Q3 2021 Cazoo Group Ltd Earnings Call
[music].
Greetings and welcome to the <unk> 21 earnings call.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Now I'll turn the conference over to your host Robert Berg Director of IR and corporate Finance you may begin.
Good morning, everyone. Thank you for joining because their Q3 earnings call and webcast, which we have just released and can be found on <unk> Investor Relations website at investors don't because they don't coat.
Right.
We appreciate everyone joining us today with me on the Covid, It's Alex Chesterman, founder and Chief Executive Officer, and Stephen Mirana, Chief Financial Officer.
Before we get started I would like to remind you of the company's safe Harbor language, which I'm sure you're all familiar with management may make forward looking statements, including guidance and underlying assumptions forward looking.
Statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially.
A discussion of risks related to our business see the filings of Kazuki limited with the S. D. C. Now I would like to turn the call over to Alex Who'll be followed by Steven and then there'll be a Q&A session at the end.
Thanks, Rob Good morning, and thank you to everyone for joining us today.
We are delighted to be hosting our first earnings call as a publicly listed business on the NYSE and we're excited to be sharing our record financial results for Q3.
This has been a landmark quarter for our company.
Not only that we successfully entered the public markets in August raising proceeds of approximately $836 million net of fees.
It accelerates our growth, but we also set many records across all key financial metrics as well as making significant progress towards our long term strategic ambitions.
It's becoming very clear that our market, leading brands and fully digital world class proposition is resonating strongly with consumers and that the shift to online car buying and selling is accelerating.
Customer feedback remains overwhelmingly positive.
And our recently launched called barring channel, where we know by calls directly from consumers.
It's being embraced by consumers and performing well ahead of initial expectations.
We're extremely excited about the significant opportunities ahead, and I'm more confident than ever, but we will transform the car buying and selling experience in the UK and across mainland Europe, when we launched that in the coming weeks.
Before we go into the detail of some more recent events I thought it would be useful to begin today's discussion with a reminder of our mission and why we are very well positioned for continued long term growth after that I'll discuss our third quarter performance and outlook I will then turn the call over to Steven.
To walk you through all third quarter financial results in more detail.
As we've shared with many of you are missing a kazoo is simple we're pioneering the shift to online car buying and selling across the UK and Europe, a 700 billion dollar market with less than 2% digital penetration lagging almost all other retail sectors and ripe for digital transformation.
Yeah.
It's an incredibly fragmented space with around 180000 dealerships across the top 10 markets in Europe, and no incumbents with more than a small single digit percent market share by leveraging data and technology to improve selection quality transparency income.
We are providing consumers with a far superior overall experience.
Given these market dynamics, we launched <unk> in 2019 to make buying and selling a call a simple and seamless purchasing any other product online today with.
We've developed a powerful data and technology platform alongside critical physical infrastructure and a market leading brands to create a world class online retail proposition, we recondition store and deliver all all cause allowing consumers to simply and seamlessly buy sell.
Finance, all subscribe to a call entirely online.
I want to highlight some of our key competitive strengths that are helping to build moats around our business and will enable our continued growth.
First.
Our fully integrated business model and comprehensive proposition is delighting our customers.
We have a world class consumer NPS of approximately 80 on trust pilot rating of $4 seven stores with 93% of all users racing their experiences excellent talk right.
Second we've developed unique capabilities with a market leading technology platform a team of states around less than an end to end infrastructure network of vehicle preparation centers customer collection centers and call it delivery transporters underpinning our growth and profitability.
Third we've assembled a world class team with a proven track record of accomplishments, including significant public market experience.
I'll see me it seems is being assembled from some of the leading digital consumer retail businesses across Europe.
Finally, we have significant expertise and a track record of identifying and executing game changing strategic deals.
Over the past 18 months, we've made seven acquisitions and signed a number of commercial partnerships to accelerate our growth and enhance our team on proposition.
As a result, we now have 11 of our own vehicle preparation incentives in the U K as well as foreign mainland Europe in partnership with third parties.
We've also opened 20 customer centers across the U K over the past 15 months and with a leading.
Consumer call subscription player in Europe with subscribers across the U K, France and Germany.
Our ability to create a transformative consumer experience, a highly recognizable and trusted brand and a world class team within one of the single largest retail market is ripe for disruption has allowed us to build one of the fastest growing businesses in Europe, taking this all together, we've built a powerful biz.
This model with a clear pathway to long term sustainable growth.
Turning now to our third quarter performance.
Our results reflect a continued growth trajectory as we leveraged our brand and unique platform in the U K, which we're in the final stages of preparing to replicate in mainland Europe.
Our third quarter revenues increased 267% to 174 million pounds on a retail gross profit per unit increased by over a thousand pounds year on year and now sits at 801 pounds up significantly from 467 pounds in Q2.
That's not to say that Q3 wasn't without its challenges some of which may continue in the short term. We've enjoyed shortages of start off as a result of COVID-19 and shortages of inventory as a result of logistics issue relating to driver and fuel shortages, all of which hampered retail volumes to some degree.
But a rule fulltime issues, none of which we expect to have any long term effect on the business.
Ultimately our record revenue performance came despite the fact that we had sub optimal levels of inventory available on our website during the period, indicating demand for our offering was even stronger than our results shrunk the biggest constraint to growth remains our ability to recondition cars in the volumes.
Quad to meet domestically, increasing consumer demand, but we've recently made a number of strategic moves to improve and increase our reconditioning capacity.
We firmly believe that owning the reconditioning process brings significant operational and financial advantages and all decisions to bring reconditioning in house in the U K ahead of schedule earlier. This year was exactly the right thing to do but bringing that process in house has led to a recent dip in vehicles available for sale.
During the transition.
Despite continued gains in production capacity and.
And improving the selection for our customers our website inventory levels, all still slower than we would like them to be we strongly believe that have we had great stock levels available on the website, we would've sold even more retail units in Q3, and therefore continuing to scale all reconditioning output remains a key priority.
Through the remainder of the year, we expect to make additional progress in growing our inventory levels and the acquisition of S. M. H has provided us with significant additional reconditioning capacity to support our future growth.
Moving to profitability all retail GPU has increased again to over 800 pounds in Q3 up from 467 pounds in Q2, and an increase of more than 1000 pounds year on year, driven by our improved buying mix continued operational efficiencies and greater attachment rates.
Of our ancillary revenue streams.
In July we successfully launched our car buying channel purchasing vehicles direct from consumers previously we only purchased calls from consumers as a policy exchange oil trading when they were also buying from us consumers have embraced a new and unique and differentiated offering with.
Uptake to date, well ahead of our expectations and we've been very encouraged with the volume of calls we're already buying through this new direct sourcing channel.
In Q3, we purchased 6761 vehicles directly from consumers up 552% year on year.
Bus define all selection and improving our inventory acquisition costs.
Within just a couple of months since our July launch, we've already seen the proportion of retail units sold but we source directly from customers rise to 10% up from 2% at this time last year and 6% in Q2.
Whilst the wider industry is experiencing supply constrains, we've seen limited issues in this area to date and have become less reliant on external sources of supply following the launch of our direct call buying channel, which we expect to provide a significant volume of vehicles in the future.
We're confident that this new direct sourcing proposition will significantly changed our buying mix overtime and help to further improve future margins.
Our plans for expansion into France, and Germany by yearend remains firmly on track and we continue to grow our teams and develop all operations and infrastructure in both markets.
Entry into mainland Europe will drastically expand our addressable market and is a significant growth opportunity for us over the coming years. Our end to end testing is going well and we could not be more excited about the future growth prospects across Europe.
During the period, we also acquired Khazar, though one of the leading data insights platforms in the European automotive space, which always one of the most comprehensive vehicle pricing dataset globally.
This deal has been the hardest our data team and capabilities and will enable us to further optimize our buying them priced vehicles across the UK and Europe.
Our strong performance. This quarter is further proof of our compelling business model and the significant opportunity to grow our business.
We have tremendous opportunities to continue to grow our share in this huge and highly fragmented market.
Now turning to the key drivers of our future growth and profitability as a reminder, we plan to leverage our highly efficient business model in the following ways.
Just by growing our revenues, we expect the growth in revenues to be driven by an increase in market penetration and share led by the shift to online buying and supported by the material growth in our in house reconditioning capabilities also through increased time with all European export.
Pension and expansion of our product offering.
And with the launch of other ancillary products and higher attachment rates driving lifetime value.
Secondly by increasing our GPU, we expect the growth in our GPU to be driven by a continued shift in our buying mix, including further success in the sourcing of calls directly from consumers.
Also through continued efficiencies in all reconditioning logistics and bulk ton was scale.
And further enhancements to our products partnerships and processes.
Third by reducing our CAC, we expect the reduction in CAC to be driven by the growth in adoption of online car buying growing substantially from less than 2% today.
Also through improved conversion rates over time, which will occur naturally as we grow our inventory.
With a higher proportion of direct traffic as a result of all brand investment SCO and repeat users.
I'd like to take this opportunity to thank our amazing team that is now over three and a half thousand strong across the UK and Europe, and who put the consumer first in everything we do well.
Whilst we're incredibly proud of these Q3 results we all still in the very early stages of transport transforming the car buying and selling experience.
Across Europe, and look forward to continuing our mission to delivering the best selection quality transparency and convenience to our customers.
Now I'll turn the call over to Steven to review, our corporate financial performance and the outlook for the remainder of the year in greater detail.
Thank you Alex and good morning, everyone.
During the quarter, our revenues increased 267% to $174 4 million pound Sterling.
From $47 5 million in Q3 2020.
Our strong Q3 performance was the result of another record quarter of vehicle sales, increasing over 200% year on year.
10074, with the associated improvement in ancillary revenues driven from retail sales.
Wholesale revenues have seen rapid growth is a byproduct of the significant success of our buying costs directly from the consumer.
A reminder, at this stage, we only sell cars on our website that zero to six years old with only 60000 miles are left on the clock and any call that doesn't fit this criteria sold by at the wholesale channel, we will look to expand niche over time, but for now we're happy with disposition.
Our strong growth came despite sharp optimal levels of inventory on our web site as a consequence of our decision to bring the reconditioning process fully in house in the U K ahead of schedule.
Less inventory means a lower conversion rate.
As Alex has said this was absolutely the right decision to make and retail sales have remained strong despite the inventory challenge.
We're now starting to see a small improvement in vehicles available on our website.
Over 10% from the lowest points in July, but it still remains below the optimum level.
Retail GPU increased to positive 801 pound from a loss per unit of 202 pound in Q3 last year.
We continue to improve all areas of the buying with the additions and selling process.
We expect to see this combined with continued operational improvements driving GPU for wood over the coming periods.
Our gross profit was 11 8 million or six 8% margin. This.
This compares to a gross loss of no point 7 million or a negative one 5% margin in the third quarter last year.
We completed two acquisitions in the quarter Kazan at the 25 million pounds, and SMA $2 million to $17 million with both transactions funded by cash.
Our cash position remains strong having raised proceeds of approximately $836 million net.
Net of fees during the spa process.
Looking forward to the remainder of the year, we continued to see very strong demand from pushed the mystery for both buying and selling cars.
We expect retail units sold to be linked closely to the number of vehicles available for sale on our website, which we expect to continue to grow during Q4 as we make further progress without reconditioning guidance.
We forecast 2021 revenues of over 650 million pounds, excluding the $15 million to $20 million of sales, where we sell vehicles as an agent with third parties.
650 million would imply Q4 growth of over 25% quarter on quarter.
200% year on year.
Thank you very much for listening I'll now hand, you back over to the operator, and we will commence Cuban back.
And at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
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One moment, please while we poll for questions.
Our first question is from Catherine O'neill with Citi.
Please proceed with your question.
Oh, hi, Thank you I've got him to answer your questions actually.
Firstly I just wanted to see if you can provide a bit more detail I'm gonna establishment transition and to what degree that Sam. Thank you retail units.
You mentioned, it's starting to ease with more units on the site now.
Looking into 2020 T. The plans you said 120 of anthem you tell you that it is reasonable based on your own.
And so that accelerated refurbishment in house.
No revenue guidance Citi I, just wanted if you could provide a bit more color on the mix between phase III Division.
And I guess in the.
The wholesale makes some munis.
Hi, Evan.
Please state for the uptake of Cucina selling could you maybe talk about how you think about pitching the still staying in that 30% I think you're targeting sort of medium to long term from Katrina that may get kind of clean up quickly and then finally on GPA and how much of the GPU uplift youre, saying is from.
Dynamics in the comm market I guess, what what about today's FX would appreciate think and how much at the J P. Expansion do you think we could see pull forward if the kitchen he'll think increasing more rapidly.
Thank you Okay I'll take those in our income so first of all on our reconditioning in the transition from outsource to bring this in house.
As we've said strategically.
The right thing to do both from a control of quality and improvements of margin on controlling the whole process and improving our G P to smoke.
Thinking about the last 12 months.
A year ago, we had to reconditioning sites and the.
One, which we own the relatively small one and one in partnership with a thud policy, where we are today is that we have 11 sites in the U K, but we all so we've made massive strategic strides over the last 12 months.
Do you think about those sites, we acquired those businesses.
Businesses operating shouldn't issuing full third policies, but we're at full capacity and so we have not been able yet to take over all of that capacity for cause of so the next 12 months, while it's the last 12 months have been.
Our focus on strategically solving for bringing reconditioning.
In house long time, and we have.
Now capability.
Two or three years.
We need to now work when they operate.
Issues, all increasing number of people on those.
Changing the shift happened was reducing the number of partners. So if I think it will be 12 months from today.
This will be fully operating exclusively for kazoo, they will be operating largely 24, seven and five.
Five shifts the process improvements. So there is a lot to come in terms of improvement in terms of the question about how much did.
Reconditioning capacity unavailable calls on the website in retail.
Retail sales I would say the answer to that is significantly because what we see is that we don't have a demand challenge in this business at all if we are able to buy.
Why can't we.
Condition them and price them sensibly, we appear to have very little difficulty in selling people love all our proposition so as they progress through the remainder of this year and the first also plenty pointing to we are comfortable but we couldn't meet that.
It is called goods and we'll have the capacity as we put those operational changes in some place in terms of the second question on the split of revenue.
And on guidance there are three key areas of the business as you know our retail wholesale and other revenues, which include a variety of things Oh ancillary revenues subscription revenues into the trucks, we see the mix.
Being a largely in line with guidance probably in the early next year as a result of the.
Very strong success overall car buying channel, which is going much better than we expected has two impacts on the business one is.
And then both related to this question one is.
In terms of the wholesale mix is likely to be slightly higher wall store retail inventory is lower than we anticipated. So we'll have a slightly higher mix of wholesale I imagine in Q4 and into the early part of 'twenty two as we're buying a formal calls from consumers than we'd anticipated and obviously those.
We don't have the capacity to recondition, we will wholesale.
The impact of that of course is the question you asked about the buying mix and how it changes the buying mix at all long term.
Call It gets hold.
30% of calls, but we sell being sourced directly from consumers, we see a significantly beating that target.
And getting to the 30% much quicker than we originally anticipated on loans.
Getting well beyond that 250% plus base at all.
The success that we've had since we launched that in.
In in July of this year in terms of GPU and the market dynamics I mean, its impact I think it's relatively muted actually because what.
What you've seen in the market with increased demand there's been an increase in the sales price what consumers are paying but also significantly more demand and price inflation in the wholesale markets. What we're paying for college. So those two things have largely moved up in tandem.
And if I sort of look that back to the answer the first question.
Why was it strategically important move reconditioning in house, I think you'll see that all of them and so in the GPU.
Which is if you look at where our GPU was 12 months ago versus where it is today a lot of that to do with.
Now doing the reconditioning ourselves as well as improving ancillary product sales et cetera. So there's been a trade off between.
The benefits of quality and margin of taking reconditioning in house with a slight tradeoff shorts.
In volume, but of course long term, we will get the benefit of both greater volume and greater margin and that's exactly what we're aiming for a whole lot probably all of those questions.
Yeah, that's very clear.
Uh huh.
Okay.
And there are no more questions in tackling. Our next question is from Jamie Basswood Remember. Please proceed with your question.
Yeah, Hello, everyone. Just two from me. Please one is on the sort of wider market.
In terms of the correlation between new car sales and secondhand inventory side, how do you sort of quantify the correlation if I say when we see a pickup in new car sales how much do you think that translates to second hand inventory entering the market and what's the lag on that.
Second question, you've sort of.
Kind of addressed already but given everything you've been saying about the constraints in reconditioning is it safe to expect that in the near term, we'll be saying more M&A similar to F. N H. Thank you.
Thanks, Jamie.
The market dynamics between new and used cars. There there are really two correlations.
One, which is a pretty new phenomenon and it hasn't really been seen before and that is what happens in a world where people who wanted I E.
Caller wanted a new call, but were unable to get to it because of the shortage of all the the lead time.
The order to delivery, which is much higher now than it has been historically so what that's done is for people, who need a call and don't want to waste stripping them into the used car market, whereas they would've otherwise been are in the new car market.
In terms of the longer term impact if you look at the average age of our call that we sell it's about three to four years old and so any shortage today.
We will have in the new car market is likely to show up as a shortage in the used car market in 234 years time.
I actually think that that's unlikely to happen on what what you will see is on all of them to support new cars this year and an oversupply.
Next year, so it's a relatively short.
That gets reversed a pretty quickly in terms of.
M&A.
M I.
You know if we look at M&A.
And where it can help improve all infrastructure. So as an example, where we've done deals like S M H or a.
Overall customer center, a state or we can enhance all team or product proposition or expand geographically and so we continue to grow very strongly organically.
But we you know where there are opportunities to accelerate that growth or to improve.
Improve the team the products the infrastructure or any of the most that we talked about that we're building around the business. If there is an opportunity to do that via M&A and we can buy those businesses sensibly and they will help to accelerate then we will consider.
Those things both in the U K and in mainland Europe, and obviously pushing into additional markets in Europe is a key focus I think as you as you know we are looking to launch in France, and Germany before the end of this year and I.
Expect that we will be in more markets in mainland Europe by the end of next year than we originally anticipated.
I hope that answers the questions.
That's very clear thank you.
And our next question is.
From Rajeev <unk> with J P. Morgan. Please proceed with your question.
Hi, good morning.
Thanks for taking my questions and congrats on getting the first quarter out of the way. So just had a question on <unk>.
Reconditioning capabilities.
And now transitioning into more in house reconditioning.
Do you see an opportunity to widen the inventory spectrum.
We are targeting.
And just catering to relatively higher margin all your legal I'm, just curious as to the pathway there.
And I had a couple of follow ups as well thank you.
Yeah, good morning, Yeah.
Yes look now that we have transitioned.
Transition to 100% in house it gives us more control over the process and there's a lack of resource to extend.
What's been a very tightly defined inventory.
And particularly since we are all quite.
Acquiring so many calls now directly from consumers. It allows us when we when we look at the inbound inventory.
Historically, we were going out and targeting.
Specific inventory.
Oh, sorry policy sell us, but now we're buying and we're seeing that a consumer wants to sell to us.
At the price that we said that is not truly giving us inventory because historically, we wouldn't have gone out and bought so.
Mileage older age and I would say our first priority is to optimize all of these operational areas around <unk>.
And the vehicle preparation centers, so improve the process flows improve the number of shifts we brought them. There are a number of steps that we have.
To make but absolutely in the long term.
Propylene a whole process that allows us to be more.
Multiple flexible in terms of the inventory.
We hold them, but I think that will be the net.
The result is that why though.
That selection.
Okay.
Got it got it.
That's great color.
And then any incremental color you could give us on you know the last 365 acquisition no just just any broad color on the market opportunity there what do you think.
<unk> look like horses, the likelihood business just.
Any further thoughts on that front that might be helpful. Thanks.
Yeah. So you know the vans.
Oh really.
Incredibly not in full product extension I I sort of described them as you know just different makes a lot of calls that slightly bigger cause.
They all are.
But the things are in every all the way.
So it's a very very natural thing for us to do it increases our addressable market.
In the U K alone there are millions of.
All of these light commercial vehicles are bought and sold out really on what we know is that all.
Consumers all the same consumers who are looking for these vehicles and the ways of marketing our.
Exactly the same via.
Aggregate us Petra.
So there is no additional cost per acquisition for us.
Benefit of actually increasing total available vehicles on our website because.
The offering and are driving up our conversion rate.
Those are the same customers, who are looking to come sell or buy vehicles from us.
At the same so that acquisition is perfectly with our expertise in that space because there are a number of new.
<unk> says it also expands.
The business customers.
So.
Payment.
The tune of teens there.
So we've we've acquired a great team who are specialists in that area. We've also obviously will benefit from acquiring additional inventory, which is owned by that business.
To integrate those.
But in the launch vans all of them.
Yeah.
Got it great. Just one last question you know memorial for like a broader macro question you mentioned.
And one of the earlier.
Responses, which was interesting around the potential oversupply of new acres next year.
Just curious as to why do you think that might be happening.
Clearly given you're hearing more and more about.
Some more supply chain bottlenecks in the auto industry, you know, obviously semiconductor and there's been an issue, but you're also hearing more around aluminum. So just curious.
I thought that was like an interesting comments. So just curious as to why you think that might happen well new cars have always been a product. The one who has ordered with a delivery time at some point in the future. So what is happening is that the backstop demand. So people are still placing orders in 2020 one.
Full calls that they would have historically expected to land in 'twenty, one but are being now poll.
Oems those calls will land 369 months later than originally anticipated. So you still have plenty of demand for new calls what happens is that the delivery is all getting back.
Into.
22, and some of it may even get back up into <unk> into 'twenty three I have my own experience of looking through for new call, where I was told that it might take 12 to 18 months, but deliver.
Probably because it's a new model and partly because of the chips will do so but it doesn't necessarily turn everybody away people are prepared to accept but okay. I will get bought vehicles later.
You have some.
A significant sort of excess demand that gets fulfilled in Q2 Q3 Q4.
Got it thank you.
Good luck.
And as a reminder, if anyone.
And any questions you May press star.
<unk> one on your telephone keypad doing so on ensuring your spot in the question queue.
Again, if anyone has any questions you May press star one on your telephone keypad.
And our next question is from David Reynolds with Davy. Please proceed with your question.
Hi, Good morning, Good afternoon, Alex Steven Roth, Thank you for that.
Nobody has said this already I think given.
Given the post COVID-19 backdrop.
It's stunning.
In Q3, so well to know.
If I may I Wonder if you could indulge me please with that full questions.
<unk>.
First I think you announced SMA.
On the 15th of September I Wonder if you could perhaps.
Expand on that a little bit and.
Perhaps.
Let us know when you would expect that to have a direct impact on your business.
Secondly in terms of the European expansion.
And as analysts to simple folk so I was wondering if you could perhaps give a sense as to when could do will be executing in anger in both France and Germany.
And thirdly, just with regard to the direct from consumer buying proposition that has clearly been extraordinarily successful across Q3, perhaps you could explain why why do you think it has done so well.
Then lastly, just to cover off other income and the ancillary opportunity.
On it.
Executing best Finance model very very well I was wondering if perhaps you could then.
Data is with any thoughts on when you would go into and.
Finance composition to.
Business growth.
Morning, Dave.
To put it.
Plenty of questions. There. So first of all just to comment on on what you said.
Look Q3 was definitely wasn't without its challenges you mentioned COVID-19. It actually Q3, probably COVID-19 have the biggest impact on us.
Our business since the beginning of the.
Pandemic in tons.
<unk> staff shortages people off.
Supply chain shortages driver shortages and of course in the back end of Q3, we have three in dual fuel shortages as well in the U K, which for a business that is often called preparing for free fuel with every car itself and delivering those cause fuel shortages are one of the most helpful thing so.
So despite all of those headwinds of Q3.
Yes, we had a great quarter in terms of the specific questions.
SMH Youre right in mid September is when we completed that acquisition.
As I said earlier.
Quite a business that had six sides, but.
The thing that capacity in the servicing third party contracts. So there's a process to go through of serving notice terminating those contracts.
Repurposing those sites in terms of flow and people and shift patterns to optimize for for what our needs are and that is all happening incrementally theres sort of no step change or not.
Ooh happening a little bit every month.
And.
The combination of all of those factors gets us to a place throughout the course of the year, where 100% of our 11th class are focused entirely on all production.
Hum.
Working.
In a much more efficient way and we see the ability to triple production.
From where it was in for example September 21 in September 'twenty, two with all existing sites, but we now have but that will be a gradual monthly improvement as we put in.
New processes people add shifts some removed.
Partners.
In terms of EU expansion, we have been pretty conservative I think in terms of our modeling for the EU for next year, it looks a little bit like U K was in our first year.
Which was which was funded through 'twenty.
We will launch before the end of this year when we're doing full end to end testing in both market currently it's going incredibly well.
And then next year, we will start to ramp up our marketing and as I said, a little bit earlier on this call.
You know our expectation now given how well our preparation is going and how strong our team is in the us.
[laughter] excuse me is that we will be.
In a number of other markets beyond France, and Germany in 2022, So I think that we've been relatively conservative in our modeling for EU and you should expect to see us from a marketing perspective very much follow the same pattern that we did in the U K.
We're building a very strong brand very quickly across markets.
Terms of call buying why has it gone up.
Much better than anticipated I think a couple of reasons almost got a very unique proposition to the alternatives all relatively poor. So if you are prepared to buy cars from our consumer pay them a sensible price, but then if if you look at the unique elements of our proposition.
We pay people the same day and often within a few minutes, we've integrated a unique payment solutions. So they get instant gratification.
Mask, but also we offer.
T price, we don't chip, providing the consumer hasn't set.
And the thing that was on other vehicle my electoral condition. The price, we all play as guarantee which is not the norm in the market. There are a number of players who offer one price and then.
When they have your captive or pay a different price, which we think is a poor consumer experience and finally, we are the only player in the market offering to come and pick it up from you. So again the traditional historic experience has been you either policy change it have a dealership for.
When you buy a new car all.
All you expect rates to a play out where you have to drop it off and then youll stranded in a.
For example, like supermarket Carpark, some wherever you've talked to them all.
Or will you sell it privately and again youll strength in software and we offer the ability to either drop but also one of all of one of our hospital census, all will come and collect it.
So I think we have a unique proposition, which is really resonate with consumers in terms of.
The experience the honesty the guarantee.
Et cetera.
And then what kinds of ancillary revenues, yes look what you've seen with our win with Carvana and all of those is that actually the opportunity on GPU.
It's higher than they had originally anticipated and a lot of this comes from ancillary revenues, we've always said that long term.
You see the split is about 50 50 between the muscle and the non metal, particularly on finance, we see significant upside we've done a lot of work thinking about.
We have a very good.
Partnership at the moment.
Oh with with Black horse.
With our platform provider, but at some point, we will take this more in house. We've started to think about that and I think the only thing I'm prepared to say on or you know on that subject. Today is that we had not modal emmis thing until sort of the end of 'twenty 'twenty four.
To bring that in house, and I would feel relatively confident saying, we expect to do it before then but I'm not going to put a day from one.
Thank you.
And we have reached the end of the question and answer session and also this concludes today's conference and you may disconnect. Your lines at this time.
You for your participation.
Thank you will.
Yeah.
Okay.
[music].