The Carsales.Com Ltd (ASX: CAR) share price has shot up more than 5% after the car online marketplace revealed a strong FY23 result.
Carsales is a large digital marketplace business, mainly focused on cars in places like Australia, South Korea and Latin America. It has a presence in the US, with Trader Interactive being a leading integrated platform on non-automotive marketplaces across the RV, powersports, truck and equipment industries.
FY23 result
Here are some of the highlights from the 12 months to 30 June 2023:
- Revenue rose 53% to $781 million
- Adjusted EBITDA (EBITDA explained) rose 57% to $424.9 million
- Adjusted net profit after tax (NPAT) grew by 43% to $278.2 million
- Reported net profit surged 301% to $645.6 million
- Final dividend per share up 33% to $0.325
Australia saw revenue growth of 13%, with resilient demand for used cars at dealers and strong (30%) revenue growth for the private market.
North American revenue increased 14% thanks to adding more customers and increased adoption of premium products and private ad yield “upside from dynamic pricing”.
In Asia the company saw “good double-digit financial performance”.
Latin America saw an “excellent” financial performance in Brazil thanks to a “strong” execution of the national expansion plan “driving lead volume and dealer subscription growth.”
All of this seems positive for the Carsales share price.
Management commentary
The Carsales CEO Cameron McIntyre said:
It’s been a fantastic year for carsales and we are incredibly proud of what our teams across the group have accomplished. We have delivered excellent financial results, made good progress executing our long-term growth strategy, delivered new products and capabilities to our customers and completed transformational acquisitions.
With the acquisitions of Trader Interactive and Webmotors, we reached a key milestone for the business with more than 50% of our revenue now coming from sources outside of Australia. We see a substantial growth opportunity in these large addressable markets continuing over many years to come.
Outlook for the Carsales share price
On a ‘proforma’ (underlying, company calculated basis), it’s expecting to show “good growth” of both revenue and EBITDA in FY24.
In terms of the ‘actual’ numbers, it expects to deliver “very strong” growth in revenue and adjusted EBITDA and “strong” growth in adjusted net profit.
Carsales is also expecting to grow its EBITDA margin on a proforma basis in FY24.
When breaking down revenue expectations for Australian dealer and private, the US, Brazil and Korea, all segments are expected to show revenue (and EBITDA) growth.
It’s a strong business, but the fact that it’s up 26% this year makes me think it’s worthwhile being patient to see if a better price comes along.
