Domain’s first full-year results with Jason Pellegrino at the helm reveal a $137m loss
Jason Pellegrino’s first full-year report at the helm of Domain has delivered a 6% revenue drop to $335.6m, largely due to Australia’s dwelling stock sitting at its lowest point in more than 20 years.
But the loss was likely offset by a pivot in the business model at the beginning of the housing market decline, which saw Domain focus on boosting revenue streams and saw it report a 12% growth in residential yield and a 0.5% increase in revenue across the sector. The focus change is a direct result of a new listings drop of 12%, and an auction drop of 25% in Sydney and 28% in Melbourne.
Earnings before interest, tax, depreciation and amortisation (EBITDA) declined 15% to $98.0m, and the business reported a statutory net loss of $137.6m. The business also took a non-cash impairment charge of $178.8m off the back of lower growth assumptions.
Domain’s results come as News Corp-owned REA Group, Domain’s direct competitor in the Australian market, posted an 8% revenue increase for FY19, for a total of $874.95m, and a 6% lift in net profit from core operations to $295.5m.
The acquisition of commercial listing service Commercial View helped Domain deliver a 30% underlying commercial revenue growth, and a focus on Domain Loan Finder and Domain Insure, as well as an increased stake in Homepass, has helped the real estate platform in the tough conditions.
Domain FY19 revenues (Click to enlarge)
The biggest drop for the business was in print, where revenues fell 30% for a revenue of $54.3m. Domain’s print products include the Allhomes magazine and editorial content across Nine titles including The Sydney Morning Herald, The Age and The Australian Financial Review, as well as Domain Review in Melbourne. The company divested its share in the Star Weekly titles in Victoria as of June 28.
Digital revenue increased by 0.2% for a total of $252.5m, providing the bulk of the income for Domain. That includes their agent services, open-for-inspection app Homepass, Pricefinder and CRM My Desktop, which delivered a revenue increase of 15%.
Savings were apparent across the business including a 1% drop in expenses and a 26% cut in production and distribution costs, as well as a 5% drop in underlying expenses.
Pellegrino has been with the business since August 2018
Pellegrino said in his report that the business had faced ‘a test like never before’ in the face of the FY19 housing market conditions. He named the Royal Commission into the financial services industry and APR’sA regulation of investor and interest-only loans, as well as the declining house prices, as the biggest hits to Domain’s business, but said the increasing yields and uptake in premium products proved the business had positioned itself correctly to weather the storm.
“In FY19 we established our purpose as ‘inspiring confidence in all of life’s property decisions’ and focused on our three key strategic objectives of growing our core listing business, growing new revenue in consumer solutions and simplifying and optimising the business,” said Pellegrino.
Pellegrino flagged that the business moved to a more streamlined digital media sales offering for FY19, transitioning to a programmatic advertising offering. The new model delivers lower revenue, but also has a lower cost and improved margins, according to Pellegrino.
In December, Domain restructured shortly after Nine completed its merger with Fairfax, with chief sales officer Tom Ainsworth leaving the business as a decision was made to split into two organisational structures – B2B and B2C – with one headed up by chief commercial officer Tony Blamey and and the other by LJ Hooker’s Jason Chuck as chief customer officer.
Domain FY19 results by segment (Click to enlarge)
In addition, Maty Paule was promoted from director product management to chief product officer, which Pellegrino said has given the business the right management team to lead it into the next stages of growth.
The results also saw Domain announce the next step in its ‘strategic partnership’ with Nine. After the Fairfax merger, Nine took a 60% controlling stake in Domain, although the media company largely leaves the property business to its own devices. Now the pair will be partnering on Your Domain, a Saturday morning TV show. It will be hosted by Nine stalwart Shelley Craft and ex-Domain finance editor Chris Kohler who left the business to join the Sky News and News Corp joint venture Your Money, before moving to a weekend reporting role at Sky News after its closure. The show will premiere on Nine on September 7 at 10:00am and focus on “everything viewers need to know about property”.
Shelley Craft and Chris Kohler will host Your Domain on Nine
“Inspiring confidence in all of life’s property decisions is at the heart of what Domain does. We’re thrilled that, through the strength and expertise of Nine in television production, we will now have a dedicated program to complement our digital and publishing footprint,” Pellegrino said.
“Whether Australians want to know the best way to increase the value of their property, get their house ready for sale, choose an agent, learn about the market or find out about the longer-term outlook for their suburb – Your Domain has it covered.”
I thought Chris Kohler was a journalist on economic policy and business .
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