And gentlemen, thank you for standing by, and welcome to the Autotrader Group Plc Full Year Results Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. I must advise you that this conference is being recorded today on Thursday, 25th June, 2020. I would now like to hand the call over to your host today, Nathan Coe.
Please go ahead.
Good morning, everyone, and welcome to Autotrader's results presentation for the year ended 31st March 2020. This is the first time that we have delivered our results solely through an online format, but one of many firsts as a result of COVID-nineteen. The pandemic also led to us delaying our results announcement by 3 weeks, enabling our auditors to complete their work and make a clearer assessment of forward looking statements. Before we start, I would be lying if I said this is how I or Jamie imagined our 1st few months as CEO and CFO, respectively.
I'd like
to recognize and thank our leadership team, the Board and all our employees for their advice, support, hard work and dedication throughout the crisis. Today, I'm joined by Jamie, our CFO and Catherine Fares, our COO. Our presentation today is slightly different to our normal format and will cover 3 areas. I will start with an overview of the highlights from last financial year, which was largely unimpacted by COVID-nineteen, and Jamie will cover the financials in more detail. Secondly, Catherine will outline the impact that the pandemic has had on our business, the industry and more importantly, how we responded to this.
I'll then finish with the outlook for 2021 beyond, which will be followed then by a Q and A session with analysts. Starting with strategic highlights. We've had another good year despite the challenges faced by our industry and have continued to make progress on our long term strategic goals. We have now monetized our new car proposition and are pleased to have over 1,000 retailers paying to advertise their new cars on Autotrader. Most importantly, the number of car buyers engaging with these new cars is already many times larger than the total number of new cars sold in any given month, with almost 9,000,000 users viewing a new car in 2020.
In April 2019, we successfully launched VehicleCheck and benefit both consumers and retailers by building greater levels of trust and more ways of connecting with one another. We've continued to increase the penetration of our advanced and premium packages with stock penetration reaching 23% by year end as more and more retailers look to increase their speed of sale through greater prominence in our marketplace. In October, we acquired key resources, which allowed us to secure the high quality data on which much of our core platform depends. And finally, in early 2020, our joint venture dealer auction completed original businesses and is now ready to fulfill its goal to become the largest online B2B marketplace in the UK. Now turning to the financial highlights.
Revenue grew by 4% to £368,900,000 underpinned by trade revenue, which increased by 6% to £324,300,000 Operating profit grew by 6% to £258,900,000 We estimate that COVID-nineteen had an adverse impact of £3,000,000 on operating profit for the financial year. Through continued operating leverage and profit contribution from our dealer auction joint venture, operating profit margin improved by 1% to 70%. Basic EPS increased by 6%. And if you exclude the £8,700,000 1 off non cash profit on disposal of SmartBuy into dealer auction last year, and underlying EPS grew by 11%, which was due to high single digit growth in net income and fewer shares in issue as a result of our share buybacks. As anticipated, in light of the current economic uncertainty, the directors will not be recommending a final dividend.
Therefore, the total dividend for the year will be 2.4p being the interim dividend paid in January. Cash generated from operations was up 3% to £265,500,000 Lower growth in cash generated from operations relative to operating profit being due to the contribution of profit from our joint venture and reduced levels of depreciation and amortization. High level of cash generation allowed us to reduce our net bank debt by £31,700,000 to £275,400,000 translating into average leverage of 1 times EBITDA at the end at year end. And finally, cash return to shareholders in the year was £126,400,000 delivered through a combination of dividends and the repurchase of shares. And finally, operational highlights.
We continue to focus on the same priorities that underpin the health and sustainability of our core business. One of our proudest achievements for the year was our audience performance. Despite more competitors and a challenging market, cross platform visits increased by 3% to 50,800,000 a month on average. We've grown our share of time spent amongst our competitors set to over 75% and are now 9 times larger than our nearest competitor Gumtree, increasing from 5 times larger just 12 months ago. As always, we urge caution with third party measures.
However, the improvements we have seen are consistent with our own internal measures. We saw growth in retail at forecourts increasing by 1% in the year. This came predominantly from smaller retailers, which has a dilutive effect on ARPA growth. Average revenue per retailer forecourt or ARPA grew by 6% when compared to the previous year, which Jamie will explain later in more detail. Number of cards advertised on-site increased by 4% to an average of 478,000 cars for the year.
Much of that growth was in new car stock. However, private stock also increased due to our new hold tools sold package, which has proven popular. Core retailer livestock decreased by 3%. The number of employees increased to 853 on average during the year. This includes the 64 employees from Key Resources, which contributed 32 to the average for the year.
I'll now hand over to Jamie, who will take us through the financials in more detail.
Thank you, Nathan, and good morning, everyone. As Nathan mentioned in the highlights, I want to remind everyone that the impact of COVID-nineteen on last financial year was relatively small. Some revenue lines such as home trader, consumer services and manufacturing agency were impacted for a part of March. However, our core retailer revenue was largely unaffected during financial year 2020. This revenue impact, combined with additional provisions made to cover the risk of bad debt, had a combined impact of £3,000,000 or 1% on operating profit.
Starting with revenue, where total revenue grew by 4% in the year, with our core trade segment being the key contributor. Trade revenue increased 6%, driven by an increase in retailer revenue, which grew by 7% year on year. ARPA was once again the primary driver, growing by 6% or £105 per retailer per month. Number of retailers advertising with us grew by 1% as customers focus on maximizing their exposure in a competitive market. Also within trade, we have seen a continued decline in home trade or pay as you go listings, offset by growth within other trade revenue, which includes a £2,000,000 contribution from key resources following the acquisition in October.
Consumer services revenue increased by 1% as our motoring services revenue stream grew. Private revenue was flat year on year despite the COVID-nineteen impact in the second half of March. The total volume of private adverts listed continues to decrease year on year. However, changes to our product offering, including the introduction of a new higher yielding hold until sold package, has allowed us to upsell customers effectively. Lastly, as anticipated, we saw a 28 percent decline in revenue from manufacturers and their media agencies.
As reported in the first half, market pressures driven by Brexit uncertainty, coupled with regulatory changes, resulted in lower marketing spend throughout the year. Now on to ARPA, a key driver of our retailer revenue. ARPA grew 6% year on year with the average spend per retailer forecourt now at £1949 per calendar month. This good level of growth has been suppressed somewhat by an increase in retailers, many of which are smaller forecourts with lower average spend. The largest contributor to ARPA growth in the year was product, which benefited from products launched over the past 2 years.
Penetration of our Prominence products, including advanced and premium packages, continues to increase with this growth representing almost half of the product lever. Also contributing to this product growth was our successful packaging event, which took place in April 2019 and included 2 new products, text chat and the option of buying vehicle check. There was a small contribution from our new car product, which was monetized through the second half of the year and a contribution from our managing or data products, which grew by 400 forecourts in the year. Our desire to help retailers to use data as much as possible to manage their forecourt has led to a change in how we market our retail check product, which Nathan will cover later on. Turning now to stock and the chart on the right.
The dark green line shows the increase in cars on-site, which grew by 4% in the year, largely as a result of the increase in the number of new cars on our marketplace since the product was launched initially as a free of charge trial in August 2018. Core retailer stock decreased by 3% on average through the year. Much of this decline came from larger customers who experienced difficulty sourcing stock, particularly in the second half of the year, which can be seen on the chart. This resulted in a 30 pound decline in the stock lever. Finally, the increase in price of £53 relates to an effective increase of just under 3%, of which the majority was delivered in April 2019 and was consistent with that achieved in the prior year.
Costs were well controlled, increasing by just 1% in the year, but decreases in people costs, marketing and depreciation and amortization almost completely offset increases in other costs. Feeble costs decreased by 1% in the year to $55,800,000 This year on year saving was driven by £3,000,000 reduction in share based payments and annual cash bonus, part of which was due to the directors waiving their bonus earned in response to the COVID-nineteen pandemic. The average number of full time equivalent employees increased by 6% to 853, with 32% of that increase being the average impact from key resources following the acquisition in October 2019. Underlying salaries increased across the business. However, a change in staff mix as we focus on early careers has suppressed cost growth.
Marketing was broadly flat year on year, decreasing by 2%. Despite this fall in spend, our audience performance has been particularly strong and has grown throughout the year. Other costs, which include data services, property related costs and other overheads, increased by 14%. The increase comes from costs associated to our vehicle check product that was monetized in April 2019 and those linked to the functionality dealer auction provides to retail accelerator customers. There were also higher costs as a result of the group's ongoing migration to cloud based services, which increases our levels of resilience, security and speed of software release, while reducing the need for capital expenditure in physical data centers.
Finally, an additional $2,100,000 charge of anticipated credit losses was recognized in line with IFRS 9 to take account of the COVID-nineteen impact on the carrying value of receivables from customers. Depreciation and amortization reduced by 27%, but the group's self developed order to billing system became fully amortized. As a reminder, our low levels of CapEx and depreciation are not a reflection of low levels of investment in our business. In addition to our investment in cloud based services, we have over 320 people in product and technology who are continuously improving our platforms and developing new products for customers, the cost for which are taken in full through our income statement in people costs. With revenue up 4%, costs up 1% and a £3,200,000 contribution from our share of dealer auctions profit, operating profit grew by 6%, and our operating profit margin increased by 1 percentage point to 70 percent.
Cash generated from operations grew by 3% to 265,500,000 dollars which is a lower rate than operating profit for the following reasons. Depreciation and amortization provided a year on year cost saving, which has no effect on cash. Share based payments yielded an operating profit benefit that has no impact on cash generated from operations. Profit from dealer auction provides growth to operating profit, but had no effect on cash in the year as no dividends were received. Underlying cash conversion remained high at 99%.
The statutory income statement outlines areas beyond our revenue and operating costs. Finance costs decreased year on year to £7,400,000 dollars in part due to the reduced level of debt drawn under our facility. The prior year also included an additional 1,700,000 of accelerated amortization costs relating to our former debt facility, which we have not had to incur this year. Our profit before tax was $251,500,000 and our effective tax rate was 18%. After removing the impact of dealer auction, which is consolidated post tax, this is in line with the standard rate of tax for the U.
K. Basic EPS grew faster than profit after tax as a result of fewer shares in issue due to our share buyback program. Basic EPS growth of 6% is suppressed by the one off profit on disposal of the Smart Buying asset to dealer auction in the prior year. As said earlier, the directors are not recommending a final dividend, meaning that the total dividend for the year is 2.4p per share, being the interim dividend that was paid in January 2020. Moving now to net bank debt and capital allocation.
Net bank debt reduced by €31,700,000 over the period and leverage reduced to 1x, which is significantly below our covenant requirements of 3.5x. Cash generated from operations of €265,500,000 was used to pay €1,500,000 of CapEx and lease payments of 2,900,000 In cash terms, we paid $6,400,000 of interest on our RCF, and we incurred $500,000 of refinancing fees as we extended our facility for the first time in June last year. Following year end, the group exercised its 2nd plus 1 extension option on the revolving credit facility. Of the €400,000,000 total commitment, €83,500,000 matures on the original termination date in June 2023. The remaining €316,500,000 will now terminate in June 2020 5.
Tax paid increased to $69,800,000 as HMRC accelerated the due dates for quarterly installment payments for companies with accounting periods beginning on or after the 1st April 2019, as well as the final 2 quarterly installments for tax relating to financial year 2019, the group was required to make all 4 installments for financial year 2020. To be clear, this increased cash payment is purely an acceleration of when payments are made and there is no additional tax charge. We acquired Key Resources in October, resulting in a net cash outflow of 25,300,000 with a further 700,000 paid post acquisition to extinguish debt in that business. Of the remaining free cash flow, €64,700,000 was paid in dividends relating to last year's final dividend and this year's interim dividend, and £62,000,000 was used to buy back shares at an average price of £5.39. In total, we returned over £126,000,000 opted to hold higher levels of cash reserves at the year end given the uncertainty caused by the COVID-nineteen pandemic.
The group had a strong balance sheet position at year end with 37 point £6,000,000 of cash and headroom on the RCF of £87,000,000 In early April, we strengthened this position further as we raised funds through an equity placing. The placing rates gross proceeds of 185,900,000 which was reduced to 183,200,000 of fees. The group's long term capital allocation policy remains unchanged, continuing to invest in the business, enabling it to grow, whilst returning around onethree of net income to shareholders in the form of dividends. Any surplus cash following these activities will be used to continue our share buyback program and over time to reduce debt. The group has returned to charging customers, but we'll continue to monitor the ongoing environment around COVID-nineteen.
Subject to that monitoring, we are hopeful of an early return to our capital allocation policy with the declaration of an interim dividend in November. I'll now pass over to Catherine, who will talk you through our response to COVID-nineteen.
Thank you, Jamie, and good morning, everybody. Moving on to Slide 13. The global health crisis caused by the emergence of COVID-nineteen has had far reaching impacts on all of our lives, well beyond business, and we remain constantly vigilant for the well-being of all our stakeholders. As everyone is aware, the social distancing measures that were introduced back in March have had a significant impact on the entire automotive industry and therefore on our business. Many of our customers, predominantly car retailers, were forced to close their showrooms and manufacturers were forced to shut down production lines.
People across all businesses, including our own, were asked to work from home if they could. Since the crisis started, our priorities have been centered around 3 areas: looking after our people, supporting our customers and protecting our business. In this section, I will describe how we reacted quickly and decisively through this period of uncertainty. I will detail we have taken to ensure we are able to emerge from lockdown in a position of strength and able to progress to make progress against our long term strategic goals. As we have said many times before, our people and our culture are at the very center of our business and key to our success.
Therefore, our primary goal has been to ensure that all of our people are safe and supported. Since 17th March, our employees have been working from home. The transition to working remotely has been almost seamless and is a testament to systems, technology and the can do attitude of our people. We acknowledge though that for many, working from home will have brought additional strains and stresses. The health and well-being of our people and their families is always front of mind, And so we have increased the support we provide.
We held weekly all company webinars, offered flexibility for those who need it and have increased our counseling and employee support services. We have worked hard to find ways to sustain the well-being of all employees and to keep morale high. Our products and technology teams have continued to innovate, test and launch new products through the lockdown as we work towards our strategic goals. These teams continue to deliver around 6 40 releases a week, which is only marginally lower than normal. Understandably, the level of activity for some of our teams, particularly those in customer facing roles, decreased.
As I will come on to talk about shortly, we utilized the coronavirus job retention scheme for a short period in April May. All employees have now returned from furlough, and we have not had to make any redundancies as a result of the crisis. The Board cannot express its gratitude and appreciation enough for the support of Autotrader's employees throughout this challenging period. We hope that our people feel the same way about the support we endeavor to provide during this difficult time. Between March 24 until various points in June, retailer showrooms were required to be closed to the public.
During this time, we decided that we should not charge our customers for an advertising service from which they could not immediately benefit. We therefore went free for all retailers from the 1st April and throughout the period they were unable to meaningfully trade. We took this decision early ahead of government lockdown announcement because it seemed simple, clear and appropriate given our intention to support our customers, many of whom are small family owned businesses. This allowed retailers to continue to advertise on our platform and to build a pipeline of consumer demand. In addition to not charging our retailer customers during lockdown, we also extended payment terms for March services by 60 days.
While showrooms were forced to close, we did not want to be a cash burden on our customers. On top of this financial support, 1 week before lockdown, we implemented a stock offer so that retailers could advertise more of their vehicles on our entered lockdown. It also enabled them to generate much needed cash before showrooms were required to close. This resulted in up to an additional 80,000 cars on Autostrade at the high point in mid April. We have also supported our customers by sharing data and insight from our platforms and through product development.
We accelerated the launch of our new market insight product and enabled retailers to advertise vehicles more effectively through the crisis, while highlighting their COVID-nineteen safety measures in place, home delivery and live video viewing options. In March, we began hosting weekly webinars designed to update the industry on what we were seeing on our platforms, to share our latest consumer research and to provide insights from industry experts. This was all designed to help buyer retailers through the turbulent period. These webinars have been well attended with over 3,000 people joining 1 or more. HomeTrader customers and private individuals who advertise their vehicle on the group's platforms were also impacted by the lockdown restrictions.
To support these customers, we extended the tenure of all efforts that were live on the 23rd March to run through the lockdown period for free. We do not believe that other online marketplaces responded as promptly, clearly and definitively to the crisis. These measures were well received by customers, and we hope this sentiment will help us to strengthen these relationships in the months and years ahead. On the 25th May, the UK government announced the lessening of the lockdown restrictions in England, allowing retailer forecourts to reopen from the 1st June. Northern Ireland and Wales subsequently followed on the 8th June 22, respectively, with Scotland announcing they would lift restrictions on the 29th June.
We extended the free period for retailers into June for as long as they could not open. Once dealers were able to reopen, we resumed charging, applied a 25% discount to the normal rate. We will resume charging at normal rates from the 1st July. Throughout the period that our customers were closed and our core services were free, we made the responsible decision to reduce costs. Our discretionary spend, which is primarily for marketing our own brand and products, has been significantly reduced.
Our largest expense relates to our people. As previously mentioned, due to our customers being required to close and our decision not to charge for our services, we made use of the coronavirus store retention scheme and furloughed just over 25% of our employees the beginning of April. To those who were placed on furlough, we supplemented the level of support provided by the government, as the large majority remained fully paid. All employees were removed from the scheme on the 21st May, ahead of retailers reopening on the 1st June. Once sufficient certainty returns, we will repay the amounts claimed through the government furlough scheme.
The executive directors have forgone 50% of their salary during this period of uncertainty and waived annual bonuses earned for the year ended 31st March 2020. The remainder of the board has waived its fees by 50% or more for the duration of this crisis. Salaries and fees will return to pre COVID levels in July 2020. Our other costs are mostly fixed. However, there has been some small savings across travel, staff entertainment, training and recruitment.
In terms of cash flow, the group has deferred VAT payments totaling $18,400,000 to date as allowed by HMRC. The group share buyback program was suspended in March, and as Jamie said earlier, the directors are not recommending a final dividend for the year. We entered the crisis with a strong balance sheet. At the year end, the group had £38,000,000 of cash and £87,000,000 of headroom on our revolving credit facility. As Jamie said earlier, on the 1st April, we raised £183,000,000 net of fees through an equity placing.
This enabled us to significantly reduce balance sheet risk when we were generating losses, and it was unclear how long the situation might persist. It has allowed us to run the group through the crisis in the long term interest of our shareholders, customers and our people. It also provides an insurance policy against protracted lockdown or series of lockdowns and puts us in a position to take advantage of strategic opportunities as they arrive. While there is greater certainty now, the situation remains inherently uncertain, and therefore, we intend to maintain our balance sheet position for the time being. At the end of May, the group had net debt of £80,000,000 and net bank debt was 0.4x EBITDA.
The measures we took in March, April May have secured our position as the U. K. Largest automotive marketplace. The chart on the left shows our performance for cross platform visits and stock advertised by day since March 2020. Cross platform visits were at their lowest on the 24th March, the 1st full day after the UK government's lockdown announcement.
Since then, our audience has trended consistently upwards and is now at record levels. For the period from the first to the 21st June, cross platform visits averaged 2,100,000 a day, which was up 28% from the prior year. The other side of the network effect model is stock on-site. Following the free stock initiative I mentioned earlier, the number of cars advertised on Autostrade increased to a high of around 550,000 in mid April. Allowing our customers to advertise all of their new and used vehicles to the largest and most engaged consumer audience during lockdown to help them to build a sales pipeline.
This demand has been demonstrated by a dramatic increase in lead volume, up 135% year on year in June so far. Many consumers are looking to complete more of the buying journey remotely. They can no longer walk into a reseller without an appointment. Some retailers have still been able to sell cars online and began handing over these vehicles when showrooms opened on the 1st June. Our stock trend, which has been steadily decreasing, shows how retailers are removing sold cars and many have struggled to restock as auction volumes remain low with physical auctions still closed and trade ins not yet ready to advertise.
The chart on the right hand side shows the average change or the change in average price retailers have processed since the beginning of March. The volume of price changes reduced to lower levels in April May and have steadily increased towards more normal levels in June as retailers reopen their showrooms. In general, prices are holding firm, which is encouraging given that consumer demand is strong and so retailers do not have to discount their stock in order for it to sell. The blue line shows the quantum of price changes, and you can see that the level of these changes is not substantially different to those made before the lockdown, shown by the orange line. Overall, like for like prices in May were 1.9% up year on year.
It's an encouraging sign for retailer health as profits on vehicles sold in recent months should be robust. During April May, actual cancellations only materialized at the same level as the prior year, But reseller numbers reduced as there was little to no new business over this period. The chart on the left hand side shows reseller numbers since the 1st March 2020, along with the average number of cards per retailer advertising on our platform. Since the 1st March, reseller numbers have slowly declined despite our advertising services being free throughout April May. For the period 1st June to 21st June, retailers were 3% down on the prior year.
The chart on the right hand side shows the retailer risk and how that has developed since the 1st March. Our standard terms mean that a retailer must give 30 days notice to downgrade or cancel their contract, giving us a pipeline of future cancellations. Many of these serve as an insurance policy for customers uncertain about the future. As a result, we have successfully retracted the majority of cancellations to date. Retailers appreciated the free period offered by Autotrader, and so there was no substantial increase in pending cancellations through March.
At the beginning of April, the volume of these pending cancellations increased to 8x the normal level as some retailers safeguarded themselves for the potential reintroduction of costs from the 1st May. Following the government announcement on the lockdown extension, we confirmed on 17th April that there would be a continuation of the free period into May, pending retailer cancellations substantially reduced. Currently, pending cancellations are running at twice their usual level. We are confident that over the coming weeks months, we can continue to attract cancellations and also increase the number of new retailers advertising with us. However, it is likely that the effects of COVID-nineteen on the market will result in a reduced number of retailers throughout the year.
It is unusual for us to provide quarterly trading updates. However, given the uncertainty caused by COVID-nineteen, we wanted to give a brief overview of trading through the Q1 of financial year 2021. The first table shows some of the key metrics we use to monitor health of the marketplace, which I have just spoken about. The second table shows our estimates of revenue and operating profit for the quarter. For the months of April May, when the majority of our products and services were free of charge, we made an operating loss of $11,400,000 In June, we remained free for retailers until the respective governments allowed showrooms to open.
We resumed charging from the point at which retailers were able to reopen to offer retailer customers a 25% discount for the month of June. With these discounts applied, reseller revenue is expected to be down 34% year on year. This return to charging resulted in estimated revenue of around £21,000,000 and an operating profit of around £12,000,000 We expect revenue for the quarter to be £25,000,000 and to broadly breakeven at an operating profit level. I will now pass over to Nathan, who will cover the outlook.
Thank you, Catherine. Also much of our focus has been on navigating COVID-nineteen, we have not veered from our purpose to significantly improve car buying and selling in the UK and bringing efficiencies to the entire automotive ecosystem. The package of actions we took early in the crisis enabled us to remain assertive and front footed when it came to protecting our people and business, supporting our customers, ensuring we continue to progress the significant opportunities ahead of us. If anything, the events of the past few months have increased our conviction in our strategy and our confidence in its benefits to the industry should they embrace it. As a result, we have an even greater sense of urgency to bring more of the car buying journey online.
We look at our strategy with reference to 3 horizons. To be clear, the horizons do not relate to when we expect to work on these initiatives. We have product and technology teams working on all of these areas. Horizons relate to when we expect these initiatives to meaningfully pay back over time. The first of these horizons is to continually improve our core.
Our core is a great business. It's healthy and has a long runway for growth. We will continue to improve our search experience to ensure it is the best it can possibly be. This year, we have improved the quality of adverts by adding vehicle checks, fair and higher price flags and moved to a relevance based sort order. We've also removed standard format display advertising allowing us to increase the size of our search results.
While standard format display advertising contributed 5,000,000 pounds to revenue in 2020, it was declining quickly, is of little value to our core customers and limited the amount of space dedicated to our core consumer experience. On top of this, we've improved our mobile search experience, increasing the size of each listing by 40% and increasing imagery by 90%. The continued investment and evolution of our platform is critical to ensuring we remain the leading destination for car buying and selling in the UK. Importantly, we will also continue to ensure we always have a good staircase for retailers to increase their prominence and sell more cars quicker. For some time, we have made it a priority to embed our data into retailers to enable faster and better decisions.
We've grown the penetration of our managing products to over 25%. From the 1st April, independent retailers can take the entry level managing product, RetailCheck, as part of their advertising package. In addition to this, we have included new performance analytics and a market insight tool within our core dealer portal. This enables every retailer to understand their own relative performance and the supply and demand dynamics within their own local markets. And finally, on core, we've been migrating our technology platform to the cloud to improve the performance, security, monitoring and resilience of our infrastructure.
Ultimately, this enables us to deploy changes to our platforms even quicker than we do today with increased levels of stability. We expect this to be largely completed by the end of this financial year. Our second horizon refers to opportunities adjacent to our core. We've made huge strides forward with new car this year and are now the largest new car marketplace in the UK. We're seeing network effects with consistent growth in both stock levels and audience.
Last year, there were over 31,000 cars advertised a day and over 41,000,000 advert views. We monetize this product in the second half of the year and have over 1,000 retailers using the product. However, we are only at the early stages of this opportunity and expect it to further develop and grow in the years ahead. Logistics is another key area where we believe we can reduce costs and inefficiencies within the ecosystem. We acquired MTD, an asset light logistics platform that helps retailers move vehicles cost effectively in 2017.
We currently facilitate over 10,000 moves a month and expect this to grow as we begin facilitating home delivery for retailers. Another area of B2B opportunity is the sourcing of vehicles by retailers. We entered into our joint venture dealer auction in the previous financial year and in 2020 they facilitated the sale of around 110,000 vehicles. While the past year has been challenging due to supply shortages, we remain confident that a digital first approach to sourcing led by data is the best and right solution for both buyers and sellers of trade vehicles in the UK. Finally, our 3rd horizon points to how we see cars being transacted in the future.
We believe consumers are ready and willing to purchase Zenix car online and the last few months have proved this to be the case. There are 3 main elements for us to solve at scale to become a transactional marketplace. The first is to provide an easy and transparent way for consumers to sell a vehicle through part exchange on our platform. The second is to enable consumers to apply for and be approved for finance online again on our platform. And the third is to effectively complete the sale through some form of reservation or deposit.
Achieving this at scale is not likely to happen quickly due to the changes required from our customers and other players within the industry. However, we are working on each of these areas at pace to ensure we solve this problem first at quality and scale. In closing, COVID-nineteen has made obvious to everyone what many of us always suspected. More of the buying and selling of cars needs to happen online. This shift would make it more convenient for car buyers and more cost effective for retailers.
And we believe AutoTrader is best placed to help make this happen. We have a massive audience of car buyers and a core capability in technology, software and automation. If we can successfully bring these to the automotive industry, then buyers, retailers and manufacturers all stand to benefit significantly. This has been our strategy for some time now and if there is any good to come from the coronavirus pandemic, it said it might well provide the impetus for the automotive industry to pursue these very same goals. And now on to the outlook.
Catherine has given an overview on the Q1 of trading. Here is the outlook beyond June 2020. Following a period of reduced revenue through which we supported our customers, we will return to full rates from the 1st July 2020. Based on current trends, we would expect July retailer revenue to be down by mid single digits on the same month last year. Total group costs are likely to decline at a rate of low to mid single digits for the year as cost measures were taken in response to COVID-nineteen.
This was largely through reduced marketing and other smaller discretionary spend. Given the situation, it is difficult to sensibly provide guidance on what the number of retailer fall courts or the level of stock might be over the coming months. The reduction in stock levels and the stability in used car prices are a sign of industry health, which although negative for our stock on-site at the moment is positive for our customer base. COVID-nineteen outbreak is likely to result in an increase in the level of vehicle ownership and we believe the current environment will only accelerate the shift towards greater digitization of the car buying process. The Board therefore remains confident in Autotrader's long term growth prospects.
That concludes the presentation and we will now take any questions from analysts.
Thank And your first question comes from the line of John King at Bank of America. Please go ahead. Your line is now open.
Hi. Sorry about that. Thank you for taking the questions. 2, if I can. First one, perhaps for Catherine.
Interested to understand, I guess, well, why you still see the click and collect or home delivery elements of the market coming through in Horizon 3. I'm just wondering why this won't accelerate that a little bit faster. And I guess also if you could comment as well around the threat from Kazoo in that regard and whether this gives them an opportunity, I suppose, to capitalize the market. Any Any comments you could make around what the customers are downgrading packages at the moment? What are you seeing right now on that front?
What do you think has to happen for that to start improving?
So I'll take just in terms of the first question. I think the way to read the horizons is that they are the right way to think about them is when we believe they will become material contributors to financial performance. It's not when we will be working on those initiatives. So you will have seen one of those features that we've launched over the last month or so is the ability for retailers to promote if they're offering home delivery options on their advert views. So we are highlighting those features to consumers already.
And It's absolutely part of the next evolution of our journey towards online retailing. However, the journey that most retailers need to go on to enable that part of the model is quite significant. Logistical capability and the operational capability that needs to be in place is something that some dealers are embracing, but for most of them, it's relatively early stage. The interesting thing will be how much this current period acts as a catalyst for others to accelerate that development of their business model. In terms of Cazoo, clearly, they are one of the players that have set out very much from the beginning of their journey to operate with only a home delivery option and no physical presence.
And there's no doubt that some of the current market dynamics we're seeing and some of the data we're seeing from our consumer research suggests that their model will play well to a segment of consumers in the current market. So I think potentially in terms of consumer demand, there's some upside that come out of recent events for them. But we see them today, we work with them as a customer. They've got 1800 or so cars on our platform, and we're working closely with them. In the future, we in the same way that we compete for audience with other customers, they're clearly investing a lot in marketing.
So will we. We benefit from the fact that this industry remains massively fragmented. So the biggest retailer group is still only about 3% of total used car transactions. And Cuzu have got a very long way to go before they come close to that level. So we're confident that for consumers, the value in a marketplace and the value in having that choice and ability to compare across options is incredibly powerful and valuable.
Yes. And John, if I take your question on packages, I mean, sorry, slightly interpreting the question, there are obviously 2 options that dealers have in terms of packages. 1 is around the level that they're at and 1 is around the level of paid stock that they opt to take. We've obviously given July retailer revenue, and we've given retailers. So I think people can sort of triangulate that ARPA is down lowtomidsingledigit.
ARPA is then made up. We put through our price increase on the 1st April, and we're carrying some good product growth from the prior year. And we haven't seen, despite the period that we've been through, we haven't seen package downgrades. So I think where you're talking about the downgrades that have occurred or the headwind, if you like, it is very much around stock. I think there are three reasons behind that.
One is a little bit of run rate that we were bringing into this year, largely from franchise livestock. But you see through what we've reported in FY 'twenty. Secondly, there have been some downgrades through this period of uncertainty. Thirdly, and probably most importantly, what we we were going through a process in the middle of March, where we were doing a kind of annual stock offer that we normally do. And in the middle of March, we effectively said we had some half price units live, and we effectively said put those back to free, reinstate the stock offer.
And that's what we've got running at the moment. And so you've got a headwind where we had a stock initiative last year around that stock offer that we haven't had this year. But it's still it's a stock offer that we can convert at some point. So we think we've got a catalyst there to improve the rate of stock that we've got currently.
Great. Thank you.
Your next question comes from the line of William Packer, Exane BNP. Please go ahead. Your line is now open.
Hi, there. It's Will Packer. Thanks a lot for taking my questions. So just to come back on the last response, and apologies, the line was breaking up a little bit. Should I understand it therefore to be the key flex in 2020 ARPA
is the extent
to which stock is weak or not? And because of the pricing events that took place earlier in the year, there should be some underlying growth on a like for like basis if we exclude the discounting? That's question 1. Secondly, if we look forward to the 2021 pricing event, which I know feels a long way off now, but will come sooner than we think, is the ambition to grow ARPA if macro is okay? And what are the key product innovations you're working on?
And then finally, a path to through the presentation is this transition towards digital retailing solutions and delivery. It's not imminent, but it's definitely a focus. Could you talk us through how you're thinking of monetizing that? Would it be subscription products? Would it be transactional products?
Any color would be helpful.
Yes. So if I take the first one for clarity, hopefully, the line is coming through okay. So I think your interpretation is exactly right. So the and I think still to work through presentationally how we put it together, but price should be reasonably like for like in FY 'twenty one as we saw in FY 'twenty. I think we will show the discounts that we've provided to retailers as a separate lever.
It is effectively priced, but it's helpful to split it out separately. Products, we're taking still good levels of run rate into this year. There's a bit of an unknown whether going forward and there is high levels of uncertainty whether you do see some pressure around Prominence products. Like I said, we've not seen it yet. And then stock is the main driver.
If you look at the livestock on-site that we've sort of presented, we've seen an interesting trend where stock levels are very high through April May. They come off in June, which we think is a reflection of high volumes of sales in those 1st 3 weeks. And I think we're hopeful that some of that stock gets replenished. And then like I said, at some point, we will look to convert that offer that's currently running and that hopefully lends some support to that stock lever.
Yes. In terms of your question on the 2021, Will, I think the answer is yes to your question, are we looking to grow ARPA at the event and during the year more generally subject to macro conditions. We are speaking specifically to the price and product elements because I think stock is obviously the moving piece. In terms of the event itself, as you said, it's some way away. We've got a number of candidates that we're considering for that.
We feel pretty good about most of those, but we'll make the decision later in the year. In terms of 2021 as a whole, so moving away from just the event that happens on the 1st April, we still have we still feel good about our Prominence products and we hope to be launching some new Prominence products over the next few months, which is obviously relevant to 2021. Our data products, analytics products, if you like, still have runway to go in terms of their penetration. Then in terms of the online retailing, Horizon 3, if you like, and just to make that point again from John's question, these are all things that we are working on now. It's just more about when we expect them to come to fruition.
That part exchange, solving part exchange is one of our biggest focuses. And we've tested and trialed things depending how the impact on COVID and the like on some of the partners that we're working with, we would hope that that would come to fruition sometime during next year. And your final question sorry, yes, your final question was on advertising online transactions. That could take the rest of the call to answer it. So I'll give you the brief version.
We don't see we're not shooting for the end goal and saying, well, someone needs to transact entirely online on Autotrader and then we'll be able to monetize that. We think that's the wrong way to think about it because we believe the dealership, the physical forecourt will have a big role to play in a very large number of transactions. So we would be there would be value leakage there if we just only monetize the ones that got all the way through the funnel. So the way to think about it is we're thinking of the steps in the purchase process, how we can bring those online and then what value does that create the retailers and what might be the right way to monetize it. So the part exchange may be monetized in a certain way, Finance might be monetized in another way.
And then if you do get through the full transaction that again could be probably more obviously in that case that's going to feel like a transactional model. But all of these things sit on top of our core advertising business. So we don't see this as being a business model transition. But the answer as to whether it's subscription or whether it's transactional or whether it's a bit of both will actually be different in all those cases I suspect.
Thanks, Nathan. That's useful color. Appreciate it.
Your next question comes from the line of Miriam Edessa, Morgan Stanley. Please go ahead. Your line is now open.
Good morning, Abid. I have
a question from me. So I was thinking if you could just give us a bit more color on performance of dealers that between independent and franchise, if you see quite a bit of difference in behavior or performance among independents of the franchise. And also how you think about consolidation among dealers and whether or not you think you may see an acceleration in the coming months? And then secondly, on dealers again, how are dealers preparing for the end of furlough? Are you concerned at all that you may see another wave of dealers going
out of business? If you could just
talk a bit about how you're preparing for that? And if you did see certain closures, what would your approach be in terms of offering dealers again? Thanks.
Yes. I mean, I'll take the first bit and Catherine can perhaps talk to the consolidation and the furlough. I think the thing that is common between independent and franchise dealers, particularly at the moment is that used car sales for them is very good and very, very strong as they've come out of lockdown. So that's the similarity. The big difference obviously between a franchise retailer and an independent retailer is that franchise retailers also sell and have a great fit of their business model exposed to the new car market and also aftersales.
Aftersales is doing from everything that we hear aftersales feels very, very solid. New car sales or new car well, new car sales have not come back nearly as quickly as used cars. At the moment, it's unclear. It would be strange to see such strong demand on the used car side without equally strong demand on the new car side. So many people are putting that down just to the length of the sales cycle.
But that does mean that exposure to new car, the fact they've not been able to sell new cars and the bonuses and the like to go along with that, does mean franchises do see a different pressure on their business to what an independent retailer does. An independent retailer is not to oversimplify, but it's about buying cars at the right price, selling them as quickly as you can at a decent margin. Whereas from a franchise perspective, they do have a bunch of other complications that come around new cars and pre registrations and targets and bonuses and the like, which does has made it challenging for them certainly last year and will probably be the same for them this year as well.
In terms of furlough and preparing for the end of furlough, so we have quite a lot of data that was gathered from our surveys on where retailers are at. And most of them, apart from those in Scotland, are now very much open and back to trading. And most of them have now unfurloughed 50% or more of their people. So we're at a position where we're sort of halfway back and through that journey. The FactShops at the moment is interesting because for many of our retailers, they are struggling to keep up operationally with the lead volume and the level of consumer demand that they are seeing.
So I think there's a good case over the coming weeks that 50% of people being back in business increasing quite significantly. So I'm not sure it will take through to September for retailers to for that position to unwind. And we have seen some redundancies announced already by a couple of the big groups in particular. I think it's likely that there are other groups that look to take similar courses of action and potentially don't look to bring back all of their people. I think the big driver of where we end up in September with reseller numbers overall is likely to be the macro backdrop.
And how much of the consumer demand that we've seen now, we believe some of it is pent up demand from April, May. We do believe we're seeing data on-site and through our research that suggests that some of it is retailers' trade through that difficult autumn period. That and the other retailer trade through that difficult autumn period. That and the other big factor I think that we need to keep a close eye on is pricing. Pricing so far has been very robust because we've had strong consumer demand combined with supply side that's been constrained with the auction physical auctions remaining closed.
If pricing remains robust and consumer demand remains strong, then we're hopeful that resellers will be in a reasonable position to trade through that furlough moment in September, October time. In terms of the final question and how we're thinking about dealer closures, I think, hopefully, that context has covered our view. Short term, I think we're very we are confident that from what we're seeing in new business and from what we're seeing in cancellation levels that retailer numbers will remain strong. When we get to that September, October moment that we talked about, I think there's still quite a number of unknowns that will feed into how that trends through.
Yes. And the only point I'd add just around consolidation is that there's I think there's as strong a case to I mean, as it is, the market is hugely fragmented. I think there's probably as strong a case for there being less consolidation than there has been historically. And 2020 was an example of that. We saw a number of groups actually getting rid of franchises they thought were unprofitable or didn't necessarily suit their portfolio.
So I think it's less than clear that there'll be a strong trend towards greater consolidation certainly within the short to medium term. And I think even in the medium to long term, any level of consolidation, I'm not sure it dramatically changes the market structure that we have.
Great. Thank you.
Your next question comes from the line of Andrew Ross at Barclays. Please go ahead. Your line is now open.
Great. Thank you and good morning everyone. Three questions for me as well. So first one is to come back on your ARPA commentary for July. I'm wondering if you could quantify how big the price component has been.
Is it the normal kind of 3 points? Or are we thinking it's more than that? And then would it be helpful to quantify the product piece as well just to give us a sense of the modeling for the rest of the year? 2nd question, manufacturing agency and your expectations for that. It sounds like there's a $5,000,000 headwind from less inventory, but how are you thinking about everything else?
And then third question, dealer auction, it would be helpful to get an update as to your thinking on that business now it's fully up and running. And I guess it would be great if you could share kind of where you think it might get to in the next year or 2, it's 110,000 transactions, dollars 13,000,000 of revenues. What are we thinking in the next year or 2 as that starts to scale? Thank you.
Great. So if I take the first one. So price is similar levels to that which we've done the last 2 years. I think products, without wanting to go into too much detail, I mean, it is still positive in the month. We've obviously got new car run rate and still some advanced and premium run rate.
It's not as positive as what we've reported in the prior year. That gives you quite a big range, but I think that's probably where this starts hearing. And the reason for not going too detailed is there's so much unknown beyond July. And additional product, if retailers are looking at their marketing spend, it's just very hard to give a steer. But hopefully, the price being reasonably similar and product being positive, although not as positive as FY 'twenty, is hopefully helpful.
In terms of manufacturing agency, I think our performance last year very much reflected the auto display category overall being down significantly and structurally in the market with Brexit emissions challenges and a hugely difficult year in terms of new car volume to manufacturers. For us, it was a year of consolidation where we've consolidated our products now back to native products on our platform that we believe are more optimized for our consumer experience and also deliver better performance for our manufacturer partners. That period of consolidation now has effectively re baseline that business for us. I think as we head into this year, clearly, we've got a number of headwinds on top of the standard format revenue in terms of the market backdrop, an incredibly challenging set of circumstances for manufacturers. But we are confident that for the products that we now have remaining and for the capability and team that we have in place, that they are the right platform for us to begin to build from again in the future when the macro backdrop is a bit more positive.
Long term, overall, the momentum we're seeing and the positive network effects we're seeing in our new car marketplace means that we do still believe and see lots of opportunity to create incremental revenue streams from manufacturers in the future through that marketplace.
And just to your question on dealer auction, you may not be happy with my answer, Andrew. So I do apologize in advance. I think dealer auction did 110,000 transactions. That's broadly speaking in a market of 3,000,000 B2B transactions where roughly 2,000,000 is, I guess traditional auction which does include some online and a million dealer to dealer transactions which very often happen offline and by personal relationships. I think we so we've got the number one position as an online marketplace for dealer to dealer transaction.
So we've got quite a big position. But as you can see from those numbers, a relatively small number share of overall transactions or the overall opportunity. So I think we're definitely looking to grow that over time significantly as in not by 10% or 20%. So I think we're really looking to grow that at a much quicker rate. I think within the short term, there is it will be more difficult for any business that's involved in certainly dealer transactions because dealers due to the supply shortages that they're seeing can often have a reluctance to trade out of vehicles as they used to because it's just impossible to get the retail stock that they want.
So they tend to, in their words, go deeper or into older vehicles than they might otherwise do in more normal times. So I think actually they're probably likely longer term opportunity remains good. What we're trying to do is we want to broaden that business now that it's all on one platform to take it just take it out of just doing dealer to dealer transactions and actually helping many of those corporate clients which are formed the core base of the auction markets. And it's about just getting those customers on board. Again, so over time, I think very, very good opportunity, but there's some short term difficulties given supply shortages, none that we're overly concerned about.
And it is about getting those large customers on, which sometimes have quite intricate or involved agreements in place with physical auction houses, including de fleeting and the like.
Very helpful. Just quickly to follow-up on the second point there, the $5,000,000 headwind on manufacturing agency from the change in format, is that all incremental to fiscal 2021? Or is some of that already in the numbers for fiscal 2020?
No. It's all for this year.
Great. Thank you. Very helpful.
Your next question comes from the line of Silvia Cunha, Deutsche Bank. Please go ahead. Your line is now open.
Thanks. Good morning, everyone. My first question is on the increased user engagement. That was pretty impressive in FY 2020 and also coming out of the lockdown in June with the gap versus gumtree increasing to 9 times despite the limited change in marketing expenses. So can you please talk about what you think is dying your market share gain and what in your view the AutoTrader platform offers more compared to competitors to the user base?
And second, can you remind us of the motor trade delivery revenue model? How is that linked to the number of deliveries? Just wondering how to think about the benefit of adding on deliveries. And then finally, maybe just a follow-up on the manufacturers and agency revenue. I see that in June, that revenue seem already increased.
So can we expect that positive trend to continue also in light of the easy comps from FY 2020? Or is pent up demand sort of buffed that it could take longer for advertising to pick up actually because it's not as much needed?
Sure. So in terms of the first question on user engagement and competitive position, if I start with competitive position. So I think we are more confident in our consumer proposition and have invested in it more significantly in the last 12 to 18 months than I think we have done at any point in the last few years. There were 3 big changes that we've made over the course of the year that I think drives this confidence. The first one is we introduced relevant source order for consumers last summer.
So our default source order is no longer driven by price. We have seen a good increase in consumer engagement and response delivered to retailers off the back of that. We also introduced fair and higher price cars and confidence over price is the number one pain point for consumers when buying a car. And that product has been well received by consumers, and I think is just another addition to our product set that has been very valuable. And then the more recent decision to remove 3rd party standard formats, we've already seen improved site performance, improved consumer engagement and really by dedicating more space to our core retailer adverts, we've seen improved response for them as well.
So some big product changes in year that have all built on the fact that we've always had more choice. We've had past exchange. We've had finance. We've got a much broader consumer experience now, we believe, than any of our competitors. In terms of what's driven the strong audience performance in year, there's probably 2 main themes to talk about.
So the first one is leveraging the strength of our organic channels. So for us, unpaid traffic is still over 90% of the audience that we drive. We've had a very strong year in apps. We've now have over 14,000,000 UK app downloads. So we're in the pocket of 1 in 5 people in the UK.
And we've seen good growth, over 100,000 downloads a month each month in apps. And that's driving good repeat visitor performance for us. We've also strengthened our position in SEO, and we've begun to involve our CRM strategy. That means that organic performance and repeat business performance overall looks strong. And we've also spent a lot of the year optimizing our paid activity.
Paid activity is a relatively small portion of our channel performance, but it has the campaigns we've optimized differently and taken some big step forward this year. So feeling confident and in a good place on that. And then for the future, this year, one of the platforms we have begun to build and invest in is our content and social platform. And it's still very early days, but we're seeing encouraging signs in terms of audience engagement and performance being driven from those channels as well. So we feel like we've we're in a strong position, all of that with a backdrop that media spend in the category has never been so high in the last 12 months.
So between PayCar, Kazoo and Cinch, we've had a very significant increase in marketing spend from peers and still managed to deliver this robust performance, which feels good.
And on the Motor Trade delivery, so the revenue model is a small subscription fee for logistics providers, and then it's a fee per move. And the vast majority of the revenue comes through that fee per move. The revenue sits in other trade within trade. So I think if you look at that number, it's still relatively small contribution to the overall group. I think we've seen good levels of growth in terms of moves.
We've done some replatforming. So we think it's in a much better place to be able to grow volume. And I think with all the changes that we've had about the last 3 months, we think it's very well positioned in those circumstances. From a revenue manufacturing agency perspective Sorry,
just one point. Just one point I think is important to make on MTD. Whilst it's relatively small to us in terms of revenue stream, the real strength of that proposition is the saving that it potentially makes our retailers because we're taking a very, very small transaction fee to connect logistics provider and a customer. But logistics fees as a general cost to retailers are very, very, very expensive. So it does really make a big difference in terms of our broader objective to make the industry more efficient.
Our customers that have used MTD have saved a large amount of money per move as a result of using the platform. So it does become whilst it's not as important to our P and L, it's actually very important to our customers' P and L. Sorry, Jamie.
Thanks, mate. Just on the manufacturer and agency question. So we have grown through April, May June, but we are still quite a long way behind prior year, so 65%. I think we would hope that, that trend does continue. So we narrow that gap to prior year.
As Catherine sort of answered previously, we obviously got slight headwind from the standard format removal. And I think these budgets are still under some level of pressure. So I think you hopefully close the gap year on year, certainly through Q2, but continue to see some improvement as we go through the course of the year.
And your next question comes from the line of Jo Bonnet Lam at Credit Suisse. Please go ahead. Your line is open.
Excellent. Thanks, team. Just two left from me. First, on consumer, it sets up quite substantially. Do you think that's pent up demand, cash strapped consumers trying to maximize sale prices?
Or do you think it's underlying in your view? And secondly, on cash returns, can you help us understand when you may resume cash returns to shareholders? Is that a 2H 'twenty one event or an FY 'twenty two event? Thank you.
So we're tracking the consumer data that we see very closely and asking a number of different questions and getting different data points from different sources. We do think, based on the data we're seeing, that there are more new buyers in market than we've seen at any point for a long time. So the number of people coming to market either don't have a part exchange or that have don't have an existing vehicle has definitely increased on our platform. What we can't tell is whether this is a longer term structural shift that will continue to play out or is a specific trend that we're seeing at the moment because of the challenges of some people needing to get back to work and wanting to avoid public transport. There is definitely an element as well as pent up demand.
When you look at the lead volumes we were delivering in April May during lockdown, we know that clearly many of those consumers will not have been able to transact and will be flowing through the numbers that we're seeing coming into June. One of the encouraging things, I guess, structurally from our perspective is that historically, twothree of the volume of consumers that we typically deliver to our retailer customers through walk ins. So they turn up at a retailer's forecourt without having left any digital footprint. Now with the lead volumes that we're seeing and the lead volumes we're driving year on year, we should be able to get much closer attribution of that sales volume and should learn more about that consumer journey over time. So we're getting more data and more visibility than we've ever had, but trying to piece together what is a response to events of the last few months versus what is a bigger longer term structural shift is still quite challenging at the moment.
And in terms of the cash returns, I think we want to continue to monitor the ongoing situation. But I think being back to charging customers, I think we're hopeful, subject to that monitoring, that we would be able to declare an interim dividend, which would be declared in November and paid in January. And that would be the first step to getting back to our capital allocation policy, which is as it was prior to COVID-nineteen.
And just anything you can say with regards to buybacks?
So I think the declaration of the dividend is likely to be the first point in returning to that policy. And then subject to the monitoring, that would be followed then by a return to share buybacks.
Excellent. Thank you very much, team. Appreciate it.
And your final question comes from the line of Adam Berlin at UBS. Please go ahead. Your line is now open.
Hi. Thanks for letting me ask some questions, Riley. And just I'll try and answer quickly. Firstly, just to think about the price product question in a different way. If you were a traditional Tier 3 independent dealer and now you've got to take retail check as well, how much more are you paying per car now, say, in July than you would have paid last year as a way to think about the impact of that price product combination for a typical dealer?
Secondly, what's been the effect of that product? Have people stayed on Tier 3 or people downgraded to avoid having to pay the retail check? And my third question is just when you say that the number of dealers who've given notice is up 2x normal, can you just put down your numbers for us? And then what's the risk to the 4 quarter numbers if all those dealers did leave the platform in the next couple of months?
Yes. I can take the first one. So I mean, I think that combination is not wholly dissimilar to what we did last year around putting through something on an underlying basis around price and then some level of additional product. I mean, I think it's fair to say we've seen very limited downgrades in terms of people moving down the packages, so not to take that product. Because I think it's clearly hugely valuable to understand valuations and desirability in the market.
I mean, it's worth pointing out as well that from a Tier 3 that you sort of referenced, the entry price has been relatively low for that product as a stand alone. So when it bundles in, it's not it doesn't necessarily mean it's as large amount incrementally as you might imagine.
Yes. And on the question on cancellations, Adam, this might come across as a strange answer to the question. Cancellations have been running pending cancellations are a very normal part of our business due to the 30 day notice period. As Catherine said, they reflect more nothing they reflect a lot less about us and more about how our retailers are feeling about the uncertainty. And just to give you a few days and the real answer to your question is, I'm not sure we really feel that there's a strong risk of those higher level of cancellations in the next certainly the next few weeks.
That's not why we flagged that in the presentation. And just to put that into perspective, the reason why retailer numbers really has gone down has been as a result of us not acquiring new business during the period that retailers were closed, which probably comes as no surprise to anyone else. It wasn't due to people canceling at any abnormal rate. As a matter of fact, despite pending cancellations being higher throughout the crisis, which you can see easily on the chart, the number of customers we actually lost during those periods was less than what we lost in the prior year. So the way that we see those that cancellation chart looking slightly higher than normal, I think our answer is we don't really see probably any at least in the near term and based on what we're seeing at the moment, we don't see any spike from our normal levels of cancellations.
They're mostly cautionary. They're almost like an insurance policy for our dealers and they'll probably retract them at the last minute. And some of the retailers will want to still have that insurance policy in place and they'll put in another pending cancellation for 30 days. So it's not really a risk that we see. And now coming back to my first point, the reason why retailer numbers went down through the period, we're now back and reacquiring new business.
And you can see, if you look very closely at the far right hand, at the left hand chart on Slide 18, at the very far end of it, you can see that that retailer number is definitely not going down, if anything starting to creep back up. And that is the new business numbers starting to come in and offset what is just a very normal level of churn.
Okay. Thanks very much.
Thank you for your questions. I'll now hand the call back to Nathan.
Okay. Well, thank you. That ends the presentation. I hope that's been helpful. Thank you very much for making the time to attend.
That does conclude the conference for today. Thank you for participating. You may