Domain suffers $6.2m net loss after tax due to separation costs as it looks to merger with Nine

Domain has reported revenue of $286.6m and a net loss after tax of $6.2m in its statutory results. The loss can largely be attributed to its separation from Fairfax, which saw it list on the ASX in November.

Domain, however, said it had much to look forward to – including incoming CEO Jason Pellegrino starting his role at the end of the month, the proposed merger between parent company Fairfax and Nine, and the results of a number of key marketing initiatives. 

Domain competes against REA Group, which is majority owned by News Corp

Unlike main competitor REA Group, which specifically broke out how much it spent on marketing in its results to reveal a 23% increase over the financial year, Domain instead focused on its marketing initiatives, rather than the numbers.

“Domain is making smart investments in brand and marketing initiatives to drive business performance,” its annual report said. “This includes above-the-line brand marketing including extensive outdoor advertising, sponsorships such as popular TV show The Block [on Nine], and our recently announced multi-year Platinum Partnership with Cricket Australia as presenting partner of Men’s Test Cricket.”

Much like its half-year results – where the real estate listings and content company announced a $3.4m net loss after tax and revenue of $112.7m in its statutory results – for its full-year results, Domain has instead focused on its pro-forma results, which provide a view of what the financials would look like had the company been a separately listed entity for the full financial year.

In the pro forma results, which exclude significant items, Domain reported revenue of $357.3m, up 11.5% and EBITDA (earnings before interest, tax, depreciation and amortisation) of $115.7m, up 12.5%.

The company’s net profit after tax in its pro forma results was $52.9m, up 7.7% and the company carries a net debt of $126.5m.

Competitor REA Group had revenue of $807.7m for the most recent full financial year, up 20%, while EBITDA (earnings before interest, tax, depreciation and amortisation) was up 22% to $463.7m.

REA Group’s net profit after tax was $279.9m, up 23% from the year prior.

Domain’s executive chairman Nick Falloon, who will resume his previous role as non-executive chairman when incoming managing director and CEO Pellegrino joins at the end of this month, said the results were in line with market expectations.

“The business is strongly positioned as an Australian real estate media and services platform with excellent growth prospects,” he said in an announcement to the ASX this morning.

Falloon also used the results as an opportunity to promote Pellegrino’s professional pedigree.

Pellegrino starts at Domain on 27 August

“We are thrilled to welcome Jason Pellegrino as our new managing director and CEO. The Domain Board ran a comprehensive global search for the role, attracting a strong field of international and local candidates,” he said.

“Jason’s leadership acumen and track record for inspiring and driving performance at Google will be great for Domain and our many talented people as we enter our exciting next stage of growth.”

The company, he said, is also looking forward to the proposed merger between its majority shareholder Fairfax and Nine.

“We welcome the proposed merger of Fairfax Media with Nine Entertainment Co, announced in July, which is subject to approvals. We only see considerable upside for Domain through the additional marketing and audience reach of the combined businesses.”

Similar to main competitor REA Group, which released its full-financial-year results to the ASX on Friday, Domain noted the mixed conditions in the Australian residential property market over the past 12 months.

Domain, much like REA Group, was able to grow revenue from the residential sector by increasing the yield on its listings.

“Residential revenue increased 19.9% to $172.5m,” Falloon said. “This is a strong result from residential in a mixed listings environment nationally.

“Yield increases and higher depth product penetration supported a 24% increase in residential depth revenue, which was the key driver of the revenue growth. For the full year, depth contributed 82% of residential revenue, with the remaining 18% from subscription.”

Print revenue for the company declined 12.6%, however EBITDA was only down 3.4% due to cost-cutting initiatives.

“Cost initiatives contributed to a 15% reduction in expenses year-on-year, supporting EBITDA growth in the second half. There is a continued focus on cost efficiencies relating to print and distribution.”


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