REA Group has announced its results for the nine months ending March 2021, with revenue of $655.9 million and earnings before interest, taxes, depreciation and amortisation (EBITDA) of $415.1 million.
REA Group CEO Owen Wilson said the positive momentum of Australia’s property market had contributed to strong listings growth for the quarter.
“Once again, realestate.com.au set new audience records and delivered over three million buyer inquiries per month, an increase of 82 per cent for the quarter,” Mr Wilson said.
Q3 RESULT
REA noted the Australian residential property market showed strong signs of recovery during the quarter, particularly in February and March.
It said that after a flat January year-on-year (YoY) performance, national listings rose by 8 per cent for the quarter, with Sydney increasing 5 per cent and Melbourne up 13 per cent
Australian residential revenue increased for the quarter reflecting listings growth and an improved product mix.
Audience highlights for realestate.com.au included:
• 12.5 million people visited each month on average, with a record 13.2 million in March;
• 130.7 million average monthly visits, up 47 per cent YoY, with a record of 137.3 million in March;
• 3.2 times more visits than the nearest competitor;
• Average monthly app launches of 59.9 million, up 63 per cent YoY, with a record 63.4 million in March; and
• Total app downloads of 10.8 million, up 10 per cent YoY
Commercial and developer revenue increased due to the continued growth in new project commencements, which were up 14 per cent during the quarter.
Developer revenue benefited from the continued improvement in smaller development launches, which were aided by government stimulus as part of the HomeBuilder scheme.
REA said this was partially offset by a decline in commercial revenues, due to the continued impact of COVID.
Media, data & other revenues were also down modestly during the quarter, with growth in data and media revenues offset by a reduction in developer display revenue due to fewer large-scale developments.
Financial services revenues declined due to a reduction in partnership revenue, with the current NAB agreement performance payments reaching maturity in September 2020.
Operational metrics remained strong with both submissions and settlements experiencing double-digit growth, coupled with an increased broker network.
Asia revenue decreased for the quarter, driven predominantly by Malaysia, which continued to be heavily impacted by movement restrictions as a result of COVID.
Elara, the India-based digital real estate platform REA acquired in October last year, has been consolidated from January 1 2021. It delivered $9.5 million in revenue and generated a $7.3 million EBITDA loss, which was In line with expectations.
The group’s combined share of associates contributed $1.4m to EBITDA, an improvement from the $7m loss in Q3 FY20. This was assisted by a strong performance from Move, Inc, which delivered a 37 per cent increase in revenue in the quarter.
Operating costs (excluding acquisitions) increased by 8 per cent during the quarter, primarily driven by increased headcount, salaries and incentives linked to stronger revenue growth.
PROPOSED REA ACQUISITION OF MORTGAGE CHOICE
On March 29, REA Group announced its proposal to acquire 100 per cent of the shares in Mortgage Choice.
REA said the proposed acquisition aligned with the group’s financial services strategy by leveraging its digital expertise, high intent property seeker audience and data insights across a larger network.
It said that following the completion of necessary regulatory and Mortgage Choice shareholder approvals, the scheme was anticipated to be implemented by July 1, 2021.
The transaction is expected to be funded by an increase in REA’s syndicated debt facilities.
The existing $170 million syndicated debt facility, which is due to expire in December 2021, will be refinanced as part of this process.
CURRENT TRADING
REA said the strength of the residential property market was evident in April, with increased levels of buyer inquiry underpinned by low interest rates, improving consumer confidence and healthy bank liquidity.
National residential listings were up 98 per cent YoY, with an increase in Melbourne of 127 per cent and 116 per cent in Sydney. While the market dynamics are strong, these growth rates are exaggerated by the severe COVID-related declines experienced in April 2020, they noted. Listings in that month were down 33 per cent compared to April 2019.
Developer revenues are expected to be supported by growth in lower yielding developments for the remainder of FY21. Commercial and Asia revenues are expected to increase in Q4 as we cycle over COVID impacted comparatives.
Elara is currently forecast to deliver revenues of $12-17 million in the second half of the 2021 financial year, and an EBITDA loss of $15-20m.
However, REA noted India is experiencing a worsening COVID situation, which it said could negatively impact on Q4 results. It said its priority was to provide the necessary care and support to staff and their families.
Core operating costs for the 2021 financial year are expected to increase marginally on FY20 as revenue-related variable costs are higher than previously expected.
“Conditions are aligned for the Australian property market to continue its positive trajectory for the remainder of 2021,” Mr Wilson said.
“This momentum, combined with strategic investments made throughout FY21, positions REA for a strong finish to the year.”
