Rea Group Ltd · ASX:REA
Rea — H1 FY23 Earnings Presentation
44 slides from Rea's earnings presentation, Feb 10, 2023
Slide 1: REA Group Investor & Analyst Presentation H1 FY23
ASX Announcement 10 February 2023 REA Group Investor & Analyst Presentation H1 FY23 On behalf of REA Group Ltd (ASX:REA) please find attached a results presentation for the half-year ended 31 December 2022. -ends- For further information, please contact: REA Group Ltd Investors: REA Group Ltd Media:
Slide 2: Half year results
REA Group Ltd REA Group Ltd Half year Half year results results 31 December 2022 31 December 2022 Changing the way the world experiences property
Slide 3: Agenda
Agenda 1 2 3 Business Highlights Financial Results update Q&A session
Slide 4: Business Highlights
Business Highlights Owen Wilson Chief Executive Officer
Slide 5: Half year core financial results FY23
Half year core financial results FY23 Revenue1, 2 EBITDA1, 2, 3 Net profit after tax1, 2 Reported net profit after tax2, 4 $617m $359m $205m $202m +5% -2% -9% -9% 58% 75¢ flat YoY 155¢ -9% $142m $172m Operating FY23 interim dividend Earnings 31 December 2022 Net debt2 EBITDA1, 2, 3 margin per share
Slide 6: Property market update
Property market update Interest rates have risen rapidly off emergency settings, uncertainty is driving lower new Buy listings Quarterly new national Buy listings3 are down Interest rates rising for the first time in 11 years YoY and tracking below 2018 levels Interest 8% Cash rate over time1 rates
Slide 7: Demand is slowing, although remains at healthy levels
Demand is slowing, although remains at healthy levels Enquiry levels have normalised following unprecedented demand Key enquiries per listing have reduced from the peak, An average of 1.8m monthly buyer enquiries in H1 but remain in line with or above pre-COVID levels FY234, up 14% on pre-COVID leve
Slide 8: Delivery of key milestones
Delivery of key milestones Consumer highlights Customer highlights Strategic investments 12.1m unique audience 1 Australia’s #1 property portal2 Record Premiere depth penetration Integration on track and in final stages 2.5 million Australians visit realestate.com.au Superior value realised with sig
Slide 9: Clear purpose & strategic focus
Clear purpose & strategic focus Largest audiences, Consumer Experiences most engaged consumers Customer Value Property Data Building the next generation Financial Services marketplaces Global Superior Unparalleled customer value data insights 8
Slide 10: Strong momentum behind strategic priorities
Strong momentum behind strategic priorities Audience & Customer Value Data & Insights Financial Services Global Consumer Deliver superior value Build Australia’s Be Australia’s #1 retail Be India’s undisputed #1 Engage Australia’s “under one roof” leading property data, broker business and property
Slide 11: Australia's #1 address in property in every market
Australia’s #1 address in property in every market1 Daily audience to realestate.com.au Average monthly Total average Average daily has doubled over the last 3 years8 realestate.com.au monthly visits to realestate.com.au unique audience on all realestate.com.au on unique audience on Then Now (Oct -
Slide 12: Personalised consumer experiences driving demand and engaging sellers
Personalised consumer experiences driving demand and engaging sellers Rent Buy Sell High intent members Supply 1 in 4 properties Demand 3.8x more likely to tracked2 enquire if using Property owner Membership tools and suggested properties2 experiences stimulating experiences driving high value selle
Slide 13: Superior customer value delivering results in all market conditions
Superior customer value delivering results in all market conditions #1 place to Property Advertising advertise Offering the most comprehensive marketing solutions property1 including Unlimited Premiere, Coming Soon and Listings Bump - supporting customers in all property market conditions Record Pre
Slide 14: Unique data powering products & experiences
Unique data powering products & experiences while delivering double digit revenue growth Strong brand growth in market Unique PropTrack data engaging consumers and driving audience, while powering core products and experiences Visits to PropTrack insights up 129% YoY1 Innovative mortgage valuation s
Slide 15: Brand and product investment driving financial services network growth
Brand and product investment driving financial services network growth, despite market challenges Broker recruitment growing the network Strong value proposition realised as part of REA Group with trust in the Mortgage Choice brand and new products and services 94 new brokers joined network1 and Mor
Slide 16: Property.com.au's data-rich research experience engaging consumers
Property.com.au’s data-rich research experience engaging consumers Audience growth Market traction in under 12 months Marketplace launch Property.com.au has continued to grow unique Property.com.au is the strongest consumer facing Successfully launched transformative product audience since launching
Slide 17: India's economy continues to grow at a rapid pace
India’s economy continues to grow at a rapid pace, despite global uncertainty India’s GDP growth is expected to be highest among Residential real estate supply has surpassed pre all major global economies pandemic levels and sales have rebounded GDP growth (%)1 Sales & Launches and Inventory overhan
Slide 18: REA India – the #1 property portal in India
REA India – the #1 property portal in India1 Housing.com visits now 1.6x the closest competitor6 Site visits (m)7 Strong hold on audience leadership 1.1 1.2 1.3 1.6 1.1 Housing.com held its position as India’s #1 property site1 Multiplier8 driven by strong SEO focus, improved mobile experience 19.8
Slide 19: Global investment
Global investment PropertyGuru Group delivered 44% revenue growth in 9 months Move revenues have come under pressure in H1 reflecting the to September with CY22 revenue growth guidance of 34-37%1 more challenging macroeconomic environment Revenue (S$m)1 Revenue (US$m)2 28% 46% 112% +14% CAGR 3 YoY $
Slide 20: Committed to a sustainable future
Committed to a sustainable future Responsible business practices driving change Environment Social Governance Strengthened commitment to An inclusive and great place to work Identifying opportunities to environmental initiatives improve ESG initiatives Achieved 87% employee engagement in Australia C
Slide 21: Property Market Outlook
Property Market Outlook
Slide 22: Financial Results update
Financial Results update Janelle Hopkins Chief Financial Officer
Slide 23: Core financial operating results
Core financial operating results Core results ($m)1, 2, 3 H1 FY23 H1 FY22 Growth $ Growth % Group Revenue1, 2 Revenue2 H1 FY23 617.3 Australia 581.0 565.9 15.1 3% India 36.3 24.5 11.8 48% H1 FY22 590.4 Group revenue 617.3 590.4 26.9 5% H1 FY21 430.4 Operating expenses H1 FY20 440.3 Australia (187.0)
Slide 24: Statutory (reported 4D) vs core results
Statutory (reported 4D) vs core results Statutory Significant Core H1 FY23 ($m) (reported 4D) items1 results Group revenue1, 2 617.3 - 617.3 Significant items1 • Operating expenses Group operating expenses (265.2) 6.8 (258.4) o Integration costs for Mortgage Choice o Australian organisational restru
Slide 25: Continued growth in Residential revenue
Continued growth in Residential revenue Double-digit Buy yield growth more than offsetting the softer listings environment Residential new national buy listings YoY change2 Residential revenue ($m)1 80% 54% 60% 40% +5% 22% 8% 11% 11% 20% 6% 5% 425 0% 2% 406 - -21% (20%) (40%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 26: Record Premiere penetration
Record Premiere penetration Yield growth driven by price, depth and Premiere+ Residential buy listings penetration (depth)1 Record Premiere Residential Buy listing depth penetration • H1 FY23 has seen record Premiere penetration across all states • Growth assisted by the success of customers upgradi
Slide 27: Commercial & Developer Media, Data & Other
Commercial & Developer Media, Data & Other Revenue up 5% with growth in Commercial offset by lower Growth in Data revenues offset by project launches in Developer declines in Media revenues Commercial & Developer revenue Developer project launches YoY Media, Data & Other revenue ($m) ($m)1 change +5
Slide 28: Financial Services impacted by slowing market
Financial Services impacted by slowing market Slowing market conditions driving lower settlements Financial Services revenue ($m)1, 2 Settlements ($bn)3 -11% YoY 13.0 11.6 -14% 10.6 41 35 H1 FY21 H1 FY22 H1 FY23 Brokers4 YoY +6% 1,037 H1 FY22 H1 FY23 1,002 978 H1 FY22 FY22 H1 FY23 Financial Services
Slide 29: 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 ($m) India EBITDA ($m)1 36 H1 FY22 H1 FY23 Housing.com audience (m)3, 5 48% 24 12 Adjacency +36% YoY 6 24 (15) 18 Property & 19 Advertising (23) 14 53%
Slide 30: Equity accounted associates continued to invest
Equity accounted associates continued to invest Total share of associate profits reduced from $2m gain in H1 FY22 to a $12m loss in H1 FY23 Move, Inc. ($m)2 PropertyGuru ($m)1, 5 Other ($m)3 H1 FY22 H1 FY23 H1 FY22 H1 FY23 8 (2) (2) H1 FY22 H1 FY23 (3) (7) (4) • Revenue down 10% to US$315m arising •
Slide 31: Australian operating costs increase 7%
Australian operating costs increase 7% Australia operating results growth1 Operational expenses ($m)1 +15% 258 23% 225 59 India REA India 22% 18% excl. Mortgage Choice 39 11% 8% 199 30 COGS 7% 186 30 +7% 10 12 20 11% 16 17 Operations & administration (incl. 7% excl. Mortgage Choice 14 travel & enter
Slide 32: Continued investment in strategic initiatives
Continued investment in strategic initiatives Group capital expenditure ($m) Depreciation and amortisation ($m)1 FY22 H1 FY23 FY23 100 25% REA Group ($m) Actual Actual Forecast 90 Australia Core depreciation & amortisation1 67 34 68-69 80 20% Depreciation of leases 9 5 8-9 Mortgage Choice amortisati
Slide 33: Strong cash position and debt repayments
Strong cash1 position and debt repayments Group cash flow ($m) Strong operating cash flows 686.4 (374.4) • Operating cash flow of $205m, with free cash flow of $148m Continued strategic investment • Capex for PPE and intangible assets of $59m • Investment in short term funds of $19m - (101.2) Strong
Slide 34: Current trading
Current trading • January National residential new listings were down 9% YoY, with Sydney decreasing 16% and Melbourne down 15%. YoY growth rates for the remainder of the financial year will reflect strong prior period listings volumes, particularly in Q4. • Residential Buy yield growth is anticipat
Slide 35: Q&A session
Q&A session Owen Wilson Chief Executive Officer Janelle Hopkins Chief Financial Officer
Slide 36: Supplementary Information
Supplementary Information Where 12 million Australians buy, rent & sell
Slide 37: Core vs. reported reconciliation
Core vs. reported reconciliation Core vs. reported reconciliation H1 FY23 H1 FY22 Growth % Core operating income 617.3 590.4 5% Trail commission integration adjustment - (3.5) n/a Trail commission integration adjustment Reported operating income 617.3 586.9 5% • Adjustment in prior year for broker r
Slide 38: MyFun revenue reconciliation
MyFun revenue reconciliation MyFun Australia H1 FY23 Australia reclass (restated) Residential 408.7 16.2 424.9 Commercial & Developer 71.5 0.7 72.2 Media, Data & Other 49.2 - 49.2 Change in revenue category presentation MyFun/legacy Asia1 16.9 (16.9) - Property & Online Advertising 546.3 - 546.3 • F
Slide 39: Cash flow reconciliation
Cash flow reconciliation Cash flow reconciliation ($m) H1 FY23 H1 FY22 Growth % EBITDA1 347.3 368.0 (6%) Working capital movement (42.0) (44.3) 5% Free cash flow Net interest paid (5.4) (2.8) (90%) Income taxes paid (101.2) (102.0) 1% • Higher net interest paid due to rising interest rates on the sy
Slide 40: Revenue breakdown
Revenue breakdown Revenue category ($m)1, 2 H1 FY23 H1 FY22 Growth % Revenue category ($m)1, 2 H1 FY23 H1 FY22 Growth % Australia Australia Depth revenue3, 4 466.2 446.3 4% Residential3 424.9 405.5 5% Subscription revenue4 30.9 27.7 11% Commercial & Developer3 72.2 68.5 5% Media, Data & Other 49.2 4
Slide 41: Financial comparatives: half year
Financial comparatives: half year Core Financial Results1 Reported H1 FY19 H1 FY20 H1 FY21 H1 FY22 H1 FY23 H1 FY23 Group results $m Growth % $m Growth % $m Growth % $m Growth % $m Growth % $m Total revenue2 469.2 15% 440.3 (6%) 430.4 (2%) 590.4 37% 617.3 5% 617.3 Total operating income 469.2 15% 440
Slide 42: Financial comparatives: full year
Financial comparatives: full year Core Financial Results1 Reported FY18 FY19 FY20 FY21 FY22 FY22 Group results $m Growth % $m Growth % $m Growth % $m Growth % $m Growth % $m Total revenue2 807.7 20% 874.9 8% 820.3 (6%) 927.8 13% 1,169.5 26% 1,160.2 Total operating income 807.7 20% 874.9 8% 820.3 (6%
Slide 43: 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 44: 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