REA Group Shows Strong Growth in FY21 Report

Australian market leading portal operator REA Group has released its yearly performance report. Highlights from the Group's last 12 months include:

• Revenue up 13% year-on-year to A$928 million
• Net profit up 18% to A$313 million
• Full-year dividend of 131 cents up 19%

Domestic performance - strong on the back of a hot market

In the firm's home market, the Realestate.com.au real estate portal performed very well with an average of 12.6 million visitors per month contributing to a 6.9% increase in traffic from 2020 overall. Speaking of his company's domestic results, REA Group CEO Owen Wilson said:

“Our flagship site realestate.com.au delivered stellar results, extending its position as the clear market leader in digital real estate and it is now Australia’s eight largest online brand overall.”

Much like fellow large portal operators Zoopla and Zillow in their recent announcements, REA Group highlighted the growth in uptake of its mobile application which boasted a 10% increase in downloads and a 49% increase in app launches compared to FY20.

REA Group's strong yearly results reflect an increasingly strong domestic market with national listings up 15% year-on-year but also notable cost management incentives that resulted in core operating costs rising only 3% on the year.

International performance - a mixed bag with plenty of opportunities

Aside from its domestic operation, REA Group has business interests in several other portal businesses around the world including a 20% stake in Realor.com operator Move Inc.

Much like its US rival Zillow, Realtor.com saw a sustained increase in traffic over the period with Q4, in particular, seeing strong growth with 32% year-on-year growth at 106 million unique monthly users.

Although Move continues to play second fiddle to Zillow (229 unique monthly users on average), the business has improved markedly in recent times going from having contributed a A$7m loss on REA's balance sheet in FY20 to a A$16m gain in FY21.

The same cannot be said of REA's business in Southeast Asia which was heavily affected by Covid lockdowns and saw a 16% decline in revenue before being sold to PropertyGuru.

In India, the recently fully acquired Elara Technologies (operator of Housing.com, Makaan and PropTiger) saw audience growth of 92% year-on-year bolstered by favourable digital adoption tailwinds in the country as well as SEO actions.

In terms of financial performance, in H1 FY21, the Group result included an equity accounted loss of $2m from its 13.5% stake in Elara. REA consolidated Elara from 1 January 2021, contributing revenue of $17m in H2 FY21 and an $18m EBITDA loss.

A year full of M&A leading to momentum for FY22

The financial year has seen REA Group engage in some sizeable M&A activity:

• In January REA took a controlling stake in Elara Technologies
• In May REA got regulatory approval for its acquisition of mortgage brokerage business Mortgage Choice - deal it would go on to tie up later that summer
• In June the company caused shockwaves in the real estate marketing industry in Asia as it agreed to sell its Southeast Asian assets to PropertyGuru for an 18% stake in the Singapore based firm
• Later in June REA paid a reported A$15 million for software firm Simpology

As of the end of June, the firm stated that it had a debt of A$414 million and a cash balance of A$169 with CEO Wilson optimistic about his company's outlook heading into a new financial year:

“REA is entering the new financial year with strong momentum, despite ongoing lockdowns. This momentum, coupled with our strategic investments and exciting product roadmap, provides an excellent platform for our continued growth”