The REA Group Ltd (ASX: REA) share price is up around 6% after reporting an exciting FY24 result.
REA Group is the owner of realestate.com.au, as well as various other property-related businesses, including REA India.
FY24 result
Here are some of the highlights from the 12 months to 30 June 2024:
- Revenue grew 23% to $1.45 billion
- Operating expenses increased 18% to $628 million
- Underlying EBITDA (excluding associates) increased 27% to $825 million
- Net profit after tax (NPAT) rose 24% to $461 million
- Full-year dividend rose 20% to $1.89 per share
REA Group revealed that the number of residential buy listings increased 7% nationally, while Sydney and Melbourne listings grew 21% and 22%, respectively.
Its residential revenue increased 24% to $996 million, thanks to a 19% increase in the buy yield. There was a 13% average national price rise, increased usage of Premiere+, and a 3% positive impact for the buy yield from the geographical mix due to the outperformance of the higher-yielding Sydney and Melbourne markets.
The company reported 127.2 million average monthly visits, 4.1x more monthly visits in the second half than the nearest competitor on average. Its leadership is a key foundation of the REA Group share price.
While project commencements were down 13% year on year, it increased 3% in the fourth quarter of FY24. Commercial and developer revenue increased 12% to $159 million, partly thanks to a 11% price increase.
REA Group’s rent revenue increased, with an 8% average price rise, partly offset by a 1% decline in listings.
Media, data and other revenue increased 25% to $122 million, or 2% excluding the impact of the CampaignAgent acquisition. Financial services operating revenue increased 8% to $74 million.
REA India
The REA India segment saw a strong result, with revenue increasing 31% to $103 million. Revenue from property and advertising grew 25%.
Management said a continued focus on improving the mobile experience and targeted marketing has seen Housing.com maintain its number one position in FY24 and REA India’s app-first strategy has driven app traffic of 39%.
Other investments
REA owns 20% of Move Inc, which operates realtor.com, a leading property portal in North America. Move revenue declined by 10% in FY24, impacted by the economic environment in the US, which has led to a 3% decline in leads and lower transaction volumes. It reported an equity accounting loss of $21 million, compared to a $6 million loss in the prior corresponding period.
It also owns 17.2% of NYSE-listed PropertyGuru, which operates leading property sites in Singapore, Vietnam, Malaysia and Thailand. Its equity-accounted contribution was a $1 million loss in FY24, a $2 million improvement year on year. It was helped by growth in Singapore.
Outlook for the REA Group share price
REA Group said demand is strong nationally, supported by high levels of employment and immigration, while supply is also “robust”.
In July, national residential new buy listings were up 12% year on year, with Sydney increasing 12% and Melbourne listings up 15%.
The residential buy yield is expected to grow in FY25, which will be primarily driven by an average 10% price increase in its highest used product, Premiere+.
I’d call REA Group one of the best ASX shares, but it’s not priced cheaply. It has a promising future, with rising prices and a growing Australian population with rising property numbers.
While it’s not one of the first ASX growth shares I’d buy today due to its valuation, I’d be happy to put it into a growth-focused portfolio.
