Carsales.com revenue revs up after Trader Interactive acquistion

Vehicle classifieds company Carsales.com (ASX: CAR) has seen revenue surge by 37 per cent year-on-year to $331.8 million in the December half as it embraces a boost in cashflow after recently taking full control of US-based non-auto online marketplace Trader Interactive (TI).

In an ASX update today, the Melbourne-based company also reported earnings grew from $125.4 million to hit $164.9 million – a result that includes roughly three months of full ownership of TI.

Net profit surged fivefold to $416.5 million due to the group’s step acquisition of TI - a process that saw Carsales.com revalue its existing 49 per cent shareholding in the company by an additional $333 million.

Of the $331.8 million generated in revenue, Australian operations accounted for 57 per cent ($189.1 million), followed by the Americas ($62.4 million), Asia ($50.4 million) and carsales Investments ($29.9 million).

While the Americas arm now accounts for almost 20 per cent of revenue, it previously contributed only 1.2 per cent after generating $3 million during the first half of FY22.

“The performance of the first half of FY23 has been exceptional for Carsales,” Carsales.com CEO Cameron McIntyre said.

“The group delivered double-digit revenue and earnings growth demonstrating both a highly resilient business model with a track record of growth through the cycle as well as strong operating discipline."

“Growth in the Australian business accelerated as we extended our market leadership from both an audience and inventory perspective. We completed the acquisition of the remaining 51 per cent of Trader Interactive in the US and are already executing on our growth initiatives in those attractive markets.”

Earnings in Australia grew by 15 per cent to reach $121.3 million, with interest from potential customers remaining high as traffic rose 17 per cent compared to pre-pandemic levels.

Dealer growth in Australia grew by 10 per cent for the half, which the company says was driven by “resilient demand for used cars and yield growth which benefited from the introduction of a new premium price tier.”

The group’s US arm saw earnings transform from a loss of $1.2 million to entering the black and generating $34.5 million - accounting for almost 20 per cent of the $177.9 million result, which excludes certain non-recurring or non-cash items.

The result comes seven months after Carsales.com announced its intention to fully acquire Trader Interactive – a Virginia-based company that owns a plethora of lifestyle vehicle marketplaces that connect buyers, sellers and renters in the powersports, RVs, aircraft, marine, commercial vehicle, and heavy equipment industries.

Meanwhile, the group posted revenue growth of 23 per cent in Brazil, while EBITDA increased eight per cent due to further investment in regional expansion.

Carsales.com’s South Korea division saw revenue up 12 per cent and EBITDA grew by 13 per cent, mostly due to increasing the penetration rate of its guarantee inspections product offering.

“Our Korean and Brazilian businesses delivered outstanding performance, with positive operating metrics and continued delivery of key products and services further enhancing our market position,” McIntyre said.

“We are seeing good levels of consumer demand in our key markets and inventory is approaching pre-pandemic levels – this growth in inventory is driving demand for dealer premium and depth listings.

“This all gives us confidence that carsales is in a strong position to deliver outstanding shareholder returns in FY23.”

Carsales.com is paying a final divided of 28.5 cents per share, up 12 per cent from the previous year.