Lifull Q1 Profits Sink 10% as Overseas Segment Struggles

February 16, 2021
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The publicly traded Japanese portal and aggregator operator Lifull has released performance figures for Q1 of FY21. Much like those of Adevinta released last week, the numbers show a diverse business weathering the storm of the global pandemic, making efficiency drives and preparing to move towards a more transactional business model once the global economy allows.

Overall revenue for the company was down -10.1% with net profit down -24.1% on a quarterly year-on-year basis. The company also saw its cash and cash equivalents decrease by 2 billion Yen as its net profits for the financial year stood at 19% of stated financial year targets after the first quarter.

 

Domestic portal business moving towards pre-pandemic levels

Lifull's biggest business segment is its domestic portal operations. The company owns and operates homes.co.jp, one of the largest property portals in the country and the portal's operations are broken out into a separate segment from its overseas operations in all reporting.

Although the average revenue per advertiser was down for the quarter here, likely due to discounts being offered to hard-hit domestic real estate agents, the number of clients for Q1 was higher than both 2020 and 2019 with 27,837 Japanese realtors on the books. As for the bottom line, Lifull's domestic portal business revenue was down -6.2% year-on-year for the quarter and profitability was down -12.8%. The silver lining according to the company's report being that revenue for the segment is trending back up and that the decreased profitability is because of a renewed domestic advertising push.

Executives of Lifull's flagship portal will be hoping that this renewed marketing campaign along with a new 'nice-to-have' search functionality, a push towards more online consultations and a reported 26% increase in organic traffic for the first quarter can see the business move the needle back to profitability for Q2.

 

Overseas segment struggling against the pandemic

Outside of its native Japan, Lifull is known for being the owner of aggregator sites Trovit, Mitula and Nestoria, collectively known as Lifull Connect, as well as for owning property portals Dot Property in Southeast Asia and icasas, laencontré and puntopropiedad in Latin America. The company also acquired the Thai portal-aggregator hybrid Hipflat at the end of October.

Here income was down -28.2% with the global pandemic cited as the reason in the company's report. Profitability for the segment however saw a year-on-year quarterly improvement of 0.8% with the aggregation sites seeing the biggest gains in gross profit margin. The quarterly presentation cites "flexible cost management" and a decrease in paid traffic -made possible by a 27% quarterly increase in organic traffic- for the gains here.

Lifull's presentation is somewhat short on specifics when it comes to the overseas portal businesses, but it does make mention of the company's stated goal for the segment which is to move to a more direct transactional model. The report breaks out the number of overseas employees by the type of business they are involved in and highlights the fact that the percentage of those involved in the CPC business has decreased by 11% year-on-year whereas those involved in the direct transaction business have increased by 7%.

February 16, 2021
Since March 2020 Edmund's job has been to read about, write about, collect data on, analyse and generally know about real estate marketplaces and the companies that run them. Before that he worked at the aggregator Mitula Group (which became Lifull Connect) for five years.

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