This week automotive portal Auto Trader Group released its financial results for the first half of the financial year.
Data shows revenues grew 11% and came largely in line with our forecasts on the back of a 13% ARPR increase. Price increase accounted for 48% of the ARPR increase, while higher stock and VAS up sell accounted for 33% and 19% of the growth.
Although the company lost 140 forecourts, its high-end Buying, Marketing and Managing product is now used by 200 more forecourts (16% of total). EBITDA came 4.5% higher than expected on the back of solid operating leverage (the company showed 6% sequential cost reduction and revenue drop-through of 127% in 1H17) on headcount reduction.
The results demonstrate Auto Trader’s solid pricing power and operating leverage. Auto Trader seems to have benefited from solid new car sales trends in 2012-16, which is expected to continue into 2018.
It appears company remains a leading provider for auto dealerships with solid EBITDA growth in the medium term, strengthening the investment case amid a volatile macro environment.