REA Group Sees Strong Domestic Growth in HY1 Results

February 8, 2024
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The Australian real estate marketplace operator REA Group has released its results for the first half of its 2024 financial year. Notable points from the group's report include:

  • Revenue was up 16% year-on-year at A$726m.
  • EBITDA (excluding associated) was up 22% at A$349m.
  • Australian residential revenue increased 19% to A$505m.
  • Overall operating costs rose 11% year-on-year.

REA Group operates the leading portal in its home country and the, and portals in India, collectively known as REA India. The company is also a significant shareholder in the Southeast Asian marketplace operator PropertyGuru and Move, Inc., the parent company of U.S. portal

Commenting on REA's results, Group Chief Executive Officer, Owen Wilson said:

“REA has delivered an outstanding result driven by strong yield growth and the benefit of a more normalised listings environment. This resulted in a strong uptake of our premium products as customers sought to leverage our leading audience to maximise their campaigns in the strengthening market."

“REA India’s momentum also continued with price and customer growth and new premium depth products delivering strong revenue growth.”

Domestically REA Group's results in the first half of the Australian financial year were excellent. The company grew residential revenue by 19% as for sale listings volumes grew 4% nationally. benefitted from a 13% average national price rise and increased depth product penetration as well as a positive impact from stronger housing markets in the lucrative Melbourne and Sydney areas.

Traffic to REA's domestic real estate marketplaces was steady at 126 million on average per month. The company is betting big on its home-tracking product and saw a 17% increase in active members and a 41% increase in unique properties tracked (3.2 million) during the period.

Elsewhere, revenues from the commercial and new build markets were up 11% at A$60m with price rises and depth penetration offsetting the 23% drop in project commencements.

The company's recently acquired BNPL platform, CampaignAgent saw good growth in the period while revenue from data insights and valuations and financial services were also up. As is being seen at portal companies around the world, REA's revenue from display advertising continues to decline.

In India, revenues were up 21% year-on-year to A$44m while EBITDA losses were reduced. REA India is continuing to focus on an 'app-first' strategy and prioritise search engine optimisation to maintain a relatively slender traffic lead over rivals such as 99acres and MagicBricks. The company said it expects growth in the second half of the year to outpace that of the first.

As for PropertyGuru, which is set to announce its own set of results in the coming weeks, its equity-accounted contribution to REA Group was at a breakeven level for the period. REA Group reported a A$120m impairment charge related to the diminished value of PropertyGuru's Vietnamese and Malaysian businesses.

In the USA, where faces increased competition from CoStar-owned, revenue was down 15% in HY1. A "challenging macroeconomic environment" saw lead volumes drop 9% year-on-year in the period.

REA Group made two small early-stage equity investments in the first half of the financial year, spending around $10m. The first spend was for a 35.9% share in Arealytics, a provider of commercial real estate information and technology in Australia, and the second for a 20.7% share in Easiloan, a technology platform for end-to-end digital processing of home loans in India.

February 8, 2024
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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