The SEEK Limited (ASX: SEK) share price is down more than 3% after the employment website business downgraded its FY23 expectations.
SEEK owns seek.com.au, Australia’s largest employment portal. It’s also involved in other areas of the ‘career’ market, as well as having investments in employment sites overseas.
SEEK downgrades FY23 expectations
The company gave a strategy presentation today and also took the opportunity to give investors a “brief” trading update and revise revenue guidance.
It said that its FY23 EBITDA (EBITDA explained) guidance was unchanged. That guidance was for EBITDA to be approximately $560 million.
SEEK also said that its net profit after tax (NPAT) guidance was affirmed and unchanged, which is for NPAT to be approximately $250 million. Maintaining the profit guidance is probably supporting the SEEK share price from a further fall.
But, the ASX tech share said that based on trading momentum for the third quarter, revenue for the full year “may be slightly lower than assumed” in its guidance. The reduction of guidance amounts to approximately A$15 million because of the “continued moderation” of job advertisement volumes.
The company is now expecting that revenue will be approximately $1.245 billion, which is a rather precise prediction.
How is SEEK managing to maintain its profitability guidance while reducing its revenue expectations? The company said that at this stage it’s expecting the lower full year revenue to be offset by lower than assumed operating expenditure. But, cutting some costs may be detrimental to the longer-term.
What to make of this?
It’s not surprising that the number of job ads is reducing. I think there’s a cyclical element to the employment rate and the amount of job ads out there, so it would make sense that job ads are falling amid all of the interest rate rises and inflation.
I think SEEK will see growth of job ads again, but there may be pain first before we get there. And it’s understandable the SEEK share price is going through pain as well.
Considering it’s down around 33% since November 2021, it may be a good time to consider shares, though if it drops further then that may be an even better time to buy.
But, I think there are other ASX growth shares which are a lot earlier on their growth journey, so they could be better ideas today.
