Today the REA Group released its full year financials for the 2008 financial year. The results are excellent with strong year on year growth of the business. However, it is the half year on half year growth that shows the truly strong growth of the business.
In the chart below, you can see the year on year growth. Impressively, revenues are up 45% while EBITDA is up 56%.
| $000′s | FY 2007 | FY 2008 | |
| Revenue | 107,293 | 155,633 | 45.1% |
| Operating Expenses | -83,793 | -119,058 | 42.1% |
| EBITDA | 23,500 | 36,575 | 55.6% |
| Depreciation/Amortisation | -4,974 | -7,336 | 47.5% |
| EBIT | 18,526 | 29,239 | 57.8% |
| Net Interest | -69 | -139 | 101.4% |
| Income Tax | -7,469 | -13,337 | 78.6% |
| Minorities | 4,076 | 6,581 | 61.5% |
| Profit After Tax/Minorities | 15,064 | 22,344 | 48.3% |
If you would like to see the full results, click here – http://investor.rea-group.com/irm/content/newreports.html
When you break down the results into the first and second half of FY 2008, you can see some interesting trends.
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Revenues continued to grow – there was a strong half year on half year growth of 18%, slightly down from the previous half year on half year growth of 20%.
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Expenses were very well managed in the second half of the year, allowing the EBITDA margin to increase to 26.5% up from 20% in the first half of the year.
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The business was able to sign up customers faster in the second half of the year versus the first half of the year although this is probably driven by seasonality as Jul – Dec has Christmas and the European holidays.
| $000′s | FY 2008 | ||
| First Half | Second Half | Full Year | |
| Revenue | 71,396 | 84,237 | 155,633 |
| Operating Expenses | -57,152 | -61,906 | -119,058 |
| EBITDA | 14,244 | 22,331 | 36,575 |
| Depreciation/Amortisation | -3,366 | -3,970 | -7,336 |
| EBIT | 10,878 | 18,361 | 29,239 |
| Net Interest | -118 | -21 | -139 |
| Income Tax | -5,802 | -7,535 | -13,337 |
| Minorities | 2,809 | 3,772 | 6,581 |
| Profit After Tax/Minorities | 7,767 | 14,577 | 22,344 |
| Financial KPI’s | |||
| Expenses / Revenue | 80.0% | 73.5% | 76.5% |
| EBITDA Margin | 20.0% | 26.5% | 23.5% |
| EBIT Margin | 15.2% | 21.8% | 18.8% |
| Net Profit Margin | 10.9% | 17.3% | 14.4% |
| Non Financial KPI’s | |||
| Increase in Employees | 108 | 80 | 188 |
| Increase in Paid Subscribers | 1,920 | 3,547 | 5,467 |
Further analysis reveals, some other observations:
Firstly, display advertising revenue from 3rd parties actually shrunk in the second half of the year. This was counter balanced by strong growth in advertising from the developer market – this is to be expected as developers globally are likely to be having problems in moving stock.
| Source of Revenues ($m) | First Half | Second Half | Full Year | % Change |
| Real Estate Agents | 54.7 | 65.9 | 120.6 | 20% |
| Developers | 6.3 | 8.3 | 14.6 | 32% |
| 3rd Parties | 10.0 | 9.6 | 19.6 | -4% |
| Consumers | 0.4 | 0.4 | 0.8 | 0% |
| Total | 71.4 | 84.2 | 155.6 | 18% |
Secondly, growth in the revenue from the UK operations appears to have stagnated. The good news is that Australia continues to power ahead with 20% half year on half year growth and the Italian business generated strong half year on half year growth of 36%.
| Country Revenues ($000′s) | First Half | Second Half | Full Year | % Change |
| Australia | 54,936 | 65,783 | 120,719 | 20% |
| United Kingdom | 10,989 | 11,082 | 22,071 | 1% |
| Italy | 2,284 | 3,117 | 5,401 | 36% |
| Luxembourg | 1,569 | 1,963 | 3,532 | 25% |
| Other Countries | 1,618 | 2,292 | 3,910 | 42% |
| Total | 71,396 | 84,237 | 155,633 | 18% |
Finally, when we look at the absolute growth in agents in the first half versus the second half, we can make some observations. When making these observations, it is important to remember that the second half of the year is traditionally stronger in growth as there are European holidays and Christmas in the first half of the year.
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Australian growth slowed however this is to be expected as they are reaching 95%+penetration.
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The UK business grew significantly, driven by the acquistion of Hotpropertyand also through organic growth.
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On the face of it, the Italian growth was consistent however given the European holidays and Christmas in the first half, a higher growth may have been expected in the second half
| Paying Agents Growth | First Half | Second Half | Full Year | % Growth |
| Australia | 414 | 366 | 780 | -12% |
| United Kingdom | 262 | 1,452 | 1,714 | 454% |
| Italy | 978 | 1,025 | 2,003 | 5% |
| New Zealand | 55 | -24 | 31 | -144% |
| Luxembourg | 33 | 43 | 76 | 30% |
| France | 35 | 108 | 143 | 209% |
| Germany | 14 | 29 | 43 | 107% |
| Belgium | 1 | 150 | 151 | |
| Hong Kong | 59 | 2 | 61 | -97% |
| UAE | 0 | 92 | 92 | |
| All Other | 69 | 304 | 373 | 341% |
| Total | 1,920 | 3,547 | 5,467 | 85% |
All data has been sourced from publicly available information.
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