Thank you, Philip, and hi, everyone. Welcome to the AUTO1 Group Q3 2026 Earnings Call. Q3 was the most profitable quarter in AUTO1's history. We delivered record GPU, record adjusted EBITDA, and our best-ever adjusted EBITDA margin. We sold 243,000 vehicles at group level. This is up 11% year-on-year. Gross profit grew even faster by 16% to EUR 298 million, and group GPU increased by 5% to EUR 1,234, the highest we have ever reported. Adjusted EBITDA grew by 46% from EUR 52 million last year to EUR 76 million in Q3, our best quarter ever, while adjusted EBITDA margin climbed by 80 basis points to a new record of 3.2%. The main driver behind these strong sets of results is the successful rollout of our new trading system in both Merchant and Retail, leading to substantially higher GPUs, combined with strict management of SG&A per unit.
Q3 was essentially a quarter of very strong operating leverage across our segments, and we are very happy with how smooth the rollout went, given the scale of our business and the current environment. Let's take a deeper look into Merchant segment performance. We sold 211,500 cars to our partner dealers in Q3. This is up 10% year-on-year. Merchant gross profit grew by 15% to EUR 212 million, and Merchant GPU increased to EUR 1,005, a new record, EUR 39 more than a year ago and EUR 46 more than in Q2. We have exceeded EUR 1,000 of Merchant GPU for the first time. The introduction of our new trading system is now complete, and it's delivering the expected meaningful GPU gains. We are very happy with how it went.
Our cars are selling faster, and faster trading means fresher stock, lower holding costs, and quickly replenishing selection for our dealers. With the latest step-up, we are tracking very well against our milestone target of EUR 1,025. Driven by strong GPU gains and disciplined SG&A performance, Merchant adjusted EBITDA reached a new record of EUR 80 million in Q3. This is up 30% year-on-year, driven by increasingly strong operating leverage across the Merchant business. Merchant adjusted EBITDA margin rose by 80 basis points to a new record of 4.5%. Demand for our B2B offering was very strong in Q3. The number of dealers buying on AUTO1.com grew to 36,500, or 18% compared to Q3 of last year, and is another new high. The average basket came down to 5.8 cars purchased per dealer from 6.2 a year ago, a 6.5% decrease.
One driver here is the continued strong inflow of new dealers who start with smaller baskets and grow them over time. Merchant financing continues to perform well. At the end of Q3, our portfolio reached a size of EUR 330 million. This is up 16% year-on-year, outgrowing units sold in Q3. Our established one-click credit line, AUTO1 Financing, is already available in eight markets, where dealers pay interest per day, which is then settled monthly. We believe it's time to accelerate the further rollout of Merchant financing, which has been a bit slow over the past couple of months, to my taste. That is why we are now launching Buy Now, Pay Later, over the next couple of months. We aim to bring financing to more dealers, and we want to do it fast.
Buy Now, Pay Later is the version of Merchant financing that works better in the markets we are targeting for the next round of rollouts, especially from a regulatory point of view. With this new product, dealers choose when to pay back their car after 60, 90, or 120 days, with a simple fee added to the car price, and then pay that together with the car. We plan to launch this new version of financing in Italy soon, followed by Romania, Hungary, Greece, the Czech Republic, and Portugal over the coming quarters. Our focus is clear. We will reach more markets and more partners and make financing an even stronger growth engine for AUTO1 in 2027 and beyond. Merchant delivered its most profitable quarter ever, reaching EUR 378 of adjusted EBITDA per unit. This is an increase of 17.6% year-on-year.
We are very happy with the substantial operating leverage Merchant delivered over Q3, primarily driven by strong GPU performance and disciplined SG&A management. GPU surged to EUR 1,005 as a result of the successful rollout of our new trading system. As we indicated on our Q2 call, we held SG&A per unit at the Q2 level, and despite higher marketing investment, improved it further by EUR 6 to EUR 627, almost 3% lower than a year ago. Q3 Merchant unit economics also made major progress towards our milestone targets. GPU is only EUR 20, SG&A per unit only EUR 2 away from their respective milestone targets. As a consequence, adjusted EBITDA per unit is only EUR 22 away from our EUR 400 per unit milestone adjusted EBITDA target. Now let's take a look at the Retail segment. Autohero sold 31,400 cars to consumers in Q3.
This is up 16% year-on-year, continuing double-digit growth. During Q3, Autohero was essentially supply constrained, especially towards the end of the quarter, driven by the current macro environment, which we will talk about in more detail later in the presentation. Retail gross profit grew by 18% to EUR 86 million, up from EUR 73 million in Q3 of last year. Retail GPU increased to EUR 2,777. This is EUR 113 more than a year ago and EUR 274 more than in Q2. We are very happy with the EUR 274 step-up quarter-over-quarter as a result of the successful implementation of our new trading system in Retail. It's the first time that we radically improved the speed of our Retail trading with an acceleration of roughly 20% year-on-year.
Retail adjusted EBITDA improved by 56% from a loss of EUR 9.6 million to -EUR 4.3 million, while Retail adjusted EBITDA margin improved by 1.3 percentage points to - 0.8%, our best Retail margin- to- date. Our ambition in Retail is simple. We are making Autohero the go-to brand when buying a used car, and our brand keeps getting stronger. At the end of Q3, aided brand awareness reached 39% across our markets, up 7 percentage points year-on-year, and another new high. We are also faster than ever. Our average delivery time fell to 8.9 days, 13% faster than in the previous quarter, and below nine days for the first time, powered by the largest logistics network for cars in Europe. Brand recognition and delivery speed are two key drivers of converting initial interest into purchases, and hence continue to be a top investment focus for us.
Our pan-European platform keeps opening up new and exciting ways to create value in Retail. During Q3, we launched cross-border selling as a feature, for now in pilot mode. We have started listing selected cars from our German Autohero inventory to customers in Poland and Italy. For our customers, this means an increase in selection. For us, it is an asset-light sales option because a car only moves once it is sold. So far, it is margin neutral, as additional taxes and transport are simply added to the sales price. It is early days, and we are still fine-tuning the selection and pricing, but we have already completed our first cross-border transactions, and we are curious to learn more about its impact and future potential. Retail unit economics improved substantially over the course of Q3, driven by great GPU and SG&A performance.
Retail GPU increased by EUR 274 quarter-over-quarter to EUR 2,777 as a result of the successful rollout of our new trading system. At the same time, we improved SG&A per unit on a year-on-year basis. SG&A per unit came down by around EUR 110 to EUR 2,913, and marketing per unit came down to EUR 935 year-on-year. Together, this improved our adjusted EBITDA per unit from -EUR 357 a year ago to - EUR 137, an improvement of EUR 220 and the best level we have seen so far. The same is true for our adjusted EBITDA margin in Retail, which improved by 1.3 percentage points to -0 .8%. Let me now take you through the Q3 group financials. In Q3, revenue grew by 10% to EUR 2.3 billion, and gross profit grew by 16% to EUR 298 million, well ahead of revenue and units.
Operating expenses were EUR 223 million, up only 8% year-on-year and flat compared to Q2, against 11% unit growth and 16% gross profit growth, demonstrating strong operating leverage. Adjusted EBITDA was EUR 76 million, up 46%, at a margin of 3.2%, the highest in our history. Over the first nine months, we grew units by 17%, gross profit by 20%, and adjusted EBITDA by 27% to EUR 194 million. Our balance sheet remains very strong. We continue to fund our asset base largely through non-recourse ABS facilities, which we see as evergreen working capital financing that grows with our asset base. Inventory increased to EUR 878 million at the end of Q3, with the vast majority of the increase in Merchant arriving very late in September.
Our consumer finance portfolio grew to EUR 783 million, with EUR 683 million externally funded, and our Merchant finance portfolio grew to EUR 330 million, with EUR 260 million thereof ABS funded. Across these three pools, we carried out EUR 2 billion of assets and funded more than 80% externally and without recourse. As before, we had no corporate debt at the end of Q3. We continued to convert profit into cash in Q3. Total cash increased by EUR 32 million to EUR 707 million at the end of the quarter, up from EUR 676 million at the end of Q2. Adjusted EBITDA contributed EUR 76 million. Cash items below the adjusted EBITDA line, e.g. capital expenditure, tax, and general working capital changes, were an inflow of EUR 24 million. The increase in our inventory and normalization of the LTV ratio consumed EUR 73 million.
Our consumer finance captive pool released EUR 20 million through the issuance of FinanceHero 3, while underlying loans grew, and our Merchant finance pool absorbed EUR 14 million. Overall, this resulted in the EUR 32 million of cash generation in Q3 that you can see on this slide. Now, let's turn to the current macro environment and our updated guidance. I will walk you through a couple of the trends we are observing in Q3, how we are navigating those, and our expectations on year-end trading. Macro headwinds have gotten stronger over the course of Q3. The fuel price increases we saw since February were tolerated by buyers and sellers for a few months. After they crossed a critical threshold around August, they started resulting in bigger gaps between buyer and seller price expectations.
This means our supply is temporarily constrained, and we have fewer cars available for sale than we would like. On AUTO1.com, for instance, the average number of cars available for sale fell from 47,000 in June to 44,000 in September. The demand side continues to be very strong, with interest in AUTO1.com as a buying channel keeping its powerful growth momentum. For example, the number of unique viewing dealers on our platform keeps growing in the mid to high 20s year-on-year. To put a number on it, had our supply side not been constrained, our Merchant units would have grown by 21% year-on-year in Q3 instead of 10%. On the Retail side, the picture is very similar. Had our Retail supply side not been constrained, units would have grown by 33% year-on-year in Q3 instead of 16%.
There are two pieces of good news around the current supply side dynamics. First, the effect is expected to be temporary. Assuming that fuel prices continue to stay around their current levels, we expect buyer and seller gaps to narrow again over the next 8- 12 weeks. Second, the transactions are not lost to us. The revenue is just delayed. We expect that nearly all transactions that are currently delayed due to this effect will still take place later in the future once buyer and seller gaps are moderating and the overall environment normalizes. The outlook for full- year 2026 is confirmed within our guidance range we gave in February. For units and gross profit, we expect to be in the middle of the range, and for adjusted EBITDA, at the lower- end.
Being able to confirm guidance despite the strong macro headwinds is a testament to the resilience of our business model. Our unparalleled trading system allowed us to navigate this temporary supply side disruption and even increase per unit profitability. We are confident that the supply side dynamics are temporary in nature. We will provide you with the outlook for the full- year 2027 with our Q4 results in February next year. AUTO1 is built to win, and Q3 proved it. We delivered record GPU, record adjusted EBITDA, and our best-ever margin since 2012. We are building Europe's leading vertically integrated used car platform and own transaction data of more than 6.5 million cars traded across more than 30 countries. We own every step of the value chain, including AI pricing, logistics, production, financing, and our brands.
This is why we control price, speed, and customer experience like no one else in Europe, and why we can offer better prices to sellers and buyers, more selection, faster delivery, and competitive financing. This platform took more than a decade to build. Today, we have more than 750 branches, 12 production centers, and the largest logistics network for cars in Europe. Combined with our proprietary pool of transactional data, this infrastructure is our competitive moat. It cannot be replicated, and it gets wider with every car we trade. More sellers bring more cars, more cars attract more dealers and buyers, and more demand lets us pay sellers better prices, and every transaction makes our pricing algorithm stronger. The opportunity in front of us is enormous. Europe's used car market is worth around EUR 700 billion a year.
We are already Europe's largest player, but we only own a tiny 3% of this gigantic market. We believe that in the long- term, our unique vertically integrated model will let us capture at least 10% market share, a more than threefold increase. We're no longer just building. We are leveraging our platform, and we're just getting started. With that, I'd like to open up for questions.
Before we begin the Q&A portion of today's call, I'd like to go over a few brief technical points. If you haven't already, please feel free to submit your questions using the Q&A tool located at the bottom of your Zoom screen. Philip will call on participants in turn. Once your name is announced, I will unmute your line and hand the floor over to you. Kindly ensure that your microphone is enabled and that you're ready to speak when prompted.
Thank you, Melissa. With that, we will start with James Tate from Goldman Sachs.
Hi, Christian. I have got a couple questions, please. Firstly, in terms of the gaps between buy and seller prices, you mentioned that you would expect this to narrow over the next 8-12 weeks if fuel prices stayed at these levels. How did you get to that specific 8-12 week timeframe? What is that based on? Just trying to understand what gives you confidence around that timeframe, and what are the potential risks that it could take longer? Secondly, you talked about the main bottleneck for Retail units growth being these temporary supply or sourcing issues. I believe there are also some issues with refurbishing and throughput and hiring enough mechanics through Q3. Would you say this bottleneck is now in a better place, or do you expect this to be an important constraint through Q4 and the start of next year? Thank you.
Hi, James. Yeah, thank you for those questions. On the gaps, the 8-12 weeks corridor that we expect these gaps to moderate is based on our previous experience of stronger macro disruptions, like, for instance, the diesel crisis we had a few years ago. We are expecting that this timeframe is, yeah, this time roughly the same. On the temporary supply, no, on your temporary refurbishment constraints that we talked about, I think, yeah, this is now getting a little bit better. So we were able to access new hiring pools, and at the moment, production capacity is not a bottleneck.
Thanks, Christian. With that, we got some questions from Nizla Naizer at Deutsche Bank.
Thank you. I will try to limit myself to four, if that is okay. The first few sets of questions relate to the guidance that you have specified for 2026. The implied volume growth for Q4 is now around 9% for the group. Could you maybe give us some color as to how we should think in terms of Merchant versus Autohero growth in that mix? Secondly, the implied GPU in Q4 also implies that it will be slightly down sequentially. What would contribute to that decrease? Is that a seasonality thing, or is the cost of production in certain parts of the business increasing? Some color there would be great. Then maybe more encouragingly on adjusted EBITDA, what is implied is an over 20% growth in adjusted EBITDA in Q4, and that implies that the SG&A per unit is decreasing again by mid-single- digits in Q4.
What is sort of driving that decrease? Some color would be great. Lastly, on the long-term growth targets that you gave us at the CMD, Christian, does that still stand for 2027 under the current conditions? Any color there would be great. Thank you.
Okay, thank you, Nizla, for this set of questions. Let us start with the first one. You asked about the implied volume growth, Autohero versus Merchant for Q4, if I am not mistaken. We are expecting both the midpoint for both categories of units based on the guidance range provided. I think that should answer your question here, I hope. We expect the midpoint for Merchant, and then we expect the midpoint for Autohero units. Then you were saying, based on your calculations, you are assuming a Q4 group GPU to be down. Yes, the Q4, especially with November a little bit, but especially on December, has a usually a slight downward seasonal pressure, mainly driven by December, but that is something that is a normal seasonal adjustment that in most of the years happens.
Then you asked about the adjusted EBITDA and the corresponding SG&A decrease that your calculations assume for Q4. While we are not specifically guiding on the SG&A per unit, I would say that in difference to last year, we are quite happy with the staffing that we currently have and the capacities that we have, other than in purchasing and in production and in Merchant sales. These are areas that we hire, but we will hire them with a starting date of 1st of January. That is a positive impact. Overall, I think your assessment is correct that we expect this to lower. Most importantly, on the CMD targets. We fully stand behind all of the CMD targets, so both the long-term targets and the medium-term milestone targets.
If you look at Q3, then we continue our trajectory towards those across both Merchant and also Retail. At this point of our journey, we are very satisfied with how smooth the rollout of the new trading system went, given the scale of our business and the current environment. We are more than confident, especially after the Q3 results, that our trajectory towards all of our CMD targets, both the long-term targets and the medium-term milestones, are well on track.
Thank you, Nizla. With that, we got Giles Thorne from Jefferies.
There we go. I finally pressed the unmute button. Thank you. It was two questions on cross-border listings, please. The first one is to get an understanding of what you are effectively optimizing for here, whether it would be a higher GPU or a quicker speed of sale, or something else altogether. I appreciate it is early days. Then secondly, some commentary on if there will be any change in how you manage your conflict of interest as you begin to take stock out of one geography and put it into another. How you manage your conflict of interest with your dealer partners would be useful if there is any change. Thanks.
Yeah. So, I mean, the cross-border listings are like a pilot that we recently started. We are super excited about it. It is an asset-light option, so this means if you think about the German stock, then there is a portion of the German stock that, for instance, just appears on the Italian website. We are working in the background to make sure that the cross-border delivery time, including all of the documents, is an attractive one. You can think about it as additional demand in the current configuration for the German stock. The German stock would accelerate in turns because it also taps into the Italian demand pool. At the moment, we are optimizing for faster turns or additional unlocking demand, plus also being able to fill gaps in the inventory that we see in a certain market.
So if we are seeing, okay, there is a gap of XYZ plus the XYZ in Italy, then we could supply that cross-border from Germany, while in the end, we do not have a strong opinion if the car is sold in Germany or in Italy at the end. However, going forward, we will take a stronger profitability focus once this is getting to some volume. Yeah. We are thinking that then we can additionally capitalize on the margin opportunity that is, yeah, pretty big if we go back to our merchant trading. Specifically on the conflicts of interest, so, I mean, I think conflicts of interest when you are referring to where do we now list the car, so we do not really see one, so that would be agnostic. The thing that we need to be careful about is that we are not listing similar inventory cross-border, right?
It's not useful. But if we see gaps and the demand is very concentrated on, yeah, or very different on, let's say each car is a very unique and individual item, there's a lot of opportunity to list interesting cars, for instance, from Germany to Italy or Germany to Poland or other market combinations that we will launch in the future.
Thank you.
Thank you. Christian, we got two questions directly from Jo at UBS.
Yes.
He is first inquiring about the new trading system that drove the strengths in GPU in both Merchant and Autohero. Are we now already seeing the full benefit of that system, or are there further benefits to come in the future? And also, can we quantify the impact for each segment?
Yeah, I think the impact for each segment is showing up nicely in the QoQ GPUs that we reported in Q3. I think in Merchant, we are seeing the full potential. In Retail, maybe there is slightly more to go. But obviously, this all belongs together. I would say we are seeing pretty much the full impact now overall.
Yeah.
Sorry, and the second question?
The second question is about our market share still low at 3%, as you said, and whether we can give any details or break down a little bit where our market share in which segments or categories is particularly strong or weak.
I mean, overall, we are taking market share, right? The market continues to be down, low- single- digits in Q3, and we are growing 10% overall, and we are 11% on the group unit side. This means that we would probably, in a stable environment, have grown 14%-15% on the group unit side, but obviously depends now on Autohero versus Merchant. We are not seeing particular areas where we are losing more or gaining less. Overall, the market share increases are quite stable. What we are seeing is that we are gaining a little bit more share on the higher above average share on the electric use side.
Great. That seems to bring us already to the end of the Q&A session for today. Just as always, a quick reminder, we will be in London at the UBS conference next week, and the week after that at the Morgan Stanley TMT conference in Barcelona, and then having a quick tour to London and Paris, and then we will close the IR year with the Berenberg conference in London. I think that's it from us. Hopefully, I'll see many of you at some of those conferences. Otherwise, I don't know, Christian, any last words?
Yeah, thank you so much for your interest in AUTO1 and this great set of questions. Let me close with a statement on the new CFO. The Supervisory Board has concluded its search, and we will be able to update you soon on the new CFO and who this is. I am super excited, already super excited about working together. Thank you so much, and take care.