Rea Group Ltd · ASX:REA
Rea — FY2023 Earnings Presentation
48 slides from Rea's earnings presentation, Aug 11, 2023
Slide 1: REA Group Investor & Analyst Presentation FY23 ASX Announcement
ASX Announcement 11 August 2023 REA Group Investor & Analyst Presentation FY23 On behalf of REA Group Ltd (ASX:REA) please find attached a results presentation for the year ended 30 June 2023. -ends- For further information, please contact: REA Group Ltd Investors: REA Group Ltd Media: Alice Bennett
Slide 2: Full year results 30 June 2023
REA Group Ltd Full year results 30 June 2023
Slide 3: Agenda
Agenda 1. Financial highlights 2. Property market update 3. Business highlights 4. Financial results update
Slide 4: Financial highlights
Financial highlights Owen Wilson Chief Executive Officer
Slide 5: FY23 core financial results
FY23 core financial results Revenue 1, 2 EBITDA 1, 2, 3 Net profit after tax 1, 2 Reported net profit after tax 2, 4 $1,183m $651m $372m $356m +1% -3% -9% -7% 55% $1.58 -4% $2.82 -9% $260m $59m Operating Dividend per share, Earnings 30 June 2023 Net debt2 EBITDA1, 2, 3 margin FY23 full year per shar
Slide 6: Property market update
Property market update Owen Wilson Chief Executive Officer
Slide 7: Interest rate uncertainty and limited stock impacted new Buy listings
Interest rate uncertainty and limited stock impacted new Buy listings, despite underlying market strength Vendors were reluctant to list given mortgage rate The largest and fastest rate hiking cycle in decades uncertainty and fewer options to buy 8 Cash rate over time1 Monthly new Buy listings vs. 6
Slide 8: Demand remains healthy driven by strong fundamentals
Demand remains healthy driven by strong fundamentals and house prices have returned to growth Buyer enquiry levels normalised in FY23 after record-highs2 Limited supply has seen demand concentrate and house and returned to positive YoY growth in May 20233 prices steadily increasing since February Na
Slide 9: Challenges in the new housing market continue
Challenges in the new housing market continue, and supply is insufficient. Total lending has stabilised but is down YoY Aside from a government stimulus fueled uptick during the New lending is well down YoY, despite an increase in prices pandemic, new dwelling approvals have been trending and sales
Slide 10: Business highlights
Business highlights • Overview and strategy • Audience and consumer • Customer • Data and insights • Financial services • Property.com.au • Global • ESG Owen Wilson Chief Executive Officer
Slide 11: FY23 highlights
FY23 highlights Consumer highlights Customer highlights Strategic investments 12.1m unique audience 1(A) #1 Indian property site 1(D) Australia’s #1 property portal1(B) Premiere+ delivering superior value Increased market leadership in India1(E) 2.7 million Australians visit realestate.com.au Signif
Slide 12: Clear focus on strategic priorities
Clear focus on strategic priorities Audience & Consumer Largest audiences, Engage Australia’s largest audience of most engaged consumers property seekers1(H), driving more leads to our customers. Customer Value Deliver superior value “under one roof” across property advertising, agent marketplace an
Slide 13: Australia's #1 address in property in every market
Australia’s #1 address in property in every market 1(J) Daily audience to realestate.com.au has grown 3.6x faster than the Average monthly Total average Average daily nearest competitor over the last 3 realestate.com.au monthly visits to realestate.com.au years1(M) unique audience on all realestate.
Slide 14: Personalised member experiences driving growth
Personalised member experiences driving growth in consumer engagement and delivering quality leads 20% of members who visit the home +18% YoY 1.4m +71% YOY Audience page engage with Suggested Growth in active Australians used Growth in new Properties1 members2 inspection Flatmates.com.au planner Add
Slide 15: Leveraging the AI opportunity to deliver unique consumer experiences
Leveraging the AI opportunity to deliver unique consumer experiences realEstimate™ AI powered suggestions Building a more accurate Building consumer value with valuation model enhanced data Powered by AI technology, AI innovation, including PropTrack’s Automated Generative AI integrations, Valuation
Slide 16: Customers are embracing premium products
Customers are embracing premium products with Premiere+ delivering superior value Property Advertising Agency Marketplace Agency Services New Premiere+ Helping Unlocking business value inclusions customers win efficiency to help AI-powered Listing their next listing win new listings Optimisation New
Slide 17: New Pro subscription will further unlock seller leads
New Pro subscription will further unlock seller leads and services value in FY24 On-track for delivery in Q2 FY24 A Pro subscription will help customers unlock even more value from realestate.com.au Pro has all the benefits of Flexi, plus new ways for customers to win listings and grow their busines
Slide 18: PropTrack data and solutions powering unique products
PropTrack data and solutions powering unique products and experiences Developing Australia's leading suite of propensity models AVM Accuracy1,2 AVM 1.0 AVM 3.0 Propensity models leverage REA’s deep understanding of the property market to help agents, lenders and brokers improve how they engage and r
Slide 19: Product innovation and brand investment delivering value to broker network
Product innovation and brand investment delivering value to growing broker network Results reflect challenging market conditions Borrowing capacities reduced by approximately 30%1 and a significant market shift with re-financing trending higher Overall Overall marketloan market loancommitments commi
Slide 20: Property.com.au - building Australia's most comprehensive property research site
Property.com.au - building Australia’s most comprehensive property research site 35+ new features added in FY23 Focussed on providing consumers comprehensive and readily accessible information to guide and inform their property journey and improve seller and buyer confidence Achieving strong organic
Slide 21: REA India – the #1 property portal in India
REA India – the #1 property portal in India 1(D) Housing.com visits 1.3x the closest competitor Audience leadership continues to grow in FY231(D) Increase in housing.com audience market leadership position1(E) Average monthly site visits (m)1(F) with continued focus on SEO, enhanced mobile experienc
Slide 22: Global investment
Global investment PropertyGuru revenue was up 25% in 9 months to March1 and 16% in Move revenues have come under pressure in FY23 reflecting the March quarter2. CY23 revenue guidance is for 18-25% growth2 the more challenging macroeconomic environment Marketplaces Revenue (S$m)1 Revenue (US$m)3 23%
Slide 23: Committed to a sustainable future
Committed to a sustainable future Responsible business practices driving change Environment Social Governance • REA Group is targeting net zero • Submitted the Group’s first • Top three placing for the second emissions across scope 1, 2 and 3 by Reconciliation Action Plan to consecutive year at the
Slide 24: Well positioned for growth in FY24 and beyond
Well positioned for growth in FY24 and beyond • Pricing: Residential re-contracting completed, with an average national buy • Pricing: Re-contracting for residential Buy depth contracts completed, with price rise of 13% and rent price rise of 8% locked in for FY24. opportunity for AI capability to s
Slide 25: Financial results update
Financial results update Janelle Hopkins Chief Financial Officer
Slide 26: Core financial operating results
Core financial operating results Core results ($m)1, 3 FY23 FY22 Growth $ Growth % Group Revenue1, 2 Revenue2 FY23 1,183.2 Australia 1,104.4 1,115.6 (11.2) (1%) India 78.8 53.9 24.9 46% FY22 1,169.5 Group revenue 1,183.2 1,169.5 13.7 1% FY21 927.8 Operating expenses FY20 820.3 Australia (388.2) (384
Slide 27: Statutory (reported 4E) vs core results
Statutory (reported 4E) vs core results Statutory Significant Core Significant items1 FY23 ($m) (reported 4E) items1 results1 • Group operating expenses Group revenue2 1,183.2 - 1,183.2 o Integration costs for Mortgage Choice and REA India Group operating expenses (549.8) 17.5 (532.3) o Australian o
Slide 28: Residential revenue resilient through cyclical downturn
Residential revenue resilient through cyclical downturn With the impact of a sharp listings decline nearly offset by double-digit Buy yield growth Residential revenue ($m)1 Residential national new buy listings YoY change3 -1% 80% 60% 814 805 40% 54% 20% - 22% 8% 11% 11% 6% 2% 5% (20%) 0% -12% (40%)
Slide 29: Strong Premiere+ take-up drives yield growth
Strong Premiere+ take-up drives yield growth With Premiere+ now the most penetrated depth product Residential buy listings penetration (depth)1 Record Premiere Residential Buy listing depth penetration • FY23 has seen record Premiere penetration (including Premiere+) • Growth assisted by the success
Slide 30: Commercial & Developer Media, Data & Other
Commercial & Developer Media, Data & Other Revenue up 4% with growth in Commercial partially offset by Growth in Data & Other revenues offset by lower Developer project launches and revenue declines in Media revenues Commercial & Developer revenue Developer project launches YoY Media, Data & Other r
Slide 31: Financial Services impacted by challenging market
Financial Services impacted by challenging market Slowing market conditions driving lower settlements in FY23 Operating revenue ($m)1, 3 Net revenue ($m)1, 2 Settlements ($bn)4 -13% YoY -13% -8% 25.5 79 20.0 22.0 69 66 61 FY21 FY22 FY23 Brokers4, 5 FY22 FY23 +6% YoY FY22 FY23 1,066 1,002 Operating r
Slide 32: Exceptional India revenue growth
Exceptional India revenue growth Driven by continued customer and audience growth for Housing.com, and Housing Edge adjacency products India revenue ($m)1 India EBITDA ($m)1 79 FY22 FY23 46% Housing.com audience (m)2, 3(P) 24 54 Adjacency 12 +28% YoY 55 42 Property & Advertising 20 (35) (39) 15 12 1
Slide 33: Equity accounted associates
Equity accounted associates Total share of associate profits reduced from $3m gain in FY22 to a $16m loss in FY23 Move, Inc. ($m)1, 2 PropertyGuru ($m)1, 3 Other ($m)4 FY22 FY23 FY22 FY23 14 (3) (5) (6) FY22 FY23 (7) (6) • Revenue down 15% to US$602m arising • PropertyGuru reported 16% revenue • Rea
Slide 34: Australian operating cost growth contained to 1%
Australian operating cost growth contained to 1% Australia operating results growth1, 2 Operational expenses ($m)1 +7% 532 23% 499 118 REA India India 89 18% excl. Mortgage Choice 11% 22% +1% COGS 410 414 8% 21 20 40 41 Opera tions & a dm inistra tion (incl. 11% 1% 30 36 tra vel & entertainment and
Slide 35: Increased investment in strategic initiatives
Increased investment in strategic initiatives Depreciation and amortisation ($m)1 Group capital expenditure ($m) FY22 FY23 FY24 140.0 25% REA Group ($m) Actual Actual Forecast 118 120.0 Australia 20% Core depreciation & amortisation1 67 69 82-86 100.0 95 Offic e fit out costs Depreciation of leases
Slide 36: Strong cash position after debt repayment during the year
Strong cash1 position after debt repayment during the year Group cash flow ($m) Strong operating cash flows • Operating cash flow of $473m, with free cash flow of $357m Continued strategic investment (653.8) • Capex for PPE and intangible assets of $118m 1,309.8 - Strong liquidity position enabling
Slide 37: Current trading
Current trading • July National residential new Buy listings were down 5% YoY, with Sydney and Melbourne listings both increasing by 9%. YoY growth rates in Q1 will reflect strong prior period listings volumes with prior year volumes weaker in Q2. • Residential Buy yield growth is anticipated to gro
Slide 38: Q&A
Q&A Owen Wilson Chief Executive Officer Janelle Hopkins Chief Financial Officer
Slide 39: Supplementary Information
Supplementary Information Where 12 million Australians buy, rent & sell
Slide 40: Core vs. reported reconciliation
Core vs. reported reconciliation Growth Core vs. reported reconciliation FY23 FY22 % Trail commission integration adjustment Core operating income 1,183.2 1,169.5 1% • Adjustment in prior year for broker remuneration alignment Trail commission integration adjustment - (9.3) (100%) Reported operating
Slide 41: Cash flow reconciliation
Cash flow reconciliation Cash flow reconciliation ($m) FY23 FY22 Growth % EBITDA1 635.0 673.5 (6%) Free cash flow Working capital movement 13.9 57.1 (76%) • Working capital unfavourability mainly due to higher prepaid Net interest paid (10.1) (6.0) (68%) expenses and a lower increase in accounts pay
Slide 42: Revenue breakdown
Revenue breakdown Revenue category ($m)1, 2 FY23 FY22 Growth % Australia Depth revenue3, 4 885.1 891.1 (1%) Subscription revenue4 61.4 58.6 5% Media, Data & Other 97.0 96.9 0% Financial Services5 60.9 67.2 (8%) Legacy Asia3, 6 - 1.8 (100%) Australian revenue 1,104.4 1,115.6 (1%) India 78.8 53.9 46%
Slide 43: CampaignAgent results
CampaignAgent results CampaignAgent results ($m) FY231 FY22 Growth Acquisition of CampaignAgent Total revenue 11.3 6.9 64% • In July 2023, REA Group moved to 100% ownership of Total operating income 11.3 6.9 64% CampaignAgent for cash consideration of $39m, following the Group’s initial acquisition
Slide 44: MyFun revenue reconciliation
MyFun revenue reconciliation MyFun Australia FY23 Australia reclass (restated) Change in revenue category presentation Residential 788.7 16.2 804.9 • Following the divestment of Malaysia, Thailand and Hong Kong Commercial & Developer 140.9 0.7 141.6 operations in H1 FY22, management assessed the rem
Slide 45: Financial comparatives
Financial comparatives Core Financial Results1 Reported FY19 FY20 FY21 FY22 FY23 FY23 Group results $m Growth % $m Growth % $m Growth % $m Growth % $m Growth % $m Total revenue2 874.9 8% 820.3 (6%) 927.8 13% 1,169.5 26% 1,183.2 1% 1,183.2 Total operating income 874.9 8% 820.3 (6%) 927.8 13% 1,169.5
Slide 46: Glossary
Glossary Buyer enquiries Buyer enquiries include email enquiry, phone number reveals, applied for inspection, SMS agent, and Developer brochure downloads. Cash Cash includes cash and cash equivalents EBITDA Earnings before Interest, Tax, Depreciation and Amortisation excluding contribution from asso
Slide 47: Audience metric sources
Audience metric sources A Nielsen Digital Content Ratings (Monthly Tagged), Jul 22 – Jun 23 (average), P2+, Digital (C/M), text, realestate.com.au, Unique Audience. B Nielsen Digital Content Ratings (Monthly Total), Jul 22 – Jun 23, P2+, Digital (C/M), text, Real Estate/Apartments subcategory, Uniqu
Slide 48: Disclaimer
Disclaimer Visit our The information in this presentation is in summary form only and does not purport to be comprehensive or complete. It contains information that has been derived from publicly available sources that has not been independently verified. This presentation should be read in conjunct