REA Group Limited (ASX: REA) reported the first-quarter figures of its 2019 financial year (FY19) on Thursday morning, showing revenue growth of 17%.
REA Group is the owner of Australia’s leading property site, realestate.com.au.
REA Group’s FY19 Q1 Update
Revenue after broker commissions grew by 17% to $221.9 million. The company said this was driven by its Australian Residential business and the inclusion of Hometrack Australia, which wasn’t in the prior quarter. Also, a full contribution from Smartline helped the result.
Operating expenses went up by 10%, leading to a 23% increase of REA Group’s ‘core EBITDA’ to $130.9 million (click here to learn what EBITDA means). REA Group also reported free cash flow increased by 52% to $52.1 million for the quarter.
The above growth numbers were delivered despite a 3% decrease in national listings. Meaning, the results appear to have been helped by price increases a few months ago and an improved product mix.
REA Group boasted of seeing 2.7x more visits than its rival, Domain Holdings Australia Ltd (ASX: DHG), in the quarter.
REA Group CEO Tracey Fellows said: “Our strong results this quarter demonstrate, despite tougher market conditions, our customers and consumers are clearly seeing value in the products and experiences we are creating.”
However, REA Group said tighter lending conditions and the effect of the Royal Commission on broker recruitment resulted in subdued revenue in its Financial Services business. It expects these conditions to “continue for the remainder of the financial year.”
REA Group also had some ominous words for the near future. It said that market conditions are not expected to improve in the short term and that listings may be weaker in the lead up to the NSW election in March.
The REA Group share price is down 9% over the past month, according to Google Finance.
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