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Investing.com -- Auto Trader shares tumbled more than 14% on Thursday after the company reported second-half fiscal 2025 results that were broadly in line with expectations but issued guidance for fiscal 2026 that came in below consensus on both revenue and operating profit.
Second-half group revenue rose 1.8% above the company’s implied consensus, while operating profit landed in line.
The Auto Trader segment posted revenue that was 1.4% lower than expected, though segment operating profit met estimates.
Losses in the Autorama unit narrowed to a loss of £1.5 million, ahead of the loss of £1.9 million consensus figure.
Average retailer numbers in the Auto Trader segment increased 1.3% year over year in the second half, matching expectations.
That compared with growth of 2% in the first half and 1.4% in the same period last year. Average revenue per advertiser (ARPA) growth slowed to 3.5% from 6.3% in the first half and 11.7% in the year-ago period.
Jefferies said the deceleration was driven by a negative contribution from stock levels, which was partially offset by gains from pricing and new product features.
The company issued multi-layered guidance for fiscal 2026. Jefferies estimated that current consensus figures for both revenue and operating profit are about 3% ahead of the implied forecast. No specific figures were issued for group-level revenue or EBIT.
Retailer revenue is projected to grow 5–7% in fiscal 2026, up from 5% in the second half of fiscal 2025.
Jefferies had previously forecast 10%. ARPR price growth is expected to reach between £90 and £100, ahead of Jefferies’ estimate of £87.
Stock-related ARPR is expected to remain “marginally down” following a -£54 contribution in the second half, while product-driven ARPR growth is anticipated to increase, particularly in prominence products. The company did not quantify the contribution from product ARPR.
The company also announced changes to its Deal Builder product. The product will now be bundled into core advertising packages and monetized through the annual pricing event, rather than generating revenue on a per-reservation basis.
Jefferies noted this represents a material change to ARPR growth expectations for the product.
Group margins are expected to improve in fiscal 2026, with Auto Trader segment margins remaining stable.
Consensus currently expects group margin to expand by 1.5 percentage points and Auto Trader margin to rise 0.9 percentage points.
Losses in the Autorama unit are forecast to fall by £3 million to -£1 million, in line with current consensus.
Auto Trader said the April 2025 pricing event “has gone well.” The company noted that growth is expected to be weighted toward the second half of fiscal 2026.