Auto Trader Group PLC (ATDRF) (Half Year 2026) Earnings Call Highlights: Strong Revenue Growth ...

This article first appeared on GuruFocus.

Release Date: November 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Auto Trader Group PLC (ATDRF) reported a 5% increase in group revenue and a 6% increase in operating profit, indicating strong financial performance. The company's AI-powered CoDriver product has seen strong engagement, with over 10,000 retailers using the tools, showcasing successful integration of AI into their offerings. Deal Builder adoption has accelerated, with a significant increase in retailers and listings, enhancing the car buying and selling experience. Auto Trader Group PLC (ATDRF) maintains a strong market position with over 75% of marketplace activity occurring on their platform, highlighting brand strength. The company returned 162.2 million to shareholders through share buybacks and dividends, demonstrating a commitment to shareholder value.

Negative Points

Consumer services revenue decreased by 9%, driven by a decline in private revenue from individual sellers. The speed of sale remains a challenge, with a one-day quicker sale in October, indicating potential headwinds in inventory turnover. Marketing spend decreased by 21%, which may impact brand visibility and customer acquisition efforts. The AutoRama segment reported an operating loss of 1.4 million, although this was an improvement from the previous year. There is caution around the near-term outlook due to potential volatility in the car market and uncertainties in supply and demand dynamics.

Q & A Highlights

Warning! GuruFocus has detected 2 Warning Sign with ATDRF. Is ATDRF fairly valued? Test your thesis with our free DCF calculator.

Q: Could you help us think through investment requirements in the next 12 to 24 months? Should we interpret your comments as you're well invested and the current formula of flattish margins or slight expansion is the right formula? A: As both Nathan and Katherine mentioned, we've been investing in much of this technology for a long period of time, particularly with our co-driver product. We feel that because these investments have been ongoing, there's no change expected in margin guidance over the next 18 to 24 months. We anticipate consistent margins in the AutoTrader segment, and with AutoRama's profitability improving, group margins could continue to expand. (Respondent: Unidentified_2)

Q: Could you discuss the integration risks and opportunities with chat GPT, and how should we think about the split of economics versus the current status quo? A: We believe structured integrations will be the approach, providing control and transparency over data usage. Historically, we've made decisions to open up our site to a certain level with platforms like Google and iOS. We expect similar structured integrations with chat GPT. The economics might involve some paid positions, but we expect our direct traffic to remain strong. (Respondent: Unidentified_1)

Story continues

Q: Can you talk about the dynamics around Deal Builder, particularly the onboarding process and future expectations? A: We've been onboarding retailers in waves, particularly independent retailers through our portal system. Growth will be influenced by technology API integrations with automotive industry partners. We expect progress by March, but some retailers may take longer due to third-party integration work. (Respondent: Unidentified_3)

Q: Could you provide more details on the stock and dealer forecourt guidance, and how you're feeling about these areas? A: Stock has improved through the half, but we remain cautious about the outlook for the remaining months. The first quarter of the calendar year is volatile, so we're holding guidance at marginally down for the year. Forecourt growth rates are trending down, so we're maintaining guidance of flat forecourts. (Respondent: Unidentified_2)

Q: Regarding Deal Builder and buying signals, how do you plan to monetize these products, and what impact will they have on your pricing strategy? A: We plan to monetize both Deal Builder and buying signals as part of the rate event next year. The first wave of monetization is likely to be from April, with both products combined as a package for retailers. (Respondent: Unidentified_3)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

View comments