Digital property advertising giant REA Group has achieved a 26% increase in revenue, thanks in part to its acquisition of broker franchise network Mortgage Choice.
The company, which released its full FY22 results this week, enjoyed a strong performance during the financial year with revenue reaching $1.17 billion. REA Group’s net profit rose 25% to $408 million and there was also a 25% increase in its full year dividend of 164c per share for the year ending June 30, 2022.
REA Group also benefitted from a 28% increase in loan settlements, which was driven by continued broker network growth and increased productivity in a strong housing market.
The group said this was partly offset by higher broker payout rates. Revenue was negatively impacted by a $13m valuation adjustment to expected future trail commissions, due to faster loan run-off rates.
REA Group’s Mortgage Choice CEO and financial services CEO Anthony Waldron (pictured above left) said Mortgage Choice accelerated its financial services strategy in FY22 and was pleased to have achieved some pivotal milestones.
“Our focus remains on becoming Australia’s number one retail broker business, providing more choice and simplicity for consumers to find and finance property,” Waldron said. “The integration of Smartline and Mortgage Choice franchises under one brand and one system is well underway and we are on track to complete this process by Q3 this financial year.”
REA Group CEO Owen Wilson (pictured above right) said FY22 had been an exceptional year for the company.
“The record take up of our premium listings products enabled us to fully capitalise on the buoyant listings environment and it demonstrates the value we provide to our customers and vendors,” Wilson said. “Key milestones were also achieved in our property data, financial services and Indian businesses building strong momentum. These markets present great opportunities and the revenue contribution of these businesses is growing rapidly.”
The REA Group operates leading residential and commercial sites realestate.com.au and realcommercial.com.au, data and insights business PropTrack, as well as Mortgage Choice.
“Core revenue of $1,116m was up 23% YoY, or 18% excluding the impact of the Mortgage Choice acquisition,” Wilson said.
The REA Group reported a 24% increase of residential revenue to $776m and experienced strong growth in FY22 as national new listings received growth of 11% and an 8% average national price rise.
“Rent revenue benefited from an increase depth penetration and a 6% price rise, however this was largely offset by a decline in rental listings due to a lack of supply,” Wilson said.
“Commercial and developer revenue increased 3% to $134m as commercial revenue growth was driven by 1 July 2022 price increases. Developer revenues were down on the prior year and were impacted by a 21% decline in project launches for the year.”
Wilson said REA Group maintained leadership as Australia’s number one address in property, with its site, realestate.com.au, increasing its leadership position and delivering record audience numbers.
“Realestate.com.au has the largest and most engaged audience with more Australians than ever before engaging with our site when seeking to transact property,” he said. “Active members are proven to drive the most value for our customers and our focus on personalisation and consumer experience has significantly accelerated the growth of this group during the year.”
The REA audience highlights include 12.7m people visitors each month on average (62% of Australia’s adult population); 124.1m average monthly visits with a record of 145.5m visits in October 2021; 3.36x more visits than the nearest competitor each month on average; 11% YoY increase in buyer enquiries and 51% YoY increase in active property owner tracks.
Wilson said the Australian residential property market was likely to continue to moderate as interest rates rise.
“While this adjustment has already impacted property prices, the current market reflects strong fundamentals including record low unemployment, high household savings and increasing migration which should continue to support demand,” he said. “July National residential new listings were up 7% YoY with Sydney listings increasing 18% and Melbourne up 6%. YoY growth rates in the first quarter will reflect the Sydney and Melbourne lockdowns in the prior period.”
Wilson said as REA Group entered the new financial year in a very strong position with a clear strategy for future growth, it was mindful of changing economic conditions.
“With further interest rate rises expected, Australia’s property market is healthy and supported by strong underlying fundamentals,” he said. “REA’s growth momentum is backed by an unrivalled audience and a product pipeline that will deliver exceptional value to our customers and consumers in FY23 and beyond.”
