attractive dividend to shareholders. So with that, I'll hand over to questions.

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

Can I do a quick one? Three quick ones, sorry. Let's do them all at once. Just firstly, on the outlook, Cam, just on that margin percentage expected to be similar in FY '25. Can I confirm this potentially has little implication for your dollar EBITDA growth versus market expectations? And my reasoning is sort of -- I mean, Brazil could be part -- a bigger part of the revenue mix that we all expect. And obviously, Brazil is lower margin. And then it looks like you're just reinvesting that better-than-expected dealer and media growth. And obviously, reinvesting, that drags down the percentage but it doesn't necessarily impact the dollar EBITDA. Second question. Just on dealer, you're expecting good growth again. And sorry if I missed it, Cam, if you gave the split on what the FY '24 dealer growth was. But I guess my question is, I wouldn't expect you to accelerate price in FY '25, given you've been pretty conservative on dealer. So can we sort of infer that dealer leads and dealer depth has held up pretty well into early FY '25? Last one on the U.S. Just wondering if it could be a bit of a tale of two halves in FY '25. And I'm just thinking or I was wondering if you could give us a bit of color on what could give you a bit more of a positive second half. I don't know, things like rate cuts or price increases or monetization of verticals. Any color would be super helpful.

Thanks, Eric, for the questions. So look, just on the margin outlook. So first thing I'd say, overall, super happy with how we performed in '24, financial metrics, operational metrics, competitive metrics, all really good. FY '25 has started the same way, and we're pleased with how it commenced the year. In terms of margin, our overall strategy, as you know, is to grow margin longer term, right? So we're always looking to expand our margins, but we're also very conscious of making sure that we're investing in the long-term growth opportunities that we have. And as you saw from the slide deck, we've got many, many growth opportunities that we want to continue to invest in. So look, when you see the words similar, I mean, in that context I just gave you, I mean, similar could be slightly up, and it could be slightly down. But overall, the objective of the business is to grow margin. So the second question was just around yield growth...

[indiscernible]

Eric, you're right, around 1/3, 1/3, 1/3, with volume yield and depth from a dealer point of view. As we head in FY '25, we're seeing dealer leads are positive. So that's looking strong. And then the third one, at your just...

Yes. So look, Eric, I mean, really solid FY '24 growth results given the economic climate as we -- and a lot of innovation done in '24. So we roll into '25 with confidence with multiple growth levers. Now Premium Select, that continues to go from strength to strength whether the economy is good or poor, so there's a real place there for that product with marketplaces. The media business is really starting to grow in a strong fashion now, which is really pleasing after the deployment of the [ Fuse Tech ] from CAR Group. Private is going really, really well, so we've done a lot on yield as well as done a lot on conversion. So that's improving all the time. And then we'll get into marine in half 2. So yes, and as for interest rates, we don't tend to really think about it. We just build a solid plan and try and execute the plan. And that's why we just reiterate the guidance to guide to good for revenue growth as well as profit.

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

Three questions from my side as well. Can you talk -- can you elaborate a little bit more about the health of the domestic used car market? And where I come from is investors are a little concerned about the health of the car market after listed car dealerships calling out margin pressure. So my question is, is the pressure mostly contained in new car market? And how is the outlook for used car market a little bit different from new car market, if it is? My second question is on your guidance around media and Brazil revenues. Are you being a little bit conservative on guiding for the -- for those two segments? Because you're delivering very strong growth in those two segments but guiding for strong growth. And within domestic media revenues, you've got 10, 12 Chinese OEMs coming into Australia next year. So is that cause for positive surprise? And lastly, on the Korean market, 10% price increase announced for guarantee ads. So with your dominance established, should we expect price increases in Korea to become a more common feature than history?

Thanks. We've seen the new car market domestically be a lot different to the used car market. Used car margins for dealers are still very strong versus pre-COVID levels. Used car pricing remains resilient and dealer leads are up, so a little bit of a difference between the new car market and used car market. Will, do you want to talk to guidance?

Yes. No worries. Thanks, Sriharsh, for the question on media and Brazil. So I suppose on Brazil, there's no upper limit for us on strong. And so obviously, there's a wide range of performance there. I think we've reserved the term very strong for times when we've had acquisitions and grown at sort of 50% plus. So I wouldn't take that into account when you're thinking about the potential performance in Brazil. On media, obviously, we've delivered a great performance over the last 2 years. We've done sort of 20% plus growth in media in Australia. And I think, obviously, as the number gets bigger, replicating those sorts of growth rates becomes a little more challenging, and that's what's reflected. But the exit run rate that we've got starting in FY '25 is really positive in media. And so we feel confident about our ability to deliver good growth in that segment.

SB?

Yes. So the guarantee, it has been growing very nicely during the last few years and become our largest revenue source for our businesses but still less than 50%. All the guaranteed price increasing has been well received by the dealers, and we will continue to look for in the future as well.

The next question comes from Entcho Raykovski with E&P.

My first question is on TI. And I wonder if you can quantify the depth contribution to growth in FY '24. If we look at that 13% pro forma revenue growth number, what came through from depth? And should we expect -- if we go into FY '25, should we expect that to slow down a little bit, given that you've now lapped the launch of Premium Select? And if you can expand as part of that obviously the reporting module, so Premium Select will likely be a contributor? Or is it just something which reduces churn and keeps dealers staying on the platform? That's my first one. I've got a couple of others, but I might wait for the answer before going ahead with those.

Sure, mate. Look, yes, so I would say that Premium Select made a material contribution to the FY '24 results, and expect it to make a material contribution to '25 and beyond, so it's got a lot of runway. And in terms of the mix, we probably make between 55% to 60% of our money out of selling products, whatever that might be versus rate, so it's making a material contribution now. We feel really good about the product, and dealers need it whether they're really competitive, now we have really good times economically as well as when they're fighting for consumers when there's less of them in the market because they need to stand out more. So we find that it works in both environments. So yes, I feel good about that product.

Okay. Great. Second question, turning to Korea. This is probably one for SB. I mean as you said, guaranteed product now has more than 50% penetration. Are you able to give us an idea of what the exact revenue contribution is now to Encar? I think you had disclosed that a couple of years back at the start of the Investor Day. If you could give us that number, that would be quite helpful. And presumably, the 10% price increase that you've just put through will have a much greater impact on the standard ad price increase that you put through earlier in the year. If you could give us a sense for what that impact might be, given it's a -- it seems like it's a staggered rollout throughout the year, that would also be useful.

Well, as I said, I think, I mean the guarantee is the largest revenue for something still less than 50%, and the 10% will be a little less than a 5% revenue intake in total, like you say. But I think that impact will not be happening in FY '25 one year because the new price scheme will be applied at the moment that existing project with existing individual client is renewed their contract. So I think that effect will be effective over the period of next 1 or 2 years. A long time.

Sorry, SB. Just to be certain, the 5% will be not only in '25? Some of that will fall into '26 as well?

Yes. I think I would say they're less than a 5% in total revenue contribution overall. I would have specified the numbers less than 5%.

Okay. Got it. Okay. And then the final one, your leverage ratio is continuing to come down, 1.7x as you say remains prudent. I mean you've obviously successfully expanded via acquisition offshore over time. Given that leverage ratio is coming down, do you see potential for further acquisitions from here? And if so, sort of what are the broad areas? Are you thinking about new jurisdictions? Or if you were to acquire something, would you be looking for markets where you already have a presence?

Yes, I'll do that one. Thanks, Entcho. Look, the leverage coming down is great. I think as a business, as you guys know, we are an acquisitive organization. But we're also very cautious around how we use shareholder capital. And there's a very high bar that needs to be jumped over for us to do M&A. And we've gone through what that looks like in the past. I'd say the things that we're looking at today are no different to the things we're looking at 12 months ago. There are opportunities out there for us. But as an organization, we tread very carefully, and we ensure that anything we look to acquire ticks all those high watermarks that we expect.

Your next question comes from Siraj Ahmed with Citigroup.

I'll have three questions as well. But just the first one, Cam, will be just in terms of Australia dealer and actually private as well. Just what do we assume for price increase for next year, if you can just give us any steer on that? And also for private ad yield, how should we think about that given prices are coming down?

Yes. I mean, price increase, we've -- traditionally, we've moved it to a regular time. We're always thinking about the volume that we provide back to the dealers, look at the market, we haven't made any decisions as yet. So we'll closely monitor that. From a private perspective, dynamic pricing allows us to extend that yield. And it's the same principle. I mean we look at the value that we're giving. We're doing a lot of work around trust and confidence, and that gives us confidence to be able to manage our yield in -- on the private side moving forward.

Got it. Second one, Will, on Webmotors, you mentioned that there is no upper limit for strong. But I mean, there is a law of large numbers. I think growth slowed to 21% in the second half. Just keen to understand, is there anything that's accelerating it from here? Or is it -- it should be that sort of rate that we should be thinking about?

No, I don't think we'd call out anything accelerating. And I suppose, similar to the comment before around media, as the numbers get bigger and as the business gets bigger, continuing to accelerate from levels of 25%-plus growth becomes more challenging. But we do have a number of levers heading into next year and some new growth levers as well. And one of those we called out was Wallet, which we think is going to be a nice contributor for the business. So I wouldn't call that an acceleration of growth rate, but obviously, we feel pretty positive about where the business is heading into next year.

Got it. And lastly, just on TI, David, just following up Eric's question, right, in terms of the two halves. Should we be thinking -- I mean, you saw good growth for the year, but just wondering whether it should be a strong or good growth in the second half rather than compared to the first half.

Thanks, Siraj. Look, I'm just guiding to the year, which is a good revenue growth and good profit growth. And as I outlined before, I feel like we've got a number of ways to achieve that goal.

Okay. Maybe just clarify, just this current trading in TI because things seem to be getting softer there, just what you are seeing for TI right now? That would be helpful.

No, the business is still growing well. All I would say is that acquisition is a little bit harder to come by, as you would have seen in half 2. But outside of that, as I said before, many different lines of business making a contribution to the business, so -- which is pleasing.

Your next question comes from Kane Hannan with Goldman Sachs.

I've got three as well. Firstly, just group guidance. I mean if we were to run spot FX through your numbers and annual thinking, do you think you'd still be able to deliver that good earnings growth that you're guiding to on a constant currency basis?

I can take that one. We don't give guidance in Australian dollars just because obviously, it's moving around a fair bit, Kane, to be around a 2% headwind based on current FX rates in terms of the difference between constant currency and AUD. And so we're just going to maintain our guidance at a constant currency level, which is for good growth in all our three key metrics.

Yes, that's rough. Just the trader dealer numbers, so 100 for the full year, implying a flat second half. I mean does that have anything in there from the marine dealer growth, the Camping World trial that we should be thinking about? I just thought they're a bit softer than that in the second half.

No, they're actually -- so Camping World is not included in that number nor is marine.

Perfect. And then just the international media revenue growth, I think it was 29% for the full year. Did that accelerate through the second half? I don't think we got the like-for-like number on the half year. And just any comments you can make around trader, Webmotors, [ new career ] and how they are performing on a media perspective?

I think it was pretty consistent across half 1, half 2, Kane. And I think, look, all the international businesses are doing well from a media perspective. I don't think I'd call out anyone specifically doing better than the other. The size of the opportunities are obviously significant in all of the markets. In Korea, obviously, one of the challenges we have is just around the fact that Hyundai and Kia haven't traditionally advertised, and that's why the addressable market we call out has been slightly smaller there. But overall, we just -- we see that media is such a big opportunity across the whole business.

Your next question comes from Darren Leung with Macquarie.

I might discuss three as well. I'll ask them upfront. Just the first one, just on Australia private. Can you give us a little bit of a feel in terms of the volume yield and IO mix, please? I'm just keen to understand if there's a little bit of the used car market coming through here. Second one is just for David. I might have a go at U.S. growth again. And I guess, I'm keen to understand a little bit about how you're thinking about drivers for FY '25. I know you said there's a lot of opportunities. But in particular, are deal acquisitions a big part of your good growth guidance? And then the third one, maybe for Will. Good EBITDA and good NPAT growth. I guess after interest, D&A, et cetera, I would have thought NPAT growth might have been a little bit higher. Can you talk a little bit around what's driving this? Is it higher D&A or CapEx or otherwise, please?

What we're seeing in private, we've seen volumes have been a bit a touch soft, but yield has been -- we've been able to maintain yield. IO has been an important contributor. We've introduced a number of different initiatives to get the flow between private sale and Instant Offer, what we call OneSell. You've probably seen that if you had a look at the private sale functionality. So that's been an important driver. What we're doing in IO around the bottom end and the top end of the market, as Cam talked to in the presentation, we're doing a lot of work around there. We see a lot of opportunities, especially at the top end.

Dave, do you want to talk to Darren?

Yes, sure, Cam. Just in terms of the drivers of FY '25, so Premium Select, obviously, we've spoken about that. So clearly, that's volume-driven. Our media business, OEM penetration as well as finance and insurance and getting into those types of spaces, from a private standpoint, we're introducing our fourth package. So we'll do that probably towards the end of this half and -- which is really just an opportunity to buy something with a lot more bells and whistles essentially for more money, which would be good. And in terms of [ planning ], I mean we're not back of the line. In terms of customer growth, it's immaterial in terms of FY '25.

And then just on your final question just around the translation to net profit. I think translation from revenue to EBITDA to net profit is -- now we would expect to be relatively similar just because the two biggest lines below EBITDA, which are depreciation, amortization and tax, largely grow in line with revenue and earnings. So not unexpected that you would have similar guidance at that level. And then obviously, from an interest perspective, depth is at a similar level to what it was last year as interest rates haven't moved. So I think that's sort of expected in terms of that similar translation.

Your next question comes from Lucy Huang with UBS.

I've got just three quick ones. So firstly, just wanted to elaborate a bit more on the dealer side in TI, particularly on the RV segment, given inventories have still remained quite soft and, I guess, '25 for now looks quite soft-ish in terms of the start. Have we seen much dealer churn as a result? And I guess, are you expecting to grow underlying RV dealer ads into next year at this point?

So look, in a tough time, the RV market has held up really well for the business. So we didn't grow but we didn't shrink essentially. So look, we're continuing to work with people. We're continuing to chase white space. And yes, I mean, I expect more of the same, okay, so -- is probably what I'll summarize there.

Yes. And then just a bit more color on the trucks vertical as well. I think feedback has been that maybe competitive landscape and your competitors probably stepped up a bit more on the marketing side. So just wondering what you're seeing in the trucks vertical at the moment in terms of competition?

Yes, sure. So like TI had a really strong '24. So that was the largest contributor to our customer growth, which was pleasing, so up over 3,000 customers now, which is nice. A good and strong inventory position. We're doing some really strong work on search. And in terms of Sandhills and TruckPaper, yes, they have stepped up their advertising with [ South Wing ]. That's one of the things that we'll be investing in, in the FY '25 year as well as the second half of this year. And it's neck and neck from a similar perspective as to visits. So yes, in a good position there and we expect to keep growing.