The REA Group Ltd (ASX: REA) share price rose 11% in response to an impressive FY27 first quarter.
REA Group is the owner of realestate.com.au, as well as a number of other property-related businesses, including realcommercial.com.au and Mortgage Choice, as well as international investments.
FY27 first quarter
REA Group reported that in the three months to 30 September 2026, revenue grew 11% to $450 million, or 8% growth excluding acquisitions.
It also reported that operating expenses increased by 9% (or 2% excluding acquisitions).
This led to the company reporting that EBITDA (EBITDA explained) excluding associates increased by 12% to $294 million. Including associates, EBITDA grew by 13% to $289 million.
Perhaps most impressive of all, free cashflow soared 24% to $126 million for the quarter.
What happened in Australia?
The core driver of the company’s economics is its Australian operations.
It said that residential revenue grew by 10%, with strong controllable buy yield growth of 14% (or 8% including the geography mix).
It was the price increases that help offset a 2% national buy listing volume decline, with Melbourne and Sydney volumes down 16%, while Brisbane, Perth and Adelaide volumes were up 17%.
REA Group also noted record engagement, with a 9% increase in active members and a 13% increase in properties tracked by their owner to 5.3 million.
It also boasted that realestate.com.au remains Australia’s leading property portal site, with 11.5 million people visiting per month on average and 137.4 million average monthly visits (97.5 million more monthly visits than the nearest competitor on average).
However, there was a 33% decline in buyer enquiries to a monthly average of 1.9 million.
Outlook for the REA Group share price
REA Group believes when there is greater certainty about the peak of the interest rate cycle, buyers and sellers who have delayed their move will return.
For FY27, the company expects new national buy listings to be down in the low single digits in FY27. October listings were down 13% year on year, though it was only down 8% after removing the impact of one less working day.
It continues to target operational margin expansion, low double-digit controllable residential buy yield growth (excluding the impact of geographical mixture) and underlying operating cost growth in the mid single digits, excluding acquisitions. Finally, it expects contributions from combined associates’ losses to improve compared to the prior year.
Overall, I think REA Group is one of the most impressive businesses on the ASX, with a strong market position and a great economic moat. The economics are also powerful, with free cashflow growing rapidly.
It may still be undervalued at this level, but it’s not as cheap as it was, so I’d be willing to wait for a time of market weakness before investing in the company. But, it’s certainly one of the ASX growth shares to keep an eye on.
