REA Group Ltd. experienced a significant sell-off, with its share price declining 7.8% to close at A$168.10 following the release of its half-year financial results. The market reaction came despite the company posting growth in several key operational metrics.
Financial Performance Highlights
For the six months ending December 31, the property listings giant reported a 5% increase in core revenue to A$916 million. Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 6% to A$569 million, while core net profit grew 9% to A$341 million. However, reported net profit fell 24% to A$336 million, a drop the company attributed to the absence of a one-off gain from the sale of its PropertyGuru stake in the prior period.
Operationally, residential revenue increased 7%, driven by a 14% rise in average revenue per listing, which helped offset a 6% decline in national for-sale listing volumes. The company's flagship portal, realestate.com.au, averaged 12.7 million monthly visitors.
Capital Management and Analyst Concerns
In response to the results, REA Group announced a fully franked interim dividend of A$1.24 per share, with an ex-dividend date of March 3 and payment scheduled for March 18. Concurrently, the board approved an on-market share buyback of up to A$200 million, set to commence on February 23 and run through the end of the year, with Goldman Sachs Australia acting as broker.
Analysts expressed caution, focusing on the widening gap between pricing power and softer market activity. Citi noted that core profit slightly missed consensus estimates by 1-2%, citing "negative operating jaws" where costs are rising faster than revenue. RBC Capital Markets highlighted persistent challenges from high interest rates, competitive pressure, and elevated Australian operating expenses.
Looking ahead, investor attention will be split between the initiation of the buyback program and the upcoming dividend timetable. The key question for the market is whether the share price decline represents a temporary adjustment or a fundamental reassessment of the company's growth profile in a cooling property market.