Release Date: April 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pinewood Technologies Group PLC (PINWF, Financial) reported results ahead of analysts' expectations, with a 15.1% revenue growth and a 16.5% increase in gross profit.
- The company successfully signed contracts with two of the largest auto retailers in the UK, Marshalls and Lookers, showcasing the strength of the Pinewood platform.
- The acquisition of CS, a leading automotive AI platform, is expected to enhance cross-sale and upsell opportunities, boosting Pinewood's growth prospects.
- Pinewood has made significant progress in its North American rollout, with plans to pilot its system in the second half of 2025 and a full rollout in 2026.
- The company maintains a high recurring revenue rate of 86.5%, providing stability and predictability in its financial performance.
Negative Points
- The transition to a standalone software business has led to increased operating costs as Pinewood builds up its team for future growth.
- The comparison of FY24 and FY23 results is complicated due to the different reporting periods, making it difficult to assess performance on a like-for-like basis.
- There are potential limitations in the North American market due to the current JV structure with Lithia, which may hinder market penetration.
- The international expansion faces challenges due to localization differences and varying operating systems across regions.
- The company faces economic headwinds such as inflation and interest rate increases, which could impact dealer groups and overall market conditions.
Q & A Highlights
Q: Could you discuss the potential scenarios for the US Joint Venture (JV) and what might be the optimal scenario?
A: CEO Bill Berman explained that the JV was a strategic entry into North America, leveraging Lithia's resources. However, the current structure may limit market penetration. Discussions are ongoing with Lithia to potentially exit them from the JV, allowing Pinewood to take full control. Options include cash, financial instruments, or equity exchanges. The partnership with Lithia has been positive, and an update is expected later this year.
Q: Are there different dynamics in winning international customers compared to the UK?
A: CEO Bill Berman noted that while localization and transaction methods differ, Pinewood's flexible system can accommodate these variations. Unlike competitors with multiple systems, Pinewood's single platform supports multiple languages and countries, offering efficiency and cost advantages. Economic headwinds like inflation and tariffs present challenges, but Pinewood's platform enhances productivity and reduces operational costs, positioning it well globally.
Q: Can you elaborate on the visibility and confidence in achieving the FY27 targets?
A: CFO Ollie Mann stated that the company is confident in its mid to high 30s EBITDA target for FY27, up from the previous 30 million. Recent deals with Global Auto and the acquisition of CS have bolstered this confidence. The rollout of Marshalls and Global Auto is expected to be completed by FY27, and the recurring revenue remains strong, providing visibility and stability.
Q: How confident are you in the 200 sites with KW Brun being part of the rollout opportunity?
A: CEO Bill Berman mentioned that while the transaction with Global Auto Holdings includes 8 dealerships, the broader rollout to 200 sites is not guaranteed but is a potential opportunity. Conversations indicate a preference for a single platform, and Pinewood is well-positioned for this, though it hasn't been factored into forecasts yet.
Q: Can you discuss the competitive environment in Central Europe, Japan, and South Africa compared to North America?
A: CEO Bill Berman explained that the competitive landscape varies by region. For example, France has a few dominant platforms, while Germany is fragmented with many players. North America is dominated by a few incumbents, but Pinewood's modern tech stack and pure data capabilities offer a competitive edge. The ongoing CDK and Techon lawsuits highlight the competitive tensions in North America.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
