REA Group Posts Resilient Third-Quarter Results
In the month of April, Australia’s new property listings fell approximately 5 per cent relative to the previous corresponding month. Statistics from SQM research revealed that the nation is presently 11.9 per cent lower on a year-to-date basis when the sector was experiencing a downturn. Firms like Charter Hall’s retail, Lendlease LLC are among the bigger players in the sector who have resorted to capital raisings. However, another player who has yet to follow suit is REA Group.
More recently, the firm has released its results for the third quarter of FY2020. REA Group successfully delivered a steady and improved performance in the quarter ended 31 March 2020. Specifically, in the three months, revenue excluding broker commissions edged up 1 per cent, sitting at $199.8 million. More notably, EBITDA posted an exceptional 8 per cent growth, finishing the quarter at $119.6 million. Collectively, these results reflect the steady recovery of the real estate sector before the outbreak of the pandemic.
The nation’s property market was making a steady 3 per cent rebound during the quarter as witnessed in the notable improvements in national residential listings led by gains in Sydney and Melbourne. Specifically, up till Mid-March, Sydney’s listings were up approximately 24 per cent while Melbourne’s listing posted a 15 per cent increase. However, having accounted for the effects of the pandemic, Australia’s national residential listing plunged 7 per cent for the quarter. Specifically, Melbourne and Sydney were the outperformers, advancing 6 and 5 per cent respectively.
REA Group generates its revenue from online commercial property and real estate advertising services. REA’s website, realestate.com.au, continues to be the firm’s rising star, coming in first place in terms of audience engagement. A further look into the figures reveals that in the month of February, the website received a massive 93.5 million visits, 18 per cent higher YoY. Additionally, REA’s app witnessed a record number of launches in February, sitting close to 39 million – a 26 per cent increase YoY.
From a broader perspective, REA Group continues to perform in other parts of the world it operates in. Despite the disruptions in Hong Kong at the start of the year, the robust growth in acquisitions in Malaysia helped offset the loss. Nevertheless, both Hong Kong and Malaysia were able to maintain their position as a market leader. This is evident as, within their respective jurisdictions, REA Group was 1.5 times and 1.1 times their closest competitor.
Additionally, in Singapore, the joint venture between REA and 99.co was finalised at the end of February. The partnership represents an attempt to build the largest property online platform for investors in Singapore and Indonesia. Moving forward, the firm will undeniably face significant headwinds as a result of current economic uncertainty. Yet, alongside cost-savings measures and a robust balance sheet, Chief Executive Owen Wilson remains confident of weathering the storm.
By Caroline Wong
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