Good morning, everyone, and welcome to the Carsales FY2022 conference call. Just before we start, I'd just like to acknowledge the traditional owners of our country throughout Australia, and here in Melbourne, where we are this morning, it's the Wurundjeri people, and we just pay our respects to their elders, past and present. On the call with me this morning, you've also got Will Elliott, our CFO, Kane Hocking, who's the head of Investor Relations, Paul Barlow, who's the MD of Australia. SB Kim has dialed in from Korea. He's CEO of Encar, and Lori Stacy's dialed in from the United States, and she is the CEO of Trader Interactive. So look, like we normally do, we'll get through the slides and hopefully leave enough time to get through everyone's questions that you might have.
I'll just call out the slide numbers as we go. We'll start with slide five. Look, we pre-released our results on June 27th with our announcement around the Trader Interactive acquisition. As you can see here, we've come in slightly above or on adjusted revenue and earnings guidance, and that's obviously a reflection of the great year that we've had as a business. We've seen a strong H2 growth in revenue and earnings while also continuing to deliver on our strategy to unlock our long-term growth potential. The next in the domestic business has been fantastic and it's accelerated, and we're continuing to execute well against our strategic priorities here.
A couple of clear examples of that being the 15% PCP revenue growth that we've seen in our media business. That obviously reflects the investment in product and insights capability and the deliberate diversification of our customer base that we've seen. Then private's another, probably another good example of that, where we're seeing 26% PCP growth driven in part by growth in yield and dynamic pricing and Instant Offer, as well. International businesses have also had a strong 12 months with the U.S., Korea, and Brazil all generating double-digit revenue growth and EBITDA growth on PCP, which is fantastic. Onto slide six.
Look, over the past 12 months, we've seen the vehicle trading market really perform quite strongly, whether that be, you know, consumers continuing to move into lifestyle assets like RVs and Powersports or buying their next car. Used car prices have continued to rise significantly throughout the year, particularly dealer used cars driven by ongoing new car supply challenges and strong demand against pre-COVID levels. Looking at the slide and the data on the slide, you can see here, I mean, we've got real strength in those market conditions coming through. That's, you know, that's reflected in things like our market position, as you can see here.
Excellent performance for customers reflected in time to sell and lead volumes both performing strongly against pre-pandemic levels. Onto slide seven. Look, part of our strategy for many years has been about investing in large, high- growth markets where we can leverage our intellectual property and our technology to create long-term sustainable value for our Carsales shareholders, and we've been highly effective at that with our investments in South Korea and Brazil especially. With the acquisition of Trader Interactive in the United States, I mean, that strategy continues to play out and with nearly half the business revenue being generated offshore by these large high- growth businesses, you know, we feel like we're in a very good position moving forward.
Also, as you can see here, the diversification through geography, industry mix and business models, we're in excellent shape to continue to grow into the future. Onto slide eight. Just adding to the comments on the previous slide, and we've presented this before, but yeah, we operate in very large and growing TAMS with emerging opportunities that have been accelerated by COVID. With this, we see significant room to increase our share in these markets, which will drive our continued long-term growth. Onto slide nine and just looking at some of our strategy execution in 2022. Last 12 months have been exceptionally good for us. We've performed well through the challenges of COVID.
Some of the key Australian highlights have been the great progress we've made on our digital retailing capability, our volume growth in Instant Offer, yield uplift in dynamic pricing, the repositioning of our media business, and growth in dealer finance. On the international side of things, we've also made great progress with launching our new branches in Korea for Guarantee and growing our dealer customer base in the United States for Trader. Very pleased to announce also that we've, as you can see there, become a carbon- neutral business with certification from Climate Active, this being received this year as well, which is a great achievement. Onto slide ten.
Look, very pleased to see the execution of our strategy also contributing to great financial performance outcomes in FY 2022 across both our Australian and our international businesses with double-digit revenue and EBITDA growth. What we're looking at here is this on a pro forma basis, which normalizes the acquisitions of Trader Interactive and TyreConnect on an underlying basis. Move to slide 11. On to the outlook. Looking at FY 2023 on a pro forma basis here. We expect to deliver good growth in adjusted revenue and adjusted EBITDA. Good growth is higher than solid growth.
On an actual basis, with the inclusion of the 51% of Trader from October, we will see us deliver very strong adjusted revenue, adjusted EBITDA, and adjusted NPAT growth in FY 2023. You can also see here from the comments that as a business we've got good momentum heading into FY 2023, which we see in both the domestic and the international observations that we're making. Look, since we announced the Trader acquisition in June, it's probably also important to say that we're continuing to see positive momentum there with the growth in inventory and customer acquisition, and we're really looking forward to that transaction being closed at the end of Q1.
Just in terms of margins, we expect to see a margin expansion of group EBITDA margin on both the pro forma and an actual basis in 2023, which is good, and we're in very good shape moving into next year. I'll hand over to Will now to talk about the financial performance in more detail.
Thanks very much, Cam, and good morning, everyone. carsales has delivered another fantastic result in FY 2022, which is a continuation of our strong track record of financial performance. The results here on slide 13 are a testament to the ongoing strength of our Australian and international businesses, as well as the long-term investments we have made in our people, product, and technology. Our business has proven to be resilient across market cycles and also adaptable to meeting our changing market conditions and competitive dynamics. As you've heard from Cam today, we are confident in our ability to continue delivering excellent growth through all the opportunities we have in front of us. On to slide 14, which shows our look-through financial performance. This provides an economic ownership view of our revenue and EBITDA rather than the accounting concept of consolidation.
These metrics are meaningful for us given the size of our minority investments in Trader Interactive and Webmotors in FY 2022. Similar to our consolidated results, we continue to deliver excellent look-through revenue and EBITDA growth. On to slide 15, which provides more detailed view of our financial performance and also demonstrates the great results we have delivered in FY 2022. From a presentation perspective, we've included a pro forma view on the right-hand side, which normalizes for the impact of the Trader Interactive acquisition and TyreConnect acquisition. This best shows the underlying performance of the business. On this basis, we delivered adjusted revenue growth of 11% and adjusted EBITDA growth of 13% excluding JobKeeper, which is a very impressive result.
Moving below EBITDA, the growth in depreciation and amortization of AUD 6.7 million reflects the D&A of building, fit- outs, and internally generated software assets. The investment we are making in our software platform and capability is critical in supporting our future revenue growth. The group delivered adjusted net profit of AUD 195 million, which was 27% higher year-on-year, reflecting the strong underlying performance of the business and the addition of Trader Interactive as an associate. The board has also declared a final dividend of AUD 0.245 per share, which is up 9% on last year. This growth is particularly pleasing given we issued almost 25% more shares for the Trader Interactive acquisition.
On to slide 16, the group has delivered an excellent margin performance in FY 2022, which highlights the inherent operating leverage in our model, our ability to deliver yield increases, and as always, a strong discipline in managing costs in what's been a more challenging inflationary environment. It is particularly pleasing to see continued margin expansion in our core Australian marketplace business. As you can see on the right-hand side, this has been a consistent story of growth over the last six years, which demonstrates our ability to grow margin in different environments. In Asia, we have a strong EBITDA margin of 51%. There was good growth in underlying margins in Encar, with a small overall decline you see here on the bridge due to an uplift in brand marketing investments to support the growth of the Dealer Direct work into the future.
While Trader isn't included in the bridge, as it is not consolidated, there also was very strong margin expansion in that business in FY 2022. There's a small drag on margin from carsales investments and the Americas, and that's through incremental investment in Placie, our mobility app, and marginally higher losses in Mexico due to a challenging macro environment. Acquisitions in the chart reflects the mixed impact of including the TyreConnect business. On to slide 17 now. We generated strong operating cash flows again in FY 2022 with an EBITDA to cash flow conversion ratio of 99%, which highlights the strong working capital profile of our marketplace business model.
From a CapEx perspective, the business continues to invest to support ongoing growth, with investment focused on a number of the key projects that we've talked about, such as Instant Offer, Dealer Direct, dynamic pricing, our media product diversification, and carsales Select. These products are supporting current and future revenue growth and customer experience. The increase in FY 2022 in CapEx has also been reflective of less employee churn and higher wage costs in the technology teams versus FY21. As pointed out on the slide, we expect the rate of CapEx growth to moderate in FY 2023. From a funding perspective, we are currently refinancing our syndicated debt facility to fund the acquisition of the remaining 51% of Trader. The refinance process is going well, and our banks are very supportive.
We anticipate having net debt of circa AUD 1 billion upon completion of the acquisition. We are seeking to upsize our facilities to circa AUD 1.4 billion to retain funding flexibility. We're also considering the most appropriate mix of maturity dates, fixed versus floating interest rates, and currency hedging as part of this process. We'll provide a more detailed update once the refinance has been completed, which we expect will be towards the end of Q1. As we said in June, post-completion of the TI deal, we expect to have leverage of about 2.7x net debt to EBITDA, and our plan is to de-lever over the next two years to around 2x . Now I'll hand back to Cam to provide some additional detail on our Australian performance.
Thanks, Will. Just onto slide 19 and talking about Australia and starting with some market observations. There's a key a few things I wanna just call out here. Over the past 12 months, we've continued to build our audience and engagement. Inventory still remains fairly tight, but published inventory is growing. It's up around 10% or so since the start of the year, which is driven by, you know, higher sale prices attracting private sellers or Instant Offer customers into market, stable new car sales volume supporting trade-ins and time to sell, which has risen a little bit more recently, but still well below pre-pandemic levels. As mentioned before, we're seeing new car sales volumes stabilize with data from VFACTS showing sales volumes pretty similar to last year.
We're continuing to see strong demand from consumers with our new car sales listings products. Also with the inventory remaining pretty tight and good consumer demand continuing, this has clearly flown through to the trade as well, and that's reflected in average gross margins we're continuing to see through the likes of Deloitte. Onto slide 20, just diving into some of our performance of our segments. As already mentioned, our Australian business had a really good 12 months with revenue growth of over 10%. Breaking that down and starting with dealer and media.
As you can see on the left, with dealer revenue growth of 6% for the year and 10% for H2 was a solid outcome overall in what's been an eventful and a buoyant year for the automotive industry. Demand for new and used cars has remained robust with underlying metrics such as audience, time to sell, lead- to- sale conversion remaining strongly supportive of the dealer network's performance that we've seen. Revenue growth of 6% primarily came from, as you can see there, in yield, while lead volume and finance product also made positive contributions.
Looking at the right-hand side of the slide there in media performance, it was great to see this part of the business finishing the year strongly with revenue growth of 15% and 19% in H2 on PCP. You know, what's working for us here has been our ability to diversify at a customer level with non-automative customers and at a product level with native advertising, programmatic and other product like, you know, brand terms paying really paying dividends for us. You can see that on that chart. Onto slide 21. Just looking at private's had an excellent year, growing exceptionally fast with revenue up 26% on PCP.
Private no longer includes tires and inspections, which I think we talked about a little while ago, but these are now part of carsales investment segment, which we'll talk about in a moment. Look, the drivers of the strong performance here are, you know, market conditions for private sellers have been excellent and helped them command higher prices. Since January, you know, are up around 9% on the previous year in terms of price. Time to sell is also still running lower than pre-pandemic levels, which I mentioned before.
In addition to private- seller ad volume strength, we've seen that advertising price changes and the launch of dynamic pricing has led to yield increases by around 19% year-on-year. Alongside private is Instant Offer, which you can see there, which has performed exceptionally well, growing consumer awareness with the release of also KMAP 2 pricing, our pricing engine there, and improving conversions helped us get to around about 3,000 cars a month being purchased, which has been, you know, for most would remember, a long-term target that we've had and supporting the great double-digit revenue growth that we've seen overall in private seller.
Now on the right-hand side, looking at data and research, it's up slightly 3%, which we felt was a resilient outcome, given market conditions and similar to H1, growth came from RedBook. Just talking about carsales investments on slide 22. As we discussed back in February, these are businesses we consider to be standalone from the rest of the Australian operations that we control. As you can see there, they include tyresales and TyreConnect, RedBook Inspect and Placie. Biggest contributor to this segment is our tyre business. That, you know, saw around 150% revenue growth on PCP, which is primarily driven by the inclusion of TyreConnect.
Without that, we saw underlying revenue grow about 8% on PCP, which was a solid outcome. RedBook Inspect and that business, as you can see there, the brand, we've rebranded the business, was challenged through lockdowns in half one, but has bounced back nicely in half two, particularly around ride-sharing volumes, which is pleasing. Placie is a longer- term play, but we've made good progress on building relationships and so on. It's an important part of our, you know, ride-share segment that we're looking to continue to invest in over time. Slide 24. Just looking at some market observations in our international segment of the business. Yeah, a few things to point out here.
United States, observed solid growth in customer acquisition across all four verticals and strong growth in inventory in all verticals, including truck and especially in equipment. Given the commercial model of the company and the initiatives that we will commence delivering on in FY 2023, we think we're well-positioned here. In South Korea, the vehicle trading environments continue to stand up well. Over the past 12 months or more, and like other markets, we're seeing inventory levels rising over the past 12 months, which is again supportive of the business model that we have in South Korea. In Brazil, the strong acquisition of new customers with our regional expansion has also supported the increasing of inventory there.
Despite rising interest rates and inflation, we continue to observe a strengthening new car market, with sales up about 23% on PCP in half two. Onto slide 25 and just talking more in more detail about our international portfolio. Overall, we have continued to deliver offshore, which is fantastic. We've generated 15% revenue growth on PCP, and feel like, you know, we're really only just getting started offshore still. Looking at Trader Interactive, they've had an excellent year with revenue and earnings up 11% and 16% on PCP, respectively, on a constant currency basis, and EBITDA margins expanding through operating leverage from around 54% to 57%.
All verticals grew, but RV and Powersports were the standouts through growth in yield and customer penetration and rising inventory levels. Overall, the business is really well positioned coming into FY 2023 with average yield uplifts of around 7% from March, April this year. Inventory levels are continuing to improve, and the execution of our synergies we mentioned earlier in June will all support the incremental revenue growth that we're looking to achieve into next year. Just onto slide 26 and looking at Asia and Encar. Again, we've been able to deliver strong financial performance outcomes here while investing in their long-term future growth opportunities. Revenue growth of 17% on a constant currency basis was underpinned by strong execution across their three growth products.
A Guarantee growth of 30% there was impressive and driven by branch network expansion with the addition of four additional new sites and growing customer penetration rates there within those branches that we have. Around 40% of Encar vehicles on site are now inspected. Looking at Dealer Direct, we remain focused on building product awareness through marketing quality and user experience improvements and increasing dealer penetration and volume, which were all key contributors to the 76% PCP growth that we saw here. Encar Home grew 65% on PCP, which was pleasing as we continue to refine our consumer and our dealer experience and product offer.
You know, I think we're up to around 19,000 vehicles listed in Encar now, which is fantastic for home delivery. On to slide 27 and Webmotors. Yeah, again, another outstanding year across the business, finishing with revenue growth of 26% and EBITDA growth of 23% on PCP on a constant currency basis. Dealer revenue growth was strong here, underpinned by new customer subscriptions across the country, and yield growth, the result of increases in lead fees and improvement in chargeable leads, and the sale of premium products, such as our CRM. Regional expansion recommenced in half one, as you'll all recall.
With this, we've seen it's been a nice driver of new dealer subscriptions through the South and Southeast regions of the country. In relation to inventory, like we're seeing in Australia and other parts of the world, inventory levels are recovering and getting closer to pre-pandemic levels too. Now onto slide 28. Just looking at Chileautos and SoloAutos. It's been a challenging year for our Chilean and Mexican businesses dealing with COVID, but the teams in both countries have done a great job in working together and keeping costs controlled or costs under control and looking for good growth opportunities as the market conditions improve.
Chileautos is beginning to show some promising signs of recovery, and we're seeing consistent double-digit revenue growth here being delivered each month now. We've also seen probably a particularly strong recovery in private sellers. We're confident this growth trajectory is gonna continue into FY 2023. Mexico still remains a challenging market at the moment, with new car sales still down around 30% below pre-pandemic levels. Our focus here remains on holding back costs while awaiting market conditions to improve. Just on to slide 30 and just providing more around strategy. On slide 30, we'll just step through some of the strategic priorities on this one. This slide was in the investor deck, so I'm sure many of you will be familiar with it.
It is important because what it reflects is what we're trying to do, which is taking our traditional sources of growth and building on these while adding material new growth drivers to meet the demands of a changing landscape, which we'll continue to you know see and keep the company in a strong position moving forward into the future. At the same time, we've diversified our sources of growth within large addressable markets with trend tailwinds and all in markets where industries where we can leverage some of our IP and our technology, which we believe is best of breed. Probably no need to continue talking about that slide. Onto slide 31 and just looking at Select.
With digital retailing, we've made significant progress here over the last 12 months since we launched the product in August last year and seen good outcomes for the customers and we're only really scratching the surface of this. Like Instant Offer, it's gonna take us some time. We said at the half year that our focus was gonna be on delivering increasing volumes of eligible cars, bringing more dealers onto the platform, as well as integrating trade-in and dealer finance products. As you can see, we've delivered largely on that. We've sold, actually, more than 6,000 cars or so far. We've got close to 2,400-2,500 carsales Select cars on the carsales site today.
We're gradually bringing more dealers into the product, as you can see on the left-hand side of that chart. We've evolved the product from phase one launch through phase two with the introduction of trade-in. Over the last week or so, we're close to launching a new finance integration module. Look, over the coming months, there's gonna be plenty more that will be done here to improve trade-in pricing and integrating finance partners onto the platform. But we're making steady progress here, which is really pleasing.
On slide 32, Instant Offer, I mean, yeah, this is a product that we've had in the market now for five years, and it's a product that, you know, we've tweaked and pivoted several times to ensure that we're building the right buyer and seller experience. Over the past 12 months, we've built a product that's in the right place for us to start developing consumer awareness, and we've been doing that with above-the-line advertising, as you can see on the slide. This has had the effect of bringing more sellers to Instant Offer. We're now selling, as I mentioned before, around 3,000 cars a month through the platform.
The other thing to say that we've done here over the last few months has been to look at our pricing engine, so it's better optimized for current market conditions, which, you know, they can change quickly and volumes can be sensitive to small price changes. We call that KMAP 2. The final thing we've been working on is buyer and seller experience. The focus has been on consumer NPS scoring to ensure that we're getting the right dealer experience. We've been bringing more dealers onto the platform so that as volumes continue to increase, our dealers can service consumers properly and to ensure that also distances consumers are having to travel to dispose their cars are minimized where we can.
The outcome of all these improvements can be seen on the far right-hand side of the slide. We feel that there's much more private seller volume that can be sold through Instant Offer over time because it's simple, easy, convenient and a fast way to sell a car, which is what basically people wanna see. Onto slide 33, dynamic pricing is another area that we've wanted to explore for some time. In the last 12 months, it's been great to finally get this to market and the results have been extremely positive. As we've discussed earlier, you know, private grew by 26% on PCP in FY 2022, and a significant portion of that growth has come through the introduction of dynamic pricing.
We feel, you know, there's significant opportunity for further growth here and also in the United States to use dynamic pricing in time. Over time, you know, we will continue to adjust our dynamic pricing algorithms and ensure that we're delivering on our objectives and matching pricing to things like, you know, like the value, market conditions, time of year, time to sell, make, model, location, you know, all that sort of stuff. Onto slide 34. Trader Interactive is gonna be a key priority for us in FY 2023, and we're working together with the Trader team to ensure that we're in a good position to begin unlocking these growth opportunities once we get into October and through transaction completion.
There's probably no need to go through each of these opportunities given that we presented them in the last couple of months. The thing to say is we're really excited about working more closely with Lori and the team, and we see huge potential in the Trader business. Onto slide 35. These are familiar strategic priorities and they're gonna continue to be. Ultimately where we're heading is to an end-to-end digital retailing experience over time. Just looking at Guarantee, and we will continue to see more of our inventory being Guarantee cars.
We're now up to 40%, and as we continue to open up new branches and increase customer penetration in existing branches, that percentage is gonna grow and is gonna help, you know, maintain the currency that Guarantee has today, which is, you know, ensuring trust for buyers and sellers of cars in South Korea. In Dealer Direct, we've seen significant uplift in transaction volume and dealership participation here, and we continue to work on improving product performance and our competitive position against our, you know, the market leader. One of the ways we'll improve performance is through the launch of Dealer Direct Pro, which, you know, will see cars inspected prior to being loaded onto the platform.
We think that's gonna help us improve conversion and price consumers are achieving. In Encar Home, inventory is continuing to grow as we mentioned before, and as transaction volumes and the priority over the coming 12 months will be to scale the product further by lifting the numbers of dealers participating in the program and continuing to enhance user experience and education of the product. Onto slide 36, just Webmotors, and look, it's this is a fantastic business and has made great progress over the last 12 months. It's in its organic growth and in its regional growth.
In FY 2023, all those priorities are gonna continue to be the case, but the company's also gonna focus on other digital products that follow similar themes to the rest of the business as you're, you know, you've seen and observed. Faz Tudo is a concierge product for private sellers. Repasse is a new vehicle wholesale product that's gonna facilitate trade between dealers through Cockpit, which is CRM platform they have. Car delivery has been around for some time, but we're gonna look to build it out further. Other area that we'll continue to focus on is on take rates, and as the slide suggests on the right-hand side, we've made some good progress here. Look, I mean, that completes the presentation for today.
As you can see, we're really happy with how the business is performing and how we're executing and driving strategy. We're also really excited about taking full ownership of Trader Interactive and have a lot of confidence in the future growth delivery of the car sales business. Let's open this up for questions.
Thank you very much. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speaker phone, please pick up the handset to ask your question. We have a first question from the line of Entcho Raykovski with Credit Suisse. Please go ahead.
Morning, Cam. Morning, Will. Morning, everyone else. My first question is on the outlook. I mean, I think this is reasonably clear, but if you can just confirm that the pro forma outlook that you're providing is for TI to be held for the entire FY 2023. Obviously on a-- clearly when you report, you only have it for about nine months or so. And just related to that, given that you're providing your guidance on a constant FX basis, if you mark to market FX, the spot exchange rates, how much of a tailwind would that provide to pro forma EBITDA in FY 2023? I don't know if that's too detailed, if you can provide that sort of color. I'm calculating about 1%, but any clarification from you would be useful.
Yeah. Will, do you wanna do that one?
Yeah, no worries. No. You're right, Entcho Raykovski. In terms of the first question around pro forma, we are assuming 100% ownership of Trader Interactive in both FY 2022 and FY 2023 to show it on a like-for-like basis. In terms of currency, your math is right. In terms of the exit run rates versus the average FX rate in FY 2022, we would generate about a 1% benefit from that. The statement of guidance is made on a constant currency basis, so assuming the same currency performance as we achieved in FY 2022. From a currency perspective, we are getting a decent benefit from the U.S. dollar, but there is a downside in the Korean won in terms of exchange rates.
Got it. Thank you. The second question, and just picking up on comments on Encar, are you able to quantify the additional investment that you're making at Encar into FY 2023? You're obviously guiding to a lower EBITDA growth than revenue growth. I guess to what extent will that investment be temporary and expect to drop off in future periods or essentially continue?
SB, do you wanna talk to that?
Sure.
At this moment, I mean, what we plan to do is we try to maintain and continue to invest in Dealer Direct, and we don't expect a significant increase for the Dealer Direct investment. Some other cases, I mean, Guarantee, I mean, some of the expansion of branches may require some additional investment as well. Overall, we don't expect a significant growth in investment between FY 2022 and FY 2023.
Okay. Just to be clear, does that just mean that you're maintaining sort of similar levels of investment? Is that the run rate we should be thinking about beyond 2023, or is it just too early to tell?
Well, for the Dealer Direct, as I said, I mean, we try to maintain and plan to have a similar level of investment. The Guarantee, I mean, it's a little uncertain because we try to diversify different formats of the branches. It may require some investment, but I mean, it's a little uncertain at this moment.
Okay, great. I just had a third one, SB, it's probably for you as well. The Hyundai entry into the used car dealer market, I mean, that's generated a little bit of publicity, and it looks like it's been delayed into next year. Interested in your thoughts. Once they launch, do you expect they'll use Encar as a distribution platform? If not, how are you preparing for their entry, and is this driving some of this continued investment into the business?
It really depending on how much their expectation on in attracting the customers on their own. I think at the initial stage, I mean, given the Hyundai's typical stance, they're probably more confident that they can attract the customers on their own. But I mean, in a pre-owned vehicle, each vehicle have a different condition. And as you might be aware of, the maximum number of vehicle that they have capped is up to the 5% of the total pre-owned vehicle market here, right? With the limited variety of the cars, if they realize, I mean, they have a difficulty to attract the customers on their own, they may consider to put their vehicles on our web pages as well in the longer term.
At the initial stage, I'd rather believe, I mean, they'll be more confident that they do on their own.
Okay. Thank you.
Thank you. We have next question from the line of Eric Choi with Barrenjoey. Please go ahead.
Morning, team. Thanks for the questions and good detail in the presentation, I thought. First one, just for Lori. Probably quibbling here, but in USD terms, were T1 FY 2022 revenues a little worse than what you guys were forecasting on June 27th? If that's the case, what vertical was a bit softer?
Yeah, no. I mean, we're actually right on track to our numbers, but I can say it came from different areas. Commercial truck was a little bit softer, but RV and private seller was a little bit higher. We're right on target for 2022.
Gotcha. Another one for you, Lori. I guess we're getting lots of queries on the impact of a weaker U.S. consumer. Do you think we should be fairly relaxed on volumes, given you price on inventory, not transactions, and FY 2023 yields look likely locked in? I'm just thinking in the back end of FY 2023 and 2024, do you think it gets harder to pull price, especially in the verticals where you're number two?
Yeah. I actually feel like we have a very good strategy as we don't just do a price lift. I mean, we have it planned every year, but alongside of that, we're building increased value in our product and our delivery at the same time. Our value continues to get stronger, and we feel very confident that we should be able to capture value and ROI from the value we're providing to the customer. We have put in fairly conservative lifts in our price over the next few years in terms of direct price increases. The rest of the yield is coming from launching new products and also upselling, for example, depth, where, you know, carsales has done a very, very good job in selling different levels of premier listings and things like that.
We have a long way to go on that, and so a lot of opportunity that we feel like just to pay to play. Levers are going to be able to drive yields further as well. I actually feel really confident in the yield side, in terms of in the outer years. As inventory increases even in the future, then that's really something that we can capture.
Gotcha. Just the last one for PB, if he's on the line. Just comparing and contrasting the dealer versus private outlook. I guess dealer will grow probably high single-digit% next year, private double-digit%. Just thinking when private eventually slows, how confident, PB, are you in dealer accelerating to pick up that slack from things like maybe a volume and debt rebound and maybe things like dynamic pricing?
Yeah. I think what we usually plan for, and you'll see in our initiatives that we have a pretty good spread across dealer, private, media, in creating a natural hedge among those lines. Certainly with dealer leads, the activity is still good, and we envisage that to pick up through the year. From a dealer services perspective, and you picked up, you mentioned depth.
Dealers really haven't used depth like they have in previous years, simply because the time to sell has been a lot quicker. We're starting to see depth starting to pick up. We expect that to improve, and our whole dealer services line as well. I think, you know, private sales, I mean, we've got. The other part of private too now is the emergence of IO. As the brand starts to pick up, because Cam said it in the call. It's, we're improving that. It seems every week we're improving the pricing algorithm, we're improving the dealer experience, and it's a premium consumer offering. Privates might drop off a bit.
I think IO will be a natural hedge to privates. You've got the dealer side as well. I think at the moment, we've got a pretty good spread to continue the growth in both lines.
Natural hedge is a good way to put it. Thanks, PB.
Thanks.
Thank you. We have next question from the line of Kane Hannan with Goldman Sachs. Please go ahead.
Morning, guys. Three from me as well, please. Firstly, just the media outlook. I mean, that's reasonably upbeat in terms of the commentary. Just can you talk about the confidence, you know, to keep delivering in that segment? I suppose, is that guidance requiring some recovery in auto spend, or is it continuing to execute, you know, in the non-auto categories?
Yeah. I think we're pretty well positioned, Kane. We've got. You know, we've been working around native ads and the implementation of that. Our mobile-first strategy is really starting to take effect. Our non-auto diversification, we're getting great benefits from that. We expect those three things to continue through this financial year. Then we've got our customer data platform and our self-serve platform, which we're taking to market in the first quarter of this year as well. We expect those products to perform well for us and continue that growth.
Perfect. Then just on the private yields, I mean, I know that curve is a hypothetical. I mean, if you, I suppose, just when you're thinking about putting those sorts of changes through and that step up from increasing pricing on the higher end, do you think that's gonna be enough to offset, you know, any normalization in used car pricing and what impact that might have on dynamic pricing?
We think so. We think there's a lot of headroom still at that top end. We've done a lot of work around being really micro from that dynamic pricing, so. Cam mentioned in the call as well around, you know, the time of year and the type of cars. There's a lot that we can do. Within privates on its own, we wanna create a natural hedge. I use that, it might be a popular word this time around because those lower priced cars, we might see dropping off a bit, and we might have to do some work around there from a pricing perspective.
I think all the way through the price ranges, we've got a lot of flexibility and a lot of growth to come.
Yep. Just lastly, Instant Offer. Did that pricing engine impact that Q4 volume growth at all, or is that a driver into FY 2023 in terms of continued volume?
I think it helps, for sure, because we're able to price more cars. We've extended the breadth of cars that we can now price. We've got more accurate on the pricing. We're giving the consumers a better experience. We're giving the dealers a better experience. I think it has started. The pricing algorithm is improving all the time. It's not perfect. It's much better, far better than anything else in the market. It's the best by far, but we have a lot of work to go with that. Combined with the branding that we've been doing, the brand advertising that we've been doing has helped to lift the IO.
We expect as we continue to build out those experiences, that'll get more confidence and more from a consumer perspective. I mean, it is a premium consumer offering, and we wanna continue to build it out that way.
Okay. When did that go live, that pricing engine?
Went in Q4, April. Yeah, just at the start of Q4.
Perfect. Thanks, guys.
Thank you. We have next question from the line of Roger Samuel with Jefferies. Please go ahead.
Oh, hi, guys. I've got two questions. First one, just going back to private. Just wondering what's the main driver of the strong volume growth. Do you think it's partly driven by the fact that you're cycling the COVID lockdowns, so now, yeah, you're seeing very strong volume growth? Do you think there's a you know, there's a structural shift happening away from dealers to private? The reason why I'm asking is because I'm trying to sell my car, and I'm just not getting a good price from the dealers. Obviously, I've gotta just go on carsales.
You're spot on. I mean, pricing, I think people are looking at the price of used cars and are willing to try and sell privately, or, they're also going through Instant Offer. I think your experience does mirror what a lot of people are finding now. The experience, I mean, we've done a lot of work on the experience of selling the used car, and we're getting better and better all the time. I think it's just enhancing that premium offering and delivering a result for our consumers.
Okay. Great. Second question, so in the notes to the financial statements, you've got employee benefits expense of AUD 96 million. Which is pretty flat year on year, which is quite unusual in this current environment, given that you mentioned about wage pressure as well. So yeah. Can you tell us, you know, if you increased the proportion of employee costs that you capitalized in FY 2022, and what should we expect in FY 2023?
Yep. It's Will Elliott. Happy to take that one. I think, you know, we've always done a good job of managing our cost base, and you can see, one of the charts in the slide deck shows the margin growth that we've generated in the core Australian business over a long period of time. There is an impact from CapEx. You'll see in the CapEx chart that most of the cost growth in terms of employee expenses has come in the technology part of our business where we've invested into more people. I think the other reason why employee expenses haven't grown materially is that for the first half of the year, it was obviously more challenging to find people.
We've started to see that normalize a little bit towards the back end of the year in terms of headcount churn. Yeah. I think that they're all the reasons why you see that sort of limited growth in employee expenses.
Okay, great. Thank you.
Thank you. We have next question from the line of Tom Beadle with UBS. Please go ahead.
Oh, hi, guys. Thanks for the opportunity to ask some questions. I just had three, please. I'll ask them one by one. Just firstly on carsales Select. I mean, that's ramping up nicely. You're obviously at about 2% of total dealers now, so just interested to hear what the feedback's been and what's required to increase that penetration and just how we should think about that ramping up in FY 2023.
Yeah. I mean, the feedback's been good. I mean, it's an enhanced experience on carsales. We wanna make it like a carsales certified, if you can think about it that way. I think over the next 12 months, it's really important that we build out our consumer proposition to help reserve a car. Right now because of the extra or the deeper information that we're giving on the Select car, it's giving consumers more confidence to put leads in. That's driving time to sell down more leads from a dealer perspective and from a consumer perspective, giving them more confidence on a Select car.
That's been working really well. Our focus over the next 12 months is really refining and keep on improving the offering that we've got around trade-in, which we've just launched. We're just about to launch finance and have credit checks and pre-approval in there. Then we wanna work towards a deal sheet towards the end of the financial year. Look, this is gonna be a journey that we're going through from a digital transaction perspective. We're at the very start of it. Yeah. It's tracking exactly where we thought it would be right now.
Great. Maybe just a second question is just around costs. I mean, you're obviously guiding to margin expansion. If we're to go across the businesses, can you just talk about the outlook for costs? You know, where are you investing for growth? I know you've spoken about career. Just, I think you have mentioned inflation, but just any quantification there would be helpful. Just any quantification in the outlook, sorry, would be really helpful. Even if you can't do that, could we maybe talk to jaws, if that's possible? Realize that your cost growth is probably dependent on the revenue environment a bit as well.
Yeah. Happy to take that one, Tom. You know, I think part of the reason we don't give specific guidance around costs is because of the flexibility we have to manage costs in different environments and our confidence in our ability to do that. In terms of, you know, across the businesses, the guidance obviously for Trader Interactive is to have good growth in revenue and strong growth in EBITDA. Costs are gonna grow slower than revenue. Then in Encar, it's the opposite as, you know, we've talked about that we're continuing to invest in Dealer Direct and the Guarantee and the push into those products. Then in Australia, I think the best context, you know, we...
Our growth excluding JobKeeper this year has been in that high -single- digit cost growth range. You know, I'm not gonna give specific guidance as to where that goes next year. Obviously, you know, we're confident in our ability in Australia to grow margins as well. Hopefully that gives you some decent color there.
Yeah, that's helpful. Thanks. Maybe just in private, probably a bit of a follow-up to a couple of the other questions. In terms of your yields, can you just talk about the extent to which you're currently benefiting from high used car prices versus the benefit of sort of, I guess, from increasing your prices and also micro-bracketing towards the end of FY 2022? Then just going into FY 2023, how should we think about the trajectory of yield growth, just given you probably have benefited from inflation in used car prices throughout the year? Thanks.
Yeah, I think from a yield perspective, I mean, yeah, some of it has come from the high used car pricing, but I don't think the majority has. I think there's still a long way to go there. We've concentrated more on getting the micro brackets across our whole inventory rather than just focusing on the price brackets. As we pointed out in the presentation, we think we've got an opportunity from that higher end, and that stands true as prices do normalize. When they do, we don't know. From that perspective, we've done.
We've seen yield increase nicely through FY 2022, and we expect the same trajectory through FY 2023.
Great. Thanks a lot, guys.
Thank you. We have next question from the line of Darren Leung with Macquarie. Please go ahead.
Morning, guys. Thanks. I'll make mine quick to catch time. First one is just on the dealer solid growth comment in FY 2023. I know there's comment here around depth growth here already, but do you have any assumptions around volume and price growth, please?
Sorry, volume and price.
Price
on leads or dealer cars?
Dealer overall.
Dealer overall. We expect lead activity has been quite good, has been strong. It's been up from last year, so we expect that to continue through the year. In addition, it's those services. As inventory starts to increase, and you've probably seen that on the site, we'll see. We expect depth to be used more and our dealer services as well.
Yeah. The other thing in the outlook statement too, Tom, we do reference dealer finance is growing, and it's been growing nicely, and that's a part of dealer. Also we've referenced yield increases there too. They're built in.
Got it. Thank you. The second one, it looks like the private yield uplift is not as strong in second half, compared to the first half results. Any color you can provide here, just around the pace of micro-bracketing and the benefits here, please?
Yeah. I think, look, I think the micro-bracketing, we've been monitoring that and adapting that to the market conditions. I think we saw an initial strong impact on that. We've let it level out as we've watched the volumes and the pricing aspect. From a yield perspective, as we've mentioned before, we think that at that higher end, we've got a lot of scope for the higher priced cars. Then at the lower end, we might see them contract a little.
Just with volume too, Tom. I mean, cycling through COVID, yeah, I mean that obviously plays around a little bit with volume. Yeah, private's been strong and, you know, we've talked Instant Offer is the other side of that too, and just what that's been doing over the last six months relative to the first six months of the year.
Instant Offer gives us a much higher yield as well.
That's clear. Thank you, guys.
Thank you. We have next question from the line of Paul Mason with E&P. Please go ahead.
Hey, thanks. Just two from me on Select. First, I was just wondering if you could tell us a bit about your plans for pricing on Select. I believe initially you've launched the product with a relatively low fixed price compared to sort of the potential number of leads that each ad gets. Maybe your plans around either raising that or if you can make a comment on like sort of what the dynamic around leads versus that fixed price versus if it was pay per lead. The second question on Select was just if you could maybe give us some color about the trajectory of adding new dealers. You've given us that 2%.
Should we think about that as the sort of the go- forward cadence at which you're gonna likely add dealers, or was that slow or fast? If you got some color there, that'd be great.
From a pricing perspective, I mean, now we're on a per- car basis, which is higher than what we get, the average per lead. Which it should be. I mean, we're offering a better quality lead with a better quality ad for the Select cars. Right now we are ahead on a per- car basis. We think there's a lot of scope for that to improve more. As we improve the consumer offering, we get more leverage around the reserving cars, and then eventually when we get to that full digital from a transaction perspective. That'll play out over time.
The trajectory for adding new dealers, I think, what you've seen over the last 12 months would be pretty similar to what we're aiming at over the next 12 months. I mean, it's more important for us now to be improving that consumer proposition. At the same time we wanna continue to add more cars onto the program and more dealers. I think if you lined up where we were and what SB's done with the Guarantee, you know, five years ago, we're following a similar path to that in terms of the way that we're rolling it out.
Hey, Vikram, we've probably got time for one more question, if that's okay?
Sure. Thank you. We'll take the last question from the line of Wei-Weng Chen with RBC. Please go ahead.
Hi, team. Yeah, just I'll limit it to one. Just on CapEx, you've guided to a slowing of CapEx growth in FY 2023. Is that on a pro forma or on an actual basis?
Yeah. That excludes Trader Interactive, which will be consolidated 'cause the numbers shown there are excluding Trader Interactive. On a like- for- like basis, you will see CapEx growth moderate.
Yeah. Okay. All right. Thanks.
Thank you. Ladies and gentlemen, that was the last question. I'd now like to hand back over to Mr. McIntyre for closing remarks. Over to you, sir.
Thanks, Vikram. I've got no closing remarks aside from saying thanks for joining the call this morning, and we look forward to catching up with everyone over the course of the next couple of days. Thanks again.