Frontier Digital Ventures Grows Revenue 37% in FY22 as Zameen and InfoCasas Continue to Lead the Way

The Malaysian-headquartered global online classifieds operator Frontier Digital Ventures (FDV) has released the results of its fourth quarter and financial year 2022 operations to the Australian Stock Market. Highlights of the company's report include:

• Record yearly EBITDA of A$5.8m, an increase of more than 300% on FY21 (excluding restructuring costs).
• Record yearly revenue of A$82.3m on an FDV share basis. A 37% year-on-year increase.
• A yearly EBITDA margin of 7% across the portfolio (3% FY21).
• Cash balance of A$27m.

The impressive results have been achieved amid a backdrop of economically challenging times. All three of the company's regions (LATAM, MENA and Asia) were cash flow positive for the last two quarters of the year with FDV's Founder and CEO Shaun Di Gregorio pleased with the portfolio's resilience.

“The record profitability achieved in FY22 demonstrates the resilience of our operating companies and business model. We have an ongoing focus on optimising cost lines for the prevailing market conditions, while continuing to drive sustainable revenue growth. We continue to assess organic and inorganic growth opportunities in line with our long-term value creation plan.”

Founded in Kuala Lumpur in 2014, FDV is an ASX-listed company that owns and operates online marketplace businesses in developing markets across the world. The company fully owns some portfolio companies such as Fincaraíz and InfoCasas in Latin America and has a stake in others such as Zameen in Pakistan.

The company's report was at pains to point out that the growth of some portfolio companies on its balance sheet was being masked by the appreciation of the Australian dollar against local currencies over the period. In particular, Zameen and PakWheels were affected by the Aussie dollar appreciating 15.9% against the Pakistani Rupee.

Leading Pakistani real estate vertical Zameen, which contributed around 30% of FDV's FY22 revenue, was the subject of an earlier FDV press release in which the company said it was "supportive" of the portal's majority shareholder EMPG's tentative plan to go public in the near future following a $200m raise in Q4.

In October Frontier Digital Ventures announced the appointment of a management team at the holding company level for its Latin American operations with the goal being the unification of its four fully-owned companies in the region. The region is a clear area of focus for the company going forward.

Having appointed InfoCasas CEO Ricardo Frechou to lead the division and reset cost bases, FDV spent A$906k on restructuring. The company expects the changes to result in around A$3 million in savings over the course of FY23.

FDV's Middle East and North Africa division was the only region to have a negative EBITDA contribution (A$-0.8m). Although the figure represents an improvement on the previous year's figure (A$-2.1m), the company saw fit to divest from Ghanain real estate vertical MeQasa in Q4.

After being purchased from Adevinta in late 2020 Moroccan horizontal marketplace Avito made an EBITDA loss of A$-1.6m in 2021. FDV was keen to stress in its FY22 report that Avito (not to be confused with the Russian marketplace of the same name) is making steady progress towards reducing its losses. Avito reduced EBITDA loss by A$1.2m in FY22 and managed to record a 5% revenue increase in the process.

Avito is the company's biggest revenue generator in Africa and its 6th most important source of revenue overall. FDV's management is clearly proud of its work with Avito and in what might be a tacit nod to potential acquisition targets in 2023 said that the turnaround showed that FDV has "the ability to reset the cost bases of loss-making classifieds businesses and transition them to long-term sustainable growth."