Domain Chief Executive Officer Jason Pellegrino has labelled the Australian property market over the past six to nine months as the “most challenging” ever seen, with the group posting reduced revenue and profits.
Statutory revenue dropped 0.5 per cent in the 2022-2023 financial year to $345.8 million, while net profit decreased 28.2 per cent to $38.6 million, down from $53.8 million year-on-year.
Net profit after tax sat at $26.1 million, including a significant items loss of $5.2 million and loss from discontinued operations of $7.3 million.
“In the context of things it’s easily been the most challenging six-to-nine months that the property market across Australia has ever seen,” he said.
“If I look through the last four years, we’ve had the royal commission, we’ve had Covid, and we’ve had the last nine months.
“Notwithstanding that, we’ve seen real progress in our business, on a positive level in terms of the velocity of product development and innovation.”
Mr Pellegrino said one of the key product developments is new mobile search functionality on the Domain App, including a dynamically integrated map and list view experience that enables buyers to not only understand what properties are available in different areas but the neighbourhoods they sit within.
Another new feature integrates recently sold properties into buyers’ search results so they can easily compare recent sales with properties currently on the market.
“We’ve launched a generational change to our user experience that is the biggest change since the 2009 launch of the Domain App,” Mr Pellegrino said.
“We’ve significantly upgraded and launched new product features with agents that have been taken up at a rapid rate, well ahead of our expectations.
“The takeup rate of new products like Platinum Edge, Social Boost, Early Access and LeadScope, our new prospecting tool, has been fantastic.”
Domain’s financial year results also showed residential revenue declined seven per cent to $233.1 million, with new ‘for sale’ listings down 13.8 per cent year-on-year.
Controllable yield was eight per cent higher, supported by price increases, record depth penetration and the launch of Social Boost All, a social media add-on.
“This result is all-the-more impressive given the disproportionate listing volume declines of more than 21 per cent and 16 percent respectively, in Domain’s highest yielding markets of Sydney and Melbourne,” Mr Pellegrino said.
Commercial real estate remained the best performing business with six per cent revenue growth, while print revenues declined 24 per cent year-on-year, reflecting the challenging listings environment in the high value markets in which Domain operates.
“Print’s EBITDA contracted to $2.3 million, from $5.5 million in FY22, as a result of the revenue declines, with operating costs down year-on-year despite higher printing costs,” Mr Pellegrino said.
“Despite this backdrop, Domain’s print readership increased, year-on-year, delivering a high quality and exclusive audience that agents continue to value.”
Mr Pellegrino said in Agent Solutions, revenue rose 86 per cent year-on-year to $40.7 million, with underlying growth of six per cent, excluding the impact of the Realbase acquisition.
He also said big changes were afoot with Domain Home Loans (DHL).
“In Consumer Solutions, while DHL continued to outperform the broader lending market, Domain sees much greater potential than has been able to be achieved through the joint venture,” Mr Pellegrino said.
“After an extensive period of discussions with our joint venture party, Domain has made a decision to pursue a sale exit of the business.
“DHL is being held for sale and treated as a discontinued operation, and is therefore excluded from trading results.”
Looking ahead towards 2024, Mr Pellegrino said the outlook for the Australian real estate market was positive.
“The one thing that’s quite pleasing is we are seeing a recovery in listings, particularly in Sydney and Melbourne as confidence returns to the market and vendors are bringing their properties to the market,” he said.
“We’ll continue to accelerate the innovation around our consumer platform, giving consumers what they want.
“A lot of that will be underpinned by new artificial intelligence technology that goes through, as well as investments we’ve made in our marketing technology that enable us to take those insights, take that wonderful content and make sure that we’re engaging with the right customer, at the right time, on the right platform and with the right message, to bring that to life.”
