Carsales share price storms higher amid strong FY23 growth

Carsales has handed down its report card for FY 2023.

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The Carsales.Com Ltd (ASX: CAR) share price is on the move on Monday.

At the time of writing, the auto listings company's shares are up over 5% to a 52-week high of $26.00.

This follows the release of the company's FY 2023 results this morning.

Carsales share price higher amid strong growth

  • Pro forma revenue up 18% to $798.1 million
  • Pro forma earnings before interest, tax, depreciation, and amortisation (EBITDA) up 19% to $495.7 million
  • Adjusted EBITDA up 57% to $424.9 million
  • Adjusted net profit after tax up 43% to $278.2 million
  • Final dividend up 33% to 32.5 cents per share

What happened in FY 2023?

For the 12 months ended 30 June, Carsales reported an 18% increase in pro forma revenue to $798.1 million. Management notes that its pro forma results are the best reflection of the underlying performance of the business as they normalise for recent acquisitions and for one-off transactions.

Carsales' top-line growth was driven by a solid performance across the business. This includes Australia revenue growing 13% and North America revenue lifting 14%.

In Australia, resilient demand for used cars and increasing adoption of higher value products, particularly depth, underpinned its growth. Whereas in North America, its growth was driven by adding more customers, increased adoption of premium products, and private ad yield upside from dynamic pricing.

On the bottom line, the company reported a 43% increase in adjusted net profit after tax to $278.2 million and a 17% lift in adjusted earnings per share to 78.1 cents. The latter grew at a slower rate due to its higher share count following a capital raising.

Finally, Carsales increased its final dividend per share by 33% to 32.5 cents (50% franked). This brought its FY 2023 dividend to 61 cents per share, which is up 22% year on year.

How does this compare to expectations?

According to a note out of Goldman Sachs, its analysts were expecting Carsales to report EBITDA of $420.8 million for FY 2023.

The company has delivered earnings ahead of this estimate, which may explain why the Carsales share price is charging higher today.

Management commentary

Carsales CEO, Cameron McIntyre, was very pleased with FY 2023. He said:

It's been a fantastic year for carsales and we are incredibly proud of what our teams across the group have accomplished. We have delivered excellent financial results, made good progress executing our long-term growth strategy, delivered new products and capabilities to our customers and completed transformational acquisitions. With the acquisitions of Trader Interactive and webmotors, we reached a key milestone for the business with more than 50% of our revenue now coming from sources outside of Australia. We see a substantial growth opportunity in these large addressable markets continuing over many years to come.

Outlook

Management advised that it expects the following for FY 2024:

Pro forma guidance: "We expect to deliver good growth in Revenue and EBITDA in FY24" and an "expansion in the carsales Group EBITDA margin."

Actual basis: "We expect to deliver very strong growth in Revenue and Adjusted EBITDA and strong growth in Adjusted NPAT in FY24."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Carsales.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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