REA Group reports Q1 results, revealing strong growth

REA Group delivered strong growth across its Australian segments during the three months to September 30, with revenue, excluding acquisitions, increasing by 22 per cent year-on-year to $264 million.

In this week’s ASX announcement of its Q1 results, the Group also reported Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $158 million; a 24 per cent year-on-year increase.

REA Group Chief Executive Officer, Owen Wilson, said REA had delivered an impressive result given prolonged lockdowns in Sydney and Melbourne.

“Our performance reflects the continued value our premium listing products are delivering to our customers, and’s clear position as the number one place to search, find and finance property,” Mr Wilson said.

“Our teams have made excellent progress across a number of key initiatives including the integration of our Mortgage Choice and Smartline businesses, the roll out of new products such as our Connect offering and our integrated rental applications platform, all of which provide the foundations for continued growth.”

Q1 result 

The announcement revealed the Australian residential property market had shown resilience during the quarter. 

After modest year-on-year declines in July, national listings increased 11 per cent for the quarter, with Sydney down 7 per cent and Melbourne up 79 per cent due to lockdown impacts in the prior period.

In the announcement, REA Group said Australian residential revenue increased for the quarter, benefiting from increased depth and Premiere penetration, listings growth, the contracted price rise from 1 July, and continued growth in add-on products.

Commercial and developer revenue increased despite the negative impact of lockdowns in Sydney and Melbourne, according to the announcement.

“Media, data and other revenues were up during the quarter, with year on year growth in data and media revenues partially offset by a reduction in other revenue, with COVID continuing to negatively impact,” the announcement said.

“In financial services, the Smartline and Mortgage Choice businesses experienced strong growth in operating revenues, benefiting from continued growth in settlements and brokers. The Mortgage Choice integration is progressing well and is expected to be completed by Q3 FY23.

“The Indian market has rebounded following the negative COVID impacts experienced in the second half of FY21, with REA India achieving strong year-on-year revenue growth.”

The announcement revealed core operating costs, excluding acquisitions, increased by 13 per cent during the quarter.

“This reflects a combination of continued investment to deliver strategic initiatives, which has seen higher headcount and salaries in a tight labour market and reduced operating costs in the prior period as the Group navigated through COVID uncertainty.”

The Group’s combined share of associates contributed $1 million to EBITDA, down from $3 million in Q1 FY21, according to the results.

“Move, Inc. continued to deliver strong revenue growth, up 30 per cent year-on-year, driven by both traditional lead generation and referral model growth,” the report said.

“Revenue growth was more than offset by planned reinvestment spending to drive long-term growth, including in areas such as marketing and employee-related costs.

The reduction in contributions from associates also reflects the inclusion of equity accounted losses from Simpology, Realtair, CampaignAgent and PropertyGuru.”

Debt refinance

The Group announced it had strengthened its liquidity position by entering a new syndicated debt facility in September 2021.

“The new $600m syndicated facility, which replaces the Group’s previous facility, has two tranches of $400m and $200m which mature in September 2024 and September 2025 respectively.

“As at 30 September, the Group’s total drawn debt was $414 million , with $186 million of the new facility undrawn.” extends audience leadership position remains Australia’s number one place for property, according to the announcement, attracting a high intent audience of loyal property enthusiasts looking to search, find and finance their property needs.

“On average, 12.6 million people visited each month during the quarter, with a record 7.3 million people choosing to use our site exclusively in July. Buyer inquiries also reached record levels during the quarter, up 61 per cent year-on-year, providing our customers with an increasing volume of qualified leads,” said Mr Wilson.

Audience highlights for included:

  • 12.6 million people visited each month on average
  • 129 million average monthly visits, up 13 per cent year-on-year
  • 3.3x more visits than the nearest competitor each month on average
  • Average monthly app launches of 58.5 million, up 17 per cent year-on-year; and
  • Total app downloads of 11.3 million, up 9 per cent year-on-year.

Current trading

Residential property market conditions are positive, with high levels of buyer inquiry underpinned by continued low interest rates and healthy bank liquidity.

REA Group reported October national residential listings were up 16 per cent year-on-year, with an increase in Melbourne of 20 per cent and 29 per cent in Sydney. 

“Based on the current market outlook, and excluding the impact of REA India and Mortgage Choice, the Group anticipates high-single digit core operating cost growth,” the announcement said.

This reflected increased investment to deliver the Group’s strategic initiatives, combined with a tight labour market driving higher salary inflation. 

“As vaccination milestones are met and restrictions continue to be lifted, we expect property markets across Australia to revert to normal operating settings. Buyers remain out in force and this strong demand is likely to fuel ongoing positive momentum,” said Mr Wilson.

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Nicole Madigan

Nicole Madigan is Senior Journalist and Content Producer for Elite Agent.