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REA Group financial results show increased marketing spend and rise in revenue

The REA Group financial results have revealed the company increased its marketing spend by 23 per cent in the 2018 financial year, up from $60.415 million to $74.483 million.

With the removal of the acquisition costs, REA Group showed a revenue increase of 20 per cent to $807.7 million. EBITDA (earnings before interest, tax, depreciation and amortisation) was up 22 per cent to $463.7 million, and net profit increased to 23 per cent – $279.9 million.

Despite tougher market conditions, REA’s revenue growth was driven by a 21 per cent increase in the Australian market, but the media side of the business showed only a four per cent increase, due to ‘declining project commencements and display advertising on content sites’ according to an ASX announcement.

In the FY18 results, REA Group did not include “significant non-recurring items” including transaction costs relating to acquisitions, which removes the funds associated with acquisitions. This includes realestate.com.au’s acquisition of an 80.3 per cent stake in mortgage broking franchise Smartline – putting the company in line for a financial services offering. The Financial Services business delivered revenue of $29.3m and EBITDA of $10.8m.

The results also highlighted the company’s position over Domain, with realestate.com.au claiming 2.6 times more monthly visits and the group saying their consumers spend 3.8 times longer in the realestate.com.au app.

Speaking to investors, CEO Tracey Fellows declined to speculate as to how the Nine and Fairfax merger would increase the competition from Domain over the next few years.

“We have had an excellent year, delivering double-digit growth. We’re giving consumers and customers even more reasons to come back to us by creating better and more personalised property experiences,” said Ms Fellows.

“In Australia, realestate.com.au continues to be the number one place for property, with 2.6 times the monthly visits of our nearest competitor. We have the largest, most engaged audience across every device, on every screen size.

On 1 June 2018, REA Group acquired Hometrack Australia, a residential property data company.  Hometrack products include property data analytics and insights, customised data platforms and an Automated Valuation Model (AVM). It is forecast to deliver revenue between $14m to $16m and EBITDA between $6m to $7m in the 2019 financial year.

“It’s been a year of unprecedented product launches focused on delivering value for our customers. This has been led by our new suite of Agent Edge products, providing onsite branding and connecting customers with potential sellers,” said Ms Fellows.

 

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