Autotrader reports higher revenue and profit, more challenging end to year

(Sharecast News) - Autotrader reported higher full-year revenue and profit and announced plans to return about £600m to shareholders in 2027 on Thursday, although shares were sliding on a more challenging end to the year and retailer concerns over its Deal Builder rollout.

The FTSE 100 automotive marketplace said group revenue rose 4% to £624.3m for the year ended 31 March, from £601.1m a year earlier.

Operating profit increased 4% to £392.7m, while the operating margin was unchanged at 63%.

Profit before tax rose 3% to £388.8m, and basic earnings per share increased 8% to 34.17p. Cash generated from operations rose 5% to £418.0m.

Autotrader revenue increased 4% to £585.3m, driven by a 5% rise in average revenue per retailer to £2,995, largely through its April 2025 pricing and product event.

Average retailer forecourts fell 1% to 13,942.

Autorama revenue rose 7% to £39.0m, while its operating loss narrowed to £2.0m from £4.3m.

The company said revenue growth slowed in the second half to 3% and was lower in the fourth quarter, reflecting tougher trading conditions and retailer feedback on Deal Builder.

Autotrader said it moved quickly to address those concerns, resulting in improved sentiment, with retailer forecourts, paid stock volumes and package penetration gradually increasing through April and May.

Autotrader said its competitive position had strengthened, with 11 times more time spent on its platform than its nearest competitor and six times more than all its main competitors combined.

More than 80% of buyers on Autotrader came directly to the platform.

The group said it continued to scale Deal Builder, which it said delivers higher-quality enquiries that convert at double the rate into sales for customers.

At the year end, more than three times as many customers were using the product and almost three times as many fully reserved deals had been completed compared with the prior year.

During the year, Autotrader returned £463.2m to shareholders through dividends and accelerated share buybacks, purchasing 58.5m shares, or 6.6% of issued share capital.

It drew £165m from its debt facility, increasing leverage to 0.3 times.

Net bank debt stood at £146.8m, compared with net cash of £15.3m a year earlier.

The board proposed a final dividend of 7.8p per share, up 10%, taking the total dividend to 11.6p.

Autotrader said it believed the prevailing share price did not reflect the company's fundamentals or long-term prospects, and updated its capital allocation policy.

For the 2027 financial year, it expects to return about £600m to shareholders, comprising around £500m of share buybacks and dividends equal to one-third of net income.

For 2027, the company expects group operating profit of £395m to £415m.

It said operating profit margins, excluding vehicle and accessory sales, would be at least maintained, while accelerated buybacks were expected to support at least high-single-digit growth in basic earnings per share.

Autotrader said revenue was flat year-on-year in April, reflecting a lower run rate and a lower price increase, but it expected growth in the second half.

Chief executive Nathan Coe said the group had continued to grow revenue and profit despite a challenging backdrop.

"We remain committed to using our brand, technology and proprietary data to benefit car buyers and retailers," he said.

"AI will significantly enhance our ability to do this which has already been demonstrated through our retailer products, such as Co-Driver and Buying Signals, as well as our improved search functionality for car buyers both on our marketplace and within ChatGPT."

The group also reported a drop in employee engagement to 72% from 91%, saying it had been a challenging year for staff because of internal and external factors, though recruitment and turnover measures were largely unchanged.

At 1001 BST, shares in Autotrader Group were down 5.42% at 469.4p.

Reporting by Josh White for Sharecast.com.

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