The REA Group Ltd (ASX: REA) share price is down more than 1% despite the business reporting a strong FY25 third quarter.
This is the business that owns realestate.com.au as well as numerous other Australian property-related businesses, plus a majority stake in REA India.
FY25 third-quarter update
The business reported that in the three months to 31 March 2025, revenue rose 12% to $374 million and operating expenses increased by 12% to $176 million. Australian costs increased 9%, while India operating costs rose 20%.
REA Group reported that its operating EBITDA, excluding the share of profits/losses from its associates, rose by 12% to $199 million.
The EBITDA, including the share of profit/losses from associates, increased 15% to $193 million. REA Group’s free cashflow jumped 19% to $132 million.
What generated those numbers?
Its Australian revenue increased 11% to $340 million, or 10% excluding the acquisition of Realtair. It said its national residential new listings were flat in the third quarter of FY25, with 4% growth in Sydney and a 3% decline in Melbourne.
REA Group said that residential revenue was up 12% for the quarter, thanks to ‘buy’ revenue growth due to a 15% yield increase. The buy yield benefited from a 10% average Premiere+ price rise, increased depth and Premiere+ penetration and growth in add-ons.
Impressively, 12.3 million people visited realestate.com.au each month on average, with 6.4 million exclusively using realestate.com.au. It received 133.4 million average realestate.com.au monthly visits, 3.9x more than the nearest competitor.
Rent revenue increased with an 8% average price rise and a 4% increase in listings.
Other revenue was flat during the quarter, with strong growth by CampaignAgent offset by lower PropTrack and programmatic display revenue.
Financial services revenue increased during the quarter, benefiting from a 16% increase in settlements.
REA India revenue increased 28% year on year, largely driven by strong growth in adjacency services on the Housing Edge platform. Housing core revenue was flat, with increased competition putting downward pressure on yields, while PropTiger revenue declined, reflecting reduced volume of stock.
Outlook for the REA Group share price
The company said that strong employment and expectations for further interest rate cuts continue to support buyer demand and vendor confidence. Available residential stock remains at “elevated levels”, though the increase in buyer demand after the February rate cut has led to a return in modest property price growth.
However, an energised Domain Holdings Australia Ltd (ASX: DHG) under CoStar ownership could be a headwind for earnings.
REA Group is still aiming for a higher profit margin in FY25.
If interest rates are reduced further in Australia, I think this could be a useful boost for the company and its medium-term prospects, though there are other ASX growth shares I’d rather buy first.
