REA Group Powering On All Fronts, Posts Strong FY2016 Results

Anna Game Lopata

August 8, 2016

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Tracey Fellows Resize
REA Group CEO Tracey Fellows

REA Group has reported a 20 per cent increase to revenue to $629.8m in FY 2016, along with an EBITDA of $347.3m, up 22 per cent.

Net profit was 214.5m, up 16 per cent and the group announced a full year dividend of 81.5 cents, up 16 per cent with EPS sitting squarely at 62.6 cents an increase of 16 per cent for the year.

The final dividend will be paid on 15 September 2016, with a record date of 24 August 2016.

The company says its reported net profit includes share of losses from associates and one-off transactions being the proceeds from the settlement of an associate’s legal case, the fair value gain on the acquisition of iProperty and acquisition related transaction costs.

The prior comparative period included profit from the sale of marketable securities and the Squarefoot business.

Operating expenditure grew 19 per cent inclusive of the results of iProperty since the date of acquisition in February 2016.

Excluding iProperty expenses grew 13 per cent.

AUSTRALIA

In Australia, where REA Group operates the leading residential and commercial property sites, realestate.com.au and realcommercial.com.au, revenues were up 17 per cent to $555.2 million.

The number of agent customers increased by 7 per cent for the year ended 30 June 2016.

Premiere All product (where customers commit to using top tier product for all of their listings), helped deliver a 19 per cent increase in the Residential business.

“This was achieved in a market where property listing volumes in the Australian market were relatively flat2,” the company reports .

There was a 26% increase in listing depth revenue to $406.8 million, while subscription revenue decreased 20 per cent to $55.0 million, as more customers opt for greater commitment to higher tier products.

Media and Developer revenue increased by 20 per cent, primarily driven by the strong take up of developer products, particularly Project Profiles, which provides an exceptional way to present large developments to prospective buyers.

The Commercial business recorded 8 per cent revenue growth in the period, due to increased sales of listing depth products.

“Strong Australian growth reflects our ever-growing, highly engaged audience,” says REA Group CEO racey Fellows.

“Independent sources demonstrate realestate.com.au’s market leadership position with the largest and most engaged audience of property seekers in Australia.”

REA Group says realestate.com.au’s market share of all residential property listings nationwide is 94 per cent, which is 17 per cent higher than the company’s nearest competitor.

  • Average monthly visits to realestate.com.au grew 20 per cent and are 2.1x higher per month than that of the number two site according to Nielsen Online Ratings (43.8 million vs 20.5 million average monthly visits )

  • realestate.com.au has 6.1 times more time on site which is a key indicator of audience engagement (253 million vs 41 million minutes per month as measured by Nielson Online Ratings )

  • The average number of monthly page views on realestate.com.au is 889 million, 5.0 times the number two site according to Nielson Online Ratings .

“We are continually investing in our product offerings and innovation to maintain and extend our market-leading position,” Fellows says.

“By working with our customers and consumers we have been able to evolve our products and change the way people look for property.”

  • Launch of Suggested Properties which uses data and predictive analysis to suggest properties to consumers based on their interests and search criteria.

  • Launch of a new mobile app which includes better management of alerts and short-cuts to recent searches.

  • Launch of Australia’s first commercial property app for Android to enable users to browse the sale, lease, sold and leased sections for realcommercial.com.au on any device.

EUROPE

REA Group’s European operations include property site casa.it, Luxembourg’s atHome.lu and atOffice.lu along with property sites in regions of France and Germany, immoRegion.fr and atHome.de.

The company’s European operations achieved 11 per cent revenue growth (5 per cent in local currency) to $50.7 million (€33.3 million).

Average monthly visits to the combined European sites increased by 15 per cent to 12.2 million.

“This year, the Italian business focused on refining the consumer experience, simplifying technology and improving its position in Italy’s competitive market,” Fellows says.

“In February 2016, we launched a new desktop design in line with our Australian sites’ designs, improving the search experience. Demand on our mobile platforms also grew, with more than 600,000 app downloads.”

“As the Italian property market continued to improve, we saw an 8 per cent growth in listing volumes on the prior comparative period.”

  •  Luxembourg business continued to expand into the northern regions of France under the ImmoRegion.fr brand

  • Launched in Nord-Pas-de-Calais less than a year ago, ImmoRegion.fr is already leading the competition in listings volumes and agency customers

  • 25% growth in total listings for the Luxembourg business and a 21% growth in total agents on the prior comparative period.

ASIA

The Asian business, which comprises iProperty and REA Group’s Chinese listing site, myfun.com, contributed $23.9 million of revenue for the year.

“Acquiring iProperty has been a game-changing move in REA Group’s global strategy as Australia is also a top pick for Southeast Asian property buyers in addition to their own region,” Fellows.

Average monthly visits to the combined iProperty sites increased by 13 per cent to 7.4 million extending our reach and enabling REA Group customers, consumers and investors to tap into a wider and more diverse market.

  • Digital advertising revenue for iProperty grew 5% on the prior year comparative period.

  • 13% growth in listing volumes for combined iProperty sites on the prior comparative period.

  • Number of mobile users increase 24% on the prior comparative period.

NORTH AMERICA

In the United States we REA Group has a 20 per cent holding in Move, Inc. operator of realtor.com, a leading real estate portal.

“Since we invested in Move in November 2014, new branding and a high-profile marketing campaign have been launched and visits have increased to 53 million, 17 per cent growth year on year,” Fellows says.

Move, Inc. has seen an increase of 27 per cent in revenue to USD$357m, which the group says was driven by continued strength in the Connections for Co-Brokerage product and growth in non-listing media revenues and professional software revenues.

OUTLOOK

“As we have seen with previous elections, the Federal election resulted in lower listing volumes across the campaign period,” Tracey Fellows says of the Australian market.

“The uncertainty surrounding the election outcome has contributed to July listings being down 11 per cent compared to July last year.

“As a result we expect first half revenue growth to be skewed towards the second quarter. Our headline expense growth in the first half will be higher than revenue growth entirely due to the inclusion of iProperty.

“Our financial performance reflects our focus on providing unmatchable value for our customers and consumers,” Fellows adds.

“We’ve done this through the development of innovative products and technologies that allow us to create the most immersive, personlised and engaging property experiences in the world.”

Anna Game Lopata

August 8, 2016

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Acerca de Lucas Vargas:

  • Empezó en Grupo ZAP como el VP de Sales y en 2016 cuando la empresa tenía 60 empleados. Fue nombrado COO de VivaReal tomando el mando de Brian Requarth el Co-Fundador. VivaReal lanzó en Colombia y se trasladó a Brasil. En 2017 se hizo CEO del Grupo ZAP.
  • Ha trabajado en Mexico en PWC y en el Banco Santander
  • Tiene un Master de Business Administration de Harvard
  • En noviembre este año después de la fusión de OLX Brasil y Grupo ZAP fue nombrado el CEO del OLX Business Unit. Lidera la empresa junto con Andries Oudshoorn y Marcos Leite
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Simon Baker is the Founder and Executive Chairman of Online Marketplaces and Property Portal Watch. Involved with property portals for 15 years, he’s a well-recognized expert and industry consultant.
As former CEO/MD of the REA Group for 8 years, Simon led the group to its current market-leading position. When he joined REA Group in 2001, it had $4m in revenues, $6m in losses and an $8m market cap.
By 2008, the company presided over $155m in revenues, $35m in EBITDA and enjoyed a peak market cap of $1b. Simon is currently Chairman of the Mitula Group and Real Estate Investar and a serial portal founder and, investor.