REA Group Smashes A$1 Billion Revenue Barrier as it Capitalizes on 'Buoyant Listings Environment' in FY22

August 9, 2022
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The Australian real estate portal operator REA Group has released its report for the 2022 Australian financial year. Highlights from the company's operations for the 12 months ended 30th of June 2022 include:

  • Revenue up 26% on 2021 at A$1,170 million ($878 million).
  • Net profit of A$408 million up 25% year-on-year. EBITDA of A$674 million, up 19%.
  • Dividend and EPS both up 25% year-on-year.

For the first time in its history, REA Group's revenues surpassed A$1 billion as the group's results incorporated the A$244 million acquisition of the Australian mortgage brokerage Mortgage Choice and its portal operations in India, REA India during the financial year. Excluding these acquisitions, revenue was up 18%.

REA Group Chief Executive Officer, Owen Wilson commented: “FY22 has been an exceptional year for REA. The record take up of our premium listings products enabled us to fully capitalise on the buoyant listings environment, and it demonstrates the value we provide to our customers and vendors.

“Key milestones were also achieved in our property data, financial services and Indian businesses, building strong momentum. These markets present great opportunities and the revenue contribution of these businesses is growing rapidly.”

REA Group's flagship listings portal, the Australian market-leader Realestate.com.au, saw revenue increase 24% over the year with listings volumes up 11% year-on-year overall. Like many market leaders, Realestate.com.au is pushing its customers toward premium listings packages and managed to implement an 8% overall price increase during the period for residential sales listings.

Unlike in other markets, in Australia the vendor is ultimately responsible for paying the portal listing costs. This situation gives Realestate.com.au much more leeway to increase prices than portal in other markets and given the company's domestic success in FY22 there is little indication that portal prices are set to get any cheaper down under.

Elsewhere, there was strong growth for the company's 'Media, Data and Other' segment which grew 9% during the year (A$97m) and modest revenue growth in commercial (3%, A$134m). As for the company's increasingly important 'Financial Services' business, the Pro-forma increase over the year was 12% (A$79) driven by a 28% increase in settlements and continued broker network growth.

 

Mixed fortunes for REA Group's overseas portal assets

For many years, REA Group's investment in India was seen as a long-term play. Today the company's patience and investment are closer to paying off as REA India's top portal Housing.com is claiming market leadership in terms of traffic over the last nine months (a record 16.7 million visits in May according to Similarweb) and an increase in brand awareness from 53% in 2020 to 2022.

Although REA India is still not profitable, the revenue growth of over 100% (A$53 million) and the news that Housing has overtaken rivals 99acres and MagicBricks will be welcomed by investors.

REA Group (which itself is 61% owned by Rupert Murdoch's News Corp) owns a 20% stake in Move Inc, the operator of Realtor.com. The #2 U.S. portal saw revenues increase 11% year-on-year with both its lead generation and newer commissions-based model driving growth. Due to increased employee and marketing costs, Move Inc contributed only A$14 million (down A$2 million from FY21).

The company also holds a 17.5% stake in the newly public Southeast Asian portal group PropertyGuru which contributed an equity accounted loss of A$6 million over the financial year. PropertyGuru is set to report its financial results for Q2 on the 25th of August.

August 9, 2022
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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