The REA Group Ltd (ASX: REA) share price is down around 1% after reporting its FY25 half-year result.
REA Group owns realestate.com.au and various other Australian real estate-related business, plus it has investments in property portal businesses in India and North America.
REA Group HY25 result
Here are some of the highlights from the six months to 31 December 2024, with the year on year numbers related to its core operations, except for the statutory net profit which includes its gain on the sale of PropertyGuru:
- Group revenue rose 20% to $873 million
- Group operating expenses increased 18% to $338 million
- Total underlying EBITDA rose 22% to $535 million.
- Net profit up 26% to $314 million
- Statutory net profit up 246% to $441 million
- Interim dividend up 26% to $1.10 per share
In the first half of HY25, the business saw national residential listings grow 5%, with 7% growth in Sydney and 5% in Melbourne. This helped Australian revenue increase 19% to $809 million.
Its realestate.com.au platform saw 5.1 million more Australians visit realestate.com.au every month compared to the nearest competitor.
The residential buy yield benefited from a 10% average Premiere+ price rise, increased Premiere+ and total depth penetration and growth in add-ons. Rent revenue was driven by an 8% average price rises and a 6% increase in listings.
Commercial and developer revenue increased 10% to $110 million, with an average 12% price rise and higher listings.
Other revenue increased 9% to $43 million, with CampaignAgent delivering strong revenue growth driven by increased customers and higher listings.
It sold its 17.2% stake in PropertyGuru for a total gain of $151 million.
REA India
The REA India division saw revenue growth of 46% to $64 million. Revenue from adjacent services on Housing Edge increased 153%, driven by increased customer acquisition and usage.
Housing.com revenue grew by 15%, benefiting from stronger customer events and improved monetisation in Tier 2 cities, though yield growth slowed in a competitive market.
However, PropTiger revenue declined by 26%, due to reduced volume of stock and lower commission rates in the strong property market.
REA India saw Housing.com app sessions increase 37%.
Outlook for the REA Group share price
The company said its strong employment, high immigration levels and expectations for interest rate cuts in the first half of 2025 “continue to support buyer demand and vendor confidence to list”.
January national residential new buy listings were up 3% year on year, with Sydney listings increasing by 5% and Melbourne declining by 2%.
The business is still expecting profit margins to rise in FY25, but it’s expecting higher costs than it was before.
REA Group is a very strong business, with an impressive market position. However, its share price has soared and I’m not sure whether profit can grow strongly in the short-term with listing growth numbers slowing and costs expected to rise further.
I wouldn’t say it’s a great buy today, but if it were to drop, it could be a strong addition to a portfolio.
