Domain’s digital revenues soar despite slowing property market
Domain Holdings has seen digital revenues jump 96% but a $178m write off in goodwill sent the business into loss for the first half of the 2018-19 financial year.
While the majority Nine-owned real estate media group reported a $156.4m net loss after tax, investors greeted the news enthusiastically and pushed the company’s shares up 18% in the hours following the announcement.
Domain CEO Jason Pellegrino said: “We are confident in Domain’s long-term growth prospects”
The write down in the company’s goodwill was due to lower listing volumes in Australia’s key housing markets as the property sector slows, which saw the group’s revenues fall 0.3% to $183.9m and EBITDA drop 7.1% to $52.7m.
Investors were cheered by the company increasing listing per income, shown by 0.3% rise in revenue to $183m despite the lower volumes and CEO Jason Pellegrino’s assurances the goodwill write down was only a short term measure.
The company’s shift to programmatic trading in its media sales division, which saw around 24 jobs go as a result of the change, cost the company however with a 10.1% decline in revenue, which Pellegrino claimed had been made worthwhile by a greater fall in costs.
“As we highlighted in August, we made the strategic decision to streamline digital media sales by transitioning to a fully programmatic advertising offering,” Pellegrino told investors.
“This had a significant impact on revenue growth in this segment. The new model is lower revenue but much lower cost, providing increased margin. H1 reflects early results.”
Print also suffered in the results with a 24% revenue slump, however Pellegrino said: “This result was affected by market cyclicality, somewhat offset by disciplined cost management which improved margin and contained the EBITDA decline at 10%.”
Core digital products however nearly doubled their income from $68.8m to $135.2m this year. Underlying EBITDA for digital was $55.9m while print was $9.5m
Despite the weakness in the real estate market, residential advertising still remained strong with revenue increasing 8.6% to $94m
“This is a solid result from Residential in the context of lower listings volumes in key markets, where auction volumes declined 20% in Sydney and 19% in Melbourne,” said Pellegrino. “Nationally, Domain new listings declined low-to-mid single digits.”
Overall, Pellegrino remained optimistic about Domain’s long term prospects despite the downturn in volumes, saying: “Today’s results are testament to Domain’s strong fundamentals and competitive strength as a leading Australian property technology and services business. Product innovation is at the heart of our great consumer experiences.
“Domain has effective listings parity and record-level audiences. We reach 7.2 million Australians across all platforms. We have a large exclusive app audience, with app downloads up 13% year on year. We are excited by the merger of Fairfax and Nine and the considerable marketing and audience boost it provides to our business.
“We are confident in Domain’s long-term growth prospects and have a strategy in place to build on our solid foundation, scale and capability as we enter our next phase of growth.”
