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REPORTING SEASON: REA Group Limited (REA)

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Figure 1: REA Group 12 month chart

 

Digital advertising business, REA Group (REA) has reported a better than expected 37% lift in its first half profit to $70.7 million.

REA is the company behind property websites such as realestate.com.au and property.com.au; earned 90% of its half year income in Australia and has a small presence in Italy, Luxembourg and Hong Kong.

The result was driven by a shift in focus from a subscription model for Real Estate Agents to a fee per listing. Revenue from property listings (what REA refers to as ‘depth revenue’) generated more than half of its sales, with its residential property advertising income jumping by 34% (63% of the company’s total revenue).

It is estimated that REA charges roughly (depending on type of ad) between $100-$3500/month for each ad. Its property advertising websites have been generating 22.5m monthly visits (2.7 times more than its nearest competitor).

REA is also making progress in the mobile space; with 6m visits per month (4.5 times more than its  competition).

The 62% News Corp owned REA, declared a 30% franked $0.22/share interim dividend which will be paid to eligible shareholders on 18 March.

No guidance was provided.

Investors have reacted well to the result, pushing REA shares higher and adding to last year’s 109% surge.

 

You can see all of CommSec’s reporting season analysis by clicking here.

Steven Daghlian, Market Analyst,