Frontier Digital Ventures Sees Increased Profitability in Q4

The ASX-listed online marketplace operator Frontier Digital Ventures (FDV) has released a report on its performance in Q4 of its 2023 financial year. Notable points from the company's release include:

• Total operating revenue of A$21.7m in Q4, up 20% year-on-year.
• Total operating EBITDA of A$2.1m for Q4 and A$7.8m for the whole year.
• Net operating cash flow of A$2.2m for the year.

While revenue was up quarterly year-on-year, total revenue for 2023 slipped slightly compared to 2022 largely because of the declining performance of Pakistani real estate portal Zameen which FDV holds a 30% stake in.

Despite the ongoing turbulence in the Pakistani market, FDV reported its first full year of positive operating cash flow and saw a 61% EBITDA improvement in Q4 compared to 2022 with both the consolidated companies and affiliates improving profitability.

Commenting on the results, Shaun Di Gregorio, Founder and CEO of FDV said:

"This quarter's results mark a significant moment for FDV as we report our fourth consecutive quarter of positive operating cash flows. This results reflects the consistent execution of our strategy and strength of the online marketplaces model, despite the headwinds experienced in the first half of 2023.

Over the past year, significant work has been undertaken including cost base optimisation, operational and product enhancements, and rebranding of the regions, designed to strengthen the business and enhance the long term equity value of each region.

FDV is entering an exciting new phase of the business focussed on growing earnings and cash flows, underpinned by sustainable long-term revenue growth."

The transactional business model that has been the focus of a lot of FDV's work over recent years is taking shape in the Latin American business (rebranded to '360 Latam' in early 2023). The region reported transactional revenue of A$2.6m in Q4, up from A$0.8m in the comparison period.

The Latin American region performed well overall with revenues up 22% year-on-year in Q4 as the real estate verticals Fincaraíz (Colombia) and InfoCasas (Uruguay, Paraguay, Peru, Bolivia) saw significant growth.

In its African portfolio (rebranded to Mena Marketplace Group) FDV saw revenues increase 9% in Q4 to A$2.7m and EBITDA increase to A$0.3m. Despite a slowdown in advertising revenues, FDV's companies in the region managed to grow subscription revenues by 110% in Q4.

In 2022 Zameen accounted for around 30% of total FDV revenue but in 2023 that figure dropped to around 10% as inflation, unemployment and political instability continued to plague the market.

There may be some positive signs on the horizon for Zameen as revenue remained stable and EBITDA rose in Q4 as cost management and a slight uptick in developer spend eased pressure. The hope is for a more settled landscape after elections in February.

FDV owns and operates 12 online classifieds marketplaces across three regions worldwide and holds a 30% stake in the leading Pakistani property portal, Zameen and a 37% stake in Pakistani autos vertical PakWheels.