The SEEK Limited (ASX: SEK) share price fell 5% today after the job ad business released its FY22 report.
SEEK is Australia’s largest jobs portal. It also has investments in sites in Latin America and China.
SEEK FY22 result
Here are some of the highlights from the report:
- Continuing operations (CO) revenue went up 47% to $1.1 billion
- CO EBITDA (EBITDA explained) grew by 53% to $509.1 million
- CO underlying net profit after tax (NPAT) jumped 81% to $245.5 million
- Total NPAT sank 78% to $168.8 million
There was a varied performance when it came to the different regions. SEEK ANZ saw revenue rise 53% and EBITDA soared 60%. However, SEEK Asia revenue increased 37% while EBITDA only increased 9%.
Management said that in all of its Asia Pacific markets, an ongoing economic recovery drove high demand for labour, which led to strong job ad volumes and increased depth adoption.
SEEK said that its markets continue to be highly competitive, but it maintains its market leadership positions, with stable placement metrics throughout Asia Pacific.
Divisional breakdown
In ANZ, it benefited from higher prices, customer mix and increased depth adoption.
In Asia, volumes grew across all markets despite some ongoing lockdowns. However, yield was impacted by hirers purchasing larger packages, resulting in higher volume-based discounts.
In Latin America, results were “mixed”. Conditions improved in Mexico, allowing OCC to grow revenue and EBITDA. But, conditions in Brazil remained “challenging” and it’s transitioning to a new business model.
In China, Zhaopin online revenue rose 2%. EBITDA fell 50% due to “significant investment” in marketing and production. Competition remains “intense” so ongoing investment is required.
SEEK growth fund
SEEK said that the portfolio value of the growth fund increased 36% to $2 billion.
The company said it continues to consolidate the fund at 30 June 2022. It will deconsolidate the fund when the fund has been drawn down and deployed all of its committed capital. Deconsolidation is likely to occur during FY23.
Upon deconsolidation, SEEK’s share of fair vale gain or loss will be recognised in its accounts as a non-cash items.
Dividend
SEEK’s board decided to pay a final dividend of 21 cents per share for FY22. That brings the total FY22 dividend to 44 cents per share.
Outlook
In terms of its FY23 guidance, excluding significant items and the SEEK growth fund, it’s expecting the following:
- Revenue to be in the range of $1.25 billion to $1.3 billion
- EBITDA in the range of between $560 million to $590 million
- Net profit after tax in the range of between $250 million to $270 million
SEEK’s share of the growth fund’s net profit is expected to be $5 million.
The management pointed out that markets remain positive, but some leading indicators look “slightly weaker”.
The guidance assumes a continuation of largely positive conditions and a low risk of job market volatility. If this assumption changes, revenue could fall below guidance.
SEEK is a quality business, but it’s unsurprising that the SEEK share price has dropped 30% this year with the market expecting worsening conditions. There may be a better time to buy if economic conditions worsen from here, so I’d personally wait for then before deciding to buy the dip on this business for my own portfolio, but we may have already seen the bottom of SEEK shares, it’s hard to say without having a time machine.
