REA Group has delivered an annual shareholders report that celebrates a number of impressive wins in what Chairman Hamish McLennan calls “unprecedented market conditions”.
Despite a slightl decline in revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA), the Group remained resilient during a challenging 12-month period.
During FY20, revenue declined 6 per cent to $820.3 million, and EBITDA declined 5 per cent to $492.1 million.
Fourth quarter core operating costs were slashed by 21 per cent, with full year costs down 9 per cent.
Australian operations saw revenue decline by 7 per cent, to $772.4 million, fuelled by decreases in the Group’s residential and developer businesses.
“Pleasingly, despite difficult core operating conditions, the Group increased its strong core EBITDA margin before associates to 60 per cent,” Mr McLennan said.
“As a result, the Board declared a total dividend of 110 cents per share, down 7 per cent.”
The Directors’ Report notes strong operating cashflows enabled the repayment of $70 million of debt, continued investment in innovation, and shareholder returns in the form of dividends.
This resulted in a cash balance of $222.8 million at 30 June, 2020.
“The Group generated positive operating cashflows and traded profitably for the period, maintaining a strong margin. The Directors expect this to continue for the foreseeable future,” the report stated.
Online audience growth
Audiences for realestate.com.au hit all-time highs during FY20.
On average, over 90 million visits were received each month, up 18 per cent year-on-year. In June, 114 million visits were recorded, a new all-time record.
On average, 9.8 million unique users visited realestate.com.au each month, hitting a new record of 11.9 million people in May.
As Mr McLennan pointed out in the Chairman’s Message, this is roughly 60 per cent of Australia’s adult population.
The report also notes metrics found 61 per cent of people used realestate.com.au exclusively when looking for property, returning an average of 9.6 times each month.
“These metrics clearly demonstrate the unrivalled brand loyalty from an audience of high-intent property seekers,” the report states.
The realestate.com.au app also enjoyed a banner year, with average app launches of 36.8 million users a month during FY20, and a new record in June of 46.2 million, jumping 46 per cent year-on-year.
Realcommercial.com.au maintained the largest audience of commercial property seekers in Australia across both its website and app.
In FY20, the app was launched 8.6 times more than the nearest competitor.
The Flatmates.com.au iOS app was also launched in FY20, seeing over 400,000 new members throughout the year. The website averages 2.8 million visits each month.
Rental applications received by 1form, the Group’s online application tool for tenants, grew 21 per cent, to more than 3.9 million.
“I am exceptionally pleased with REA Group’s performance this year given the historic nature of FY20,” Group CEO, Owen Wilson said.
“We commenced the year with the negative impact of the Financial Services Royal Commission on the property market.
“This was followed by the catastrophic Australian bushfires, prolonged unrest in Hong Kong and the devastating impact of the COVID-19 pandemic, which created extreme volatility.
“These events have had a profound effect on our markets, but we were able to successfully navigate through these challenges to deliver an excellent result.”
Responding to COVID-19
REA Group accelerated delivery of new products, features and support measures in the wake of COVID-19 restrictions.
“These new features enjoyed huge consumer uptake and helped ensure the market was able to adapt to the rapidly changing market conditions,” Mr Wilson noted.
Measures outlined in the report included: reduced subscription fees, the ability to re-list or re-upgrade for free, campaign extensions for new developments, shorter duration products, and delaying contracted price increases until further notice.
In May 2020, the Group introduced the new product, Pay on Sale, which meant customers could allow their vendors to list their property with no up-front cost, with payment due once the property was sold.
The Group also introduced weekly newsletters, videos and webinars and in March and April over 8000 customers attended the information webinars.
The customer event Prop20, pivoted to an online event, with over 6500 property professionals accessing the exclusive online content.
“I could not have asked for greater commitment, collaboration and care demonstrated by our teams during these unsettling times,” Mr Wilson said.
Building a better future
The Group also established its carbon footprint, and announced plans to become carbon neutral, with science-based targets in line with the goals of the Paris Agreement.
REA Group also achieved its target of 50:50 gender representation within the senior leadership group for the Australian business, with 50 per cent of executive leadership team positions also held by women.
Over one third (34 per cent) of employees were also promoted internally throughout the year, including the promotion of Kul Singh to the executive leadership team in the position of Chief Sales Officer, in January 2020.
CEO Owen Wilson ended his message on a positive note.
“We have a strong balance sheet, a talented workforce and a loyal audience, which will see us emerge an even stronger business when more normal operating conditions return.”