News’s parent company REA Group sees revenue and operating costs climb

REA Group, the online real estate advertising company and parent group of, has reported a 16% jump in revenue in its Q3 results, compared to the same period last year, noting the group’s growth comes despite “a market of lower listing volumes, declining dwelling commencements in Australia, as well as continuing soft market conditions in Malaysia and Hong Kong”.

The company’s revenue for the nine months to 31 March was $493m, according to a statement on the ASX, compared to $424m in the corresponding period last year. 

Earnings before interest, tax, depreciation and amortisation (EBITDA) also climbed from $288m in the first nine months of last financial year to $286m – a jump of 15%. Free cash flow was up 19%, from $143m to $170m.

The growth was somewhat offset by increased operating expenses, which were $176m after Q3 of the 2016 financial year, and are now up to $207m.

“The rate of operating expense growth is due to increased marketing costs and the consolidation of iProperty for the full quarter. We expect the phasing of costs to be higher in Q4 due to increased investment in product innovation and associated marketing expenses,” the ASX statement said.

Some of these expenses include the launch of Front Page, a new product which gives customers of the option to prominently advertise their property on the site’s homepage; and REA’s Lifestyle video and editorial content offering which aims to give consumers “access to the information, insights and inspiration they want to transform their property into their dream home”.

While the initiatives are somewhat responsible for the climbing operating expenses, REA Group chief executive officer Tracey Fellow said they also accounted for the strong returns the company experienced this quarter.

“We’ve been able to deliver a strong result this quarter by launching exciting consumer experiences and delivering new products which provide value to our customers,” she said.

“ continued to grow its leadership position with the largest and most engaged audience of property seekers in Australia. Average monthly visits were more than 2.6 times that of our nearest competitor, reaching a record high in March of over 55 million visits. Consumers also spent over 7.8 times more time on our site than any other property site,” she said, citing Nielsen Online Market Intelligence figures.

The company said – excluding the impact of iProperty – it anticipates the rate of full-year revenue growth will exceed the rate of cost growth, however it did warn dwelling commencements may continue to trend lower as a result of changes to government policy and lending practices.


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