REA Group Limited reported robust financial results for the third quarter of 2025, with significant growth in revenue and operating EBITDA. According to InvestingPro analysis, the company maintains a GREAT financial health score, though current valuations suggest the stock is trading above its Fair Value. The company’s stock experienced a slight decline following the announcement, reflecting broader market trends and investor sentiment. InvestingPro has identified 13 additional key investment tips for REA Group, available to subscribers.
Key Takeaways
- REA Group’s Q3 revenue increased by 12% year-over-year to $374 million.
- Operating EBITDA also rose by 12%, reaching $199 million.
- The stock price fell by 1.18%, closing at $250.08.
- The company launched several new products and innovations, including AI-driven listings.
- REA Group anticipates a modest increase in residential buyer yield growth.
Company Performance
REA Group demonstrated strong performance in the third quarter, driven by double-digit growth in both revenue and operating EBITDA. The residential business and financial services segments were significant contributors to this growth. Additionally, REA India’s revenue surged by 28% year-over-year, showcasing the company’s expanding footprint in international markets.
Financial Highlights
- Revenue: $374 million, up 12% YoY
- Operating EBITDA: $199 million, up 12% YoY
- Residential Business Revenue: Increased by 12%
- Financial Services Revenue: Achieved double-digit growth
- REA India Revenue: Increased by 28% YoY
Market Reaction
Despite the positive earnings report, REA Group’s stock price fell by 1.18%, closing at $250.08. This decline may reflect cautious investor sentiment amid broader market uncertainties. InvestingPro data reveals the stock has delivered an impressive 36.65% total return over the past year, though it currently trades at elevated multiples with a P/E ratio of 52.92 and an EV/EBITDA of 39.97. The stock remains within its 52-week range, with a high of $276.64 and a low of $181.68.
Outlook & Guidance
REA Group is optimistic about its future performance, expecting listing growth of 1-2% for FY2025 and residential buyer yield growth of 13-15%. The company aims to maintain positive operating jaws in FY2025, despite anticipating marginally lower EBITDA losses in India.
Executive Commentary
Owen Wilson, CEO of REA Group, highlighted the company’s strong performance, stating, "REA Group has delivered a strong third quarter result underpinned by double-digit yield growth." He also emphasized the company’s commitment to marketing and personalizing the membership experience.
Risks and Challenges
- Potential market entry by competitors like CoStar could impact market share.
- Economic factors such as interest rate changes may affect the property market.
- Increasing operational expenses, up by 12%, could pressure margins.
- The competitive landscape in India poses challenges to market expansion.
- Fluctuations in consumer demand and property listings could influence revenue growth.
Q&A
During the earnings call, analysts inquired about the potential impact of CoStar’s market entry and REA Group’s pricing strategy. The company expressed confidence in its competitive positioning and highlighted strong employee engagement as a key factor in its success.
Full transcript - Rea Group Ltd (REA) Q3 2025:
Conference Operator: Good day, and thank you for standing by. Welcome to the REA Group Limited Third Quarter Fiscal Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during this session, you will need to press 11 on your telephone.
You will then hear an automated message advising you your hand is raised. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Alice Bennett. Please go ahead. Good morning, and welcome, everyone.
My name
Alice Bennett, Head of Investor Relations, REA Group: is Alice Bennett, Head of Investor Relations, and I’d like to thank you for joining us to discuss REA Group’s results for the third quarter ended thirty first March twenty twenty five. Before we commence, I’d like to acknowledge the traditional owners of country throughout Australia and recognize the continuing connections to lands, waters, and communities. We pay our respects to aboriginal and Torres Strait Islander cultures and to elders past, present, and emerging. This morning, you’ll firstly hear from our CEO, Owen Wilson, who will provide a brief business update. Then Janelle Hopkins, REA’s CFO,
Janelle Hopkins, CFO, REA Group: will talk to
Alice Bennett, Head of Investor Relations, REA Group: the financial highlights for the quarter. Following this, we’ll be happy to take your questions. Just as a reminder, our quarterly numbers are top line results only, so we’re restricted in the amount of detail we provide. With that, I’ll pass to Owen to get us started.
Owen Wilson, CEO, REA Group: Thanks, Alice. I’d like to welcome everyone this morning and also acknowledge the Traditional Owners of the land on which we are meeting and pay my respects to their elders past and present. REA Group has delivered a strong third quarter result underpinned by double digit yield growth. Looking at our results from cooperations for the quarter, revenue was $374,000,000 an increase of 12% and EBITDA excluding associates was $199,000,000 also an increase of 12%. Strength in underlying fundamentals coupled with the first interest rate cut in four years supported the health of the market and buyer demand in the quarter.
National listings remained in line with the prior year’s strong comparables with steady national house price growth supporting vendor confidence. In these positive conditions, consumers visited our platforms in record numbers and our customers continue to prioritize our market leading products and services. REA’s growth is driven by our clear strategy and our third quarter achievements demonstrate excellent progress towards our strategic goals. To deliver on our purpose of changing the way the world experiences property, we remain focused on engaging the largest consumer audience with our personalized property experiences, delivering superior value to our customers with leading products and services and leveraging unparalleled data insights as we expand our core business and build next generation marketplaces. Australians can find more listings and more buyers on realestate.com.au than anywhere else.
This quarter, more people visited our platform than ever before, including a record 12,600,000 visitors in March. We further extended our exclusive audience in the quarter with a monthly average of 6,400,000 Australians using our platform and not using our nearest competitor. This means access to this large number of potential buyers, sellers and renters is exclusive to REA customers. Our personalized experiences ensure property obsessed Australians continue to return to our platform with an increased average of 133,000,000 visits each month and our app first strategy delivered 5.5 times more app visits than our nearest competitor. Our consumer strategy is centered on personalizing our membership experience.
Deep personalization not only unlocks an enhanced consumer experience, it also amplifies the value delivered to customers. Members are proven to be much more likely to perform a high value action, and our active membership base continues to expand, increasing 6% on the prior year. RealEstate.com.au is more than just an advertising platform, and our goal is to support consumers throughout the full property journey. The aspiration of our AI driven next generation listings initiative is to set a new global property experience benchmark. It’s aimed at helping consumers understand more about a property and encouraging them to take action sooner.
Supporting this, we recently integrated Before You Buy building, test and strata reports. And while it’s early days, we’re currently seeing more than 400 reports downloaded on average each week and this is continuing to grow. We also integrated NBN availability on all listings at the February, providing the most up to date information about our products connectivity. Recent enhancements to the property listing experience have significantly boosted higher value consumer interactions. As we expected via email inquiries declined slightly, but these have been replaced by inspection interactions which are up 12%.
These are a much more meaningful buyer action. Our property owner experience helped drive a 50% year on year increase in seller leads delivered to our customers during the quarter. The release of an enhanced owner experience in December, which enables owners to more easily update their properties attributes, continues to engage in owners with an average of 10,000 properties updated each month since launch. Turning to our customers, record Premier Plus penetration supported the strong yield growth in our core residential business and our top tier commercial product Elite Plus also achieved record penetration. The uptake of our high performance listing solution, Lux, continues to gain momentum and deliver significant value to customers and their vendors.
Luxe generates 71% more high value consumer actions than a Premier Plus listing. These include saving or sharing a property, booking an inspection or adding an option for an inspection to plan. During the quarter, we launched our developer high performance listing solution Amplify. Amplify is designed to engage high intent buyers on the homepage and is set to deliver significant value to developers with more project profile views and more buyer leads. As part of our commitment to delivering greater choice and flexibility to customers, we introduced more options into our FY twenty six contract rollout.
We know high the highest performing campaigns combine a multichannel strategy, and these new options achieve this in the most cost effective way. Pro is the most comprehensive subscription in the market with advanced solutions across agency services and agency marketplace. It is designed to support and accelerate business growth for our customers. Customers are seeing significant value in exclusive benefits such as access to our PropTrack powered CMA tool. Pleasingly, some key national agencies have recently signed new enterprise wide pro partnerships.
With the powerful combination of the most comprehensive property comparison data and unparalleled demand data, we believe we have the best CMA in the market. Our latest customer sentiment scores are at record levels and pleasingly the gap over domain is at an all time high. Turning to financial services, with improved market conditions in recent quarters, we’re now seeing the increase in submission volumes flow through to an increase in settlements. Investment in the Mortgage Choice brand and systems coupled with product innovation continues to deliver value for our brokers and support productivity. Leads generated from the enhanced realestate.com.au experience were up 45% year on year.
Mortgage Choice Freedom continues to drive white label penetration. Freedom reached an exciting milestone in the quarter with brokers settling more than $2,000,000,000 in Freedom loans since the product first launched just under two years ago. Moving to REA India. Our Indian business delivered strong revenue growth in the quarter, driven mainly by the Housing Edge platform. Housing.com’s performance reflects the competitive environment and a slightly softer market.
We remain focused on investment in our app experience and driving our app audience. This is delivering strong results with housing.com continuing to lead the share of app downloads with 59% of all downloads and app sessions continue to grow rapidly. We know apps are the future of the Indian property experience and we’re confident in our app prime strategy. As we enhance the app experience with new features and technology, we are also prioritizing listing quality and information accuracy. Verified listings on the housing.com platform grew steadily in the quarter.
This is a strategically important trend and while our focus on verified listings may impact volumes in the short term, we know consumers value trust and high quality listings are an essential component of that trust. Before I hand over to Janelle, I’d like to share a few comments on the market as we look ahead. The Australian property market remains healthy with the support of positive fundamentals. As we know, listings are notoriously hard to predict. As we close out FY 2025, we expect listing growth will moderate against the very strong comparables of last year.
This would still represent a healthy market. There are significant global factors currently playing out. And while this may cause some uncertainty, increased expectation of the number and timing of further interest rate cuts is likely to support activity and encourage people to transact in a market underpinned by strong demand. The recent clear result in the federal election is also likely to support confidence. REA is well positioned for a strong finish to the year.
Our next gen listing experience will continue to evolve with some exciting releases set to drive deeper engagement and connection with our consumers and value for our customers. Over to you, Gerald.
Janelle Hopkins, CFO, REA Group: Thanks, Owen, and good morning, everyone. REA has delivered a strong result, driven by double digit revenue growth in our residential, commercial, financial services and India businesses. There are also 12 this quarter. Group revenue for the third quarter increased 12% to $374,000,000 Operating expenses from core operations increased 12% to $176,000,000 and the group delivered operating EBITDA excluding the results from our associates of 199,000,000 up 12%. Our residential business continued to deliver strong results with revenue growth of 12% driven by double digit yield growth partly offset by a 3% negative impact from revenue deferral.
Q3 national new buyer listings were flat year on year with Sydney up 4% and Melbourne listings declining by 3%. The biggest driver of our residential performance was our strong buyer yield, which is up 15% for the quarter. Yield was driven by a 10% average Premier Plus price rise, year on year growth in overall depth and Premier Plus penetration, growth in add ons and a 1% positive impact from the consolidation of RealTear, and this was partly offset by 1% negative geo mix drag. Our rent business saw continued strong growth with revenue driven by double digit yield and a 4% growth in listings. Recent commercial and developer trends continued with strong growth in commercial and lower growth in developer revenues.
Commercial drivers and revenue growth were again similar to our residential business with double digit yield growth and modest growth in listings. Developer revenues were up year on year with a 13% increase in project commencements, longer project duration and a price rise from January more than offsetting lower display revenues. Other revenues are flat during the quarter. We saw strong growth from Campaign Agent, which continued to benefit from higher volumes and greater spend per customer. This growth was partly offset by lower PropTrack revenue and the declining programmatic display revenues in a soft advertising market.
Financial services momentum improved during the quarter with double digit revenue growth. Revenue was driven by settlements growth of 16% and increased productivity across our broker network, including our salaried brokers. REA India delivered strong revenue growth in the quarter, up 28% year on year. This reflected strong growth in our adjacency services on the Housing Edge platform with an increased number of rent to pay on credit users and a price increase from February 25. It’s worth noting that while year to date adjacency revenues have been stronger than expected, we will face much tougher comps in the fourth quarter with growth in the prior year up more than 150%.
Housing dot com revenues were flat year on year with customer growth offset by pressure on yields in a very competitive market and PropTiger revenues declined with reduced volume stock. Turning to operating costs. Group core costs were up 12% and Australia increased by 9%. Excluding the impact of the RealTear acquisition, group operating expenses increased seven sorry, 10 and Australian costs by seven. In Australia, this was due to higher employee costs, which reflects salary inflation and higher performance incentives and increased technology costs due to double digit supplier price rises.
This was partly offset by lower marketing spend, which was down year on year due to the timing of our largest customer event, Ready, which was in March 24 and will be held in August ’20 ’20 ’5. India saw operating costs increase by 20%, driven largely by an increase in housing edge COGS. The group’s combined share of associates contributed a £6,000,000 loss to the core EBITDA, which compares to £9,000,000 loss in the prior period. Move continues to experience very challenging market conditions in The U. S, resulting in lower lead and transaction volumes.
Despite this, Move has been able to deliver revenue growth for the second quarter in a row, up 2%, driven by growth in rentals, seller and new homes. For more information on Move, please see News Corp’s q three results release. Moving to current trading conditions. Year on year growth rates for national residential new buy listings in the fourth quarter will reflect very strong prior period volumes, particularly for Melbourne and Sydney. As expected, April listings declined, down 11% year on year, with Sydney and Melbourne both 16% lower.
As well as more difficult comps, this also reflected the timing of Easter and the federal election. Year to date listings to April are plus 2%. And for FY ’twenty five, we anticipate growth of 1% to 2%. Residential buyer yield growth is expected to be between 1315% in FY 2025 with the main swing factor being where geo mix lands in Q4. We continue to target positive operating jaws in FY 2025.
Low double digit group core cost growth is anticipated with the year on year growth rate in Q4 lower due to the phasing of marketing costs and lower anticipated COGS in India. EBITDA losses in India are anticipated to be marginally lower in FY 2025 compared to FY ’twenty four. Associates losses in FY ’twenty five are anticipated to be modestly higher than the prior year. On a final note, we are very pleased with the performance we’ve delivered so far this year and our business is in great shape. Comps will get tougher across the remainder of the calendar year.
However, fundamentals are healthy and we remain focused on improving consumer engagement, providing increased value to our customers and driving growth across our portfolio of assets. Let me pause there. Operator, we’ll now open for questions.
Conference Operator: Thank Our first question is going to come from the line of Eric Choi with Biren Joy. Line is open. Please go ahead.
Eric Choi, Analyst, Biren Joy: Owen, Janelle and Alice. Two questions. Got it. Okay. So the first one, just on listings, I guess to get to the top end of the 1% to 2% FY ’twenty five guide, I.
E, the 2%, you probably need May and June to grow 3% in aggregate. So I’m just wondering if has the election deferred certain listings out into May? Or are you seeing anything else that gives you confidence in that outcome? And then maybe just a second one on buy yield. It looks like buy yield accelerated one to two percentage points in the third quarter versus the second quarter, but geo mix stayed negative.
So something else has accelerated. I’m I’m particularly interested if if if that was Amax or where Amax sits today just because, when we’re doing work on FY ’26, we’re all trying to work out the potential delta on your new subscription and Amax bundles. So, yeah, if you could comment on Accelerant and Amex, that would be helpful.
Owen Wilson, CEO, REA Group: Thanks, Eric. I’ll take the listings question, and Janelle will talk to yield. Looking at listings for May and June, listings for the year to date April were up 2%. Is that guidance of 1% to 2% for the full year implies sort of flat to get to the 2% or moderately down if you’re going to get down to the 1%? May has started quite healthily, particularly in the capital cities.
And I think that’s probably just a sort of a rebound of listings that were deferred across that holiday period of Easter Anzac Day and then into the election. So it’s very hard to call it just based on the small sample size we’ve got for May to date. But so far, it looks good and mainly in the capital city. So I think that’s just a hangover from that downtime. So our guidance assumes flat at the top end or marginally down for May and June.
Reminder that they are very strong comps.
Janelle Hopkins, CFO, REA Group: And on yield, Eric, there is a bit of rounding involved here. We did see geo mix be only 1% in q three versus q two rounded to 2%. So that’s really the the key change between q three and q two overall yield growth. So that’s that’s really the only difference. But, again, audience maximizer, super pleased with how that product has gone in Q3.
It’s continued to track very well, and we’ve continued to see record penetration of that product.
: Our
Conference Operator: Our next question is going to come from the line of Encho Ryszkowski with E and P. Your line is open. Please go ahead.
Encho Ryszkowski, Analyst, E and P: Good morning, Owen. Good morning, Janelle. My first question is on OpEx. And I mean you’ve given us some very good color around the phasing of costs. And obviously, was high phasing towards that quarter.
Is it fair to assume OpEx growth in sort of in the mid single digits in Q4? Or is that being too optimistic? I just appreciate you’ve maintained your full year guidance, but there can be a range within that.
Janelle Hopkins, CFO, REA Group: Yeah. Look, Ensho, we have maintained our full year guidance, absolutely. We are anticipating q four cost to be lower than q three. It’s it’s also a mix. So in Australia, we’re anticipating, q four cost to be marginally lower than we saw in q three.
In Q4, we’re anticipating our India cost to be substantially lower, predominantly in relation to our expectation around volumes of housing edge coming down. So there’ll be lower revenue, but also lower COGS. But we’re still holding to the full year expectation of overall low double digit cost growth.
Encho Ryszkowski, Analyst, E and P: Okay. Got it. And my second question, maybe a bit of a left field question, but are you able to comment on the level of employee engagement that you’re seeing at the moment across the group, across the company? The reason why I ask this is I wonder if you see it as a risk that if CoStar acquired Domain, they’ll look to hire from your talent pool. They might look to poke some of your employees, particularly in the sales team.
And how do you think you’re positioned to ensure key employees don’t leave? And is there potential upward pressure to the cost base if that’s the case?
Owen Wilson, CEO, REA Group: Pleased to report and show that our engagement scores, I think, were at record high. It’s only a couple of months ago that we did our annual engagement survey. We also do monthly pulse checks of our engagement across our employee base. So sitting at a record high for the time that we’ve been doing engagement scores over a decade, I think, is a very pleasing place to be. We also have just ranked in the great places to work for tech companies in Australia and have quite a high ranking compared to some of the other names in the market.
So we’re pretty confident our staff enjoy working at REA.
Encho Ryszkowski, Analyst, E and P: Okay. And do you I mean, just as a second part of that question, do you see it as a risk given CoStar if CoStar enter the market? Are either of you I appreciate your comments that people are engaged, which is clearly encouraging, but is there some pressure that could come into your cost base?
Owen Wilson, CEO, REA Group: I think that risk has always been in the market, Encho. We’re seeing we have such a great employment brand. We are such a kind of icon company in this sort of sector, and I’ll call it the digital sector, not just in property. And so it’s the nature of the market that we’re in that any of the names that you can mention, Carsales, Z, Xero, you name it, we’re all seen as a target for staff coaching. So we regularly take staff from each other.
It’s just a factor of the market we’re in. I think that’s going to change going forward.
Encho Ryszkowski, Analyst, E and P: Our
Conference Operator: next question is going to come from the line of Cain Hannan with Goldman.
Cain Hannan, Analyst, Goldman Sachs: Hey, guys. Just actually two. Just if I think about, you know, the feedback you’ve had on on the recent pricing discussions, you know, let’s say, we assume CoStar does ultimately acquire domain. I wanna mean, if you put yourself in the shoes of your successor first year in the job, what are some of the factors you’d think about sort of pricing, you know, for the next year, in in that situation?
Owen Wilson, CEO, REA Group: So so far, Incho, we’re halfway through our sort of pricing. Sorry, Kane. We’ve gone Kane, we’re halfway through our pricing discussions. And so far, it’s been a very positive and productive conversation. And we’re seeing good uptake of our products.
When you think about pricing over the recent times, Domain has largely copied our price increases and gone alongside us. I can’t speculate on what they might do on price. Anything that Costa might think of doing in this market, I would say, has already been tried by Domain at some stage.
Cain Hannan, Analyst, Goldman Sachs: Yes. Yes, that makes sense. And then secondly, M and A. I mean, there’s some press recently around potentially a second interest in Rightmove. But I suppose more recently, there’s some out suggesting that Zoopla might be up for sale in The UK.
Just remind us how you think about global M and A, I suppose, you know, looking at number one versus number two, then I suppose if we can’t make Rightmove work over time, I mean, would would Zoopla be something of interest?
Owen Wilson, CEO, REA Group: I honestly don’t understand the strategy of buying number two or number three or number four. You know? I I just don’t get it. I haven’t seen a market anywhere in the world where a weaker number two or a weaker number four or a weaker number three has overtaken the leadership position. So, I just I couldn’t see how that could be ever of interest to us.
Tom Beadle, Analyst, Jarden: Yep. That’s clear. Thanks, guys.
Conference Operator: You. One moment for our next question. Our next question comes from the line of Roger Samuel with Jefferies. Your line is open. Please go ahead.
: Hi, good morning all. My first question is on your cost. As you look towards FY ’26 and beyond, what would you consider as a sustainable rate of cost growth for the group considering that you may have a potentially more emboldened competitor and and also you need to reinvest yeah. Just continue to continue to reinvest in product development and and marketing as well? And, also, the second question is on audience maximizer.
Given that you’re bundling this product with your customer subscriptions and looks like you’re pushing this product even more into the market. Should we expect some margin dilution in your Australian business?
Owen Wilson, CEO, REA Group: Thanks, Roger. In terms of investment, I’ll just remind everyone that we spend about 7% to 9% of revenue on our CapEx or product innovation. And then there’s expenditure within the OpEx that’s also related to product innovation. So it runs at something around about $200,000,000 per annum on product innovation investment. And that increase has increased every year, year on year as our revenue increases.
And we are not going to stop doing that. So we outinvest our competitor on multiple levels. So we’ll continue to do that and we are going to focus on delivering increased value to our consumers and to our customers and that’s always been the premise for our revenue proposition. In terms of marketing, that type of thing, again, if you look at I would direct you to the other markets that CoStar breaks in. They have spent a fortune on marketing.
I think they outspend Rightmove in The UK Four times on marketing, and yet their audience has not moved. They’re still the number three after two years of marketing investment, and the audience is flatlined. If you look at Homes.com in The US, it’s reported they spent a billion dollars US on marketing last year, and they’ve still got a flatlined audience, and they’re still the number four. And in their own numbers for this latest quarter result, their unique audience fell 5% having spent that. Their revenue fell about 5% and they wouldn’t quote their customer numbers but they talked about churn so I’m pretty sure that’s down as well.
So again, we’re very confident in our levels of marketing. We do increase it year on year. We are in a very privileged position. We’ve got such strong brand awareness in the Australian market. We do have a team that punches way above its weight and gives huge value for the dollars that we spend.
So, we’ll keep doing that, and we’re very confident in our position. On the MX, I’ll I’ll I’ll let
Janelle Hopkins, CFO, REA Group: and look at audience maximizer. You know, we we see that social is becoming an increasingly, valuable part of the overall marketing schedule. So we want to make sure we’re we’re part of that, But we don’t expect that to have any substantial impact on our margin at all.
: Okay, great. Thank you.
Conference Operator: Thank you. And one moment for our next question. Our next question comes from the line of Suraj Ahmed with Citigroup. Your line is open. Please go ahead.
Thanks. Owen, just you made some comments on,
Suraj Ahmed, Analyst, Citigroup: the take up for next year based on the price increases in packaging units. Can can you touch on specifically what you’re seeing? Is it because subscription price increased, but it did I think if they take up AMAX and Luxe, it’s lower. So are you actually seeing that, all AMAX orders that are getting taken up?
Owen Wilson, CEO, REA Group: What I will comment on this, I’ll I’ll I’ll preface this by saying, look. We’re we’re not even quite halfway through the the pricing discussion process. But what we are seeing, you know, with the the new flexibility and options we’ve put into our contracts that it is going to enable more customers to take more AMAX going forward. So that’s really encouraging. I mentioned in my speaking notes, we’re seeing very healthy uptake of Pro and a couple of large franchise groups have taken enterprise wide contracts, which is again very pleasing.
And I think it’s a proof point on the value that’s being delivered through Pro, particularly in terms of the quality of our CMA tool. We’re seeing CMA usage continue to tick up month on month on month. But knowing that, the seller leads. If you’re an agent in Elevate, you’re getting more seller leads than your competitor and we’re increasing the volume of seller leads we’re putting out. So it’s a it’s a very high value, product pro, and and and the market is starting to realize that and starting to buy it increasingly.
Suraj Ahmed, Analyst, Citigroup: Got it. Second one, Janelle, I know this is a difficult one. Mean, negative three in this quarter. Given your guidance for volumes in May, June expectations, is it fair to assume that some of the deferrals comes back in fourth quarter?
Janelle Hopkins, CFO, REA Group: You’re right. It’s such a hard one. We’ll absolutely get that benefit of the deferral into Q4. But the net impact for the Q4 on revenue will depend on what happens on May 2 and how strong that is and how much of that upside then gets deferred into into ’26. It’s always hard with deferral.
It’s just a timing issue, but it just can play around a little bit with the numbers. So we will see some benefit into q four. How much of that holds versus getting deferred into q one would really depend.
Suraj Ahmed, Analyst, Citigroup: Got it. Alright. Thank you.
Conference Operator: Thank you. And one moment for our next question. Our next question is going to come from the line of Tom Beadle with Jarden. Your line is open. Please go ahead.
Tom Beadle, Analyst, Jarden: Good morning, everyone. Thank you for the opportunity to ask questions. I’ve got two as well. Just firstly, on Developer, I thought that modest revenue growth comment in the release was interesting just in the context of that 13% increase in project commencements. We’ve obviously had a couple of good quarters now, albeit off a low base.
But how might we think about this improvement in commencements in terms of how that flows through to future periods? Is this potentially a sign that developer revenues could start to accelerate over the next few quarters? Second question, it’s a bit related to to Rogers. Just just around CoStar, you know, if if they are to take control of Domain, you’ve obviously got the benefit of seeing how their competitive behavior has impacted Move, if at all. But my question is, what can you learn from Move’s experience in terms of your competitive response if if they are to take control of Domain?
Owen Wilson, CEO, REA Group: Thanks, Tom. On developer, you’re right. It feels like we are seeing green shoots in the developer market in terms of the number of projects that are are starting commencements. And it feels like the conditions are finally there for that sort of pent up demand in that space to reverse. I think we may have hit an inflection point.
I’m just loathe I’d be loathe to call it after four years of downs in this space or five years probably. When you think of what drives developments, a big one is interest rates. They have to fund the project while they’re building it. And we’ve had our first rate cut, whether we get another 234, some are calling 5, I don’t buy that. But any amount of cuts from here makes it easier for developers to bring projects out of the ground.
We’re also seeing the moderation in building materials cost. That seems to be flowing through. The only one that probably hasn’t 100% corrected to where that like it is availability and cost of labor. But again, I think that’s the rate of increase there and the availability is getting better. So at some stage, that is going to become a tailwind for us.
There is no doubt about that. When it’s hard to call, it feels like we’ve inflected, which is really pleasing. Look, in terms of our response to CoStar, we’ve watched them move, compete with them through Homes.com in The US. Their playbook around what I would call wasting a lot of money on marketing for no discernible movement in the audience, is there. And I assume that they will probably try something like that in the Australian market.
Honestly, our approach to CoStar coming in, it just doesn’t change the competitive dynamic market in that the way we deliver value to consumers and the way we deliver value to customers is not going to change. And you’ve heard us speak for years and years and years that we underpin our revenue growth by continuing to deliver increased value to both sides of the market, keep growing our audience, keep growing that engagement, keep growing the leads, which then underpins the value we’ve given our consumers. And we have a very robust strategy to keep doing that into FY ’twenty six and well beyond that. And quite frankly, that’s the best defense is just to build a better and better product and drive more value.
Conference Operator: Thank you. And one moment for our next question. Our next question is going to come from the line of Tahrir Singh with Bank of America. Your line is open. Please go ahead.
Alice Bennett, Head of Investor Relations, REA Group0: Hi, Oven. Thank you. Just two questions from my side. One, if I just look at the price increases that you’re discussing with your customers for next year, it looks like you’ve gone a little bit softer on depth price increases and a little bit harder or ramped up subscription costs a little bit more with with extra add ons. Can you talk about a thinking on that as in increasing the subscription cost?
Do you have do you think you have more room to do that over the coming years, or is it just a one time thing because you’re gonna put through AMA bundles and agent Elevate with the with the higher subscription cost? So that was my first question. The second question is, saw that Aurea India CEO resigned a few weeks back. Any thoughts on India market strategically? Could that prompt a rethink in how you’re going about India?
Or is it just going to be status quo?
Owen Wilson, CEO, REA Group: Thanks. Both good questions. So look, in terms of our pricing, we always talk to yield. And we’ve always got a target of double digit yield growth. And you recall, part of that is price and part of that is obviously mix.
We have gone out with a single digit price rise this year and again deliberately after two years of very healthy double digit price increases. And again, we’ve done that because of what else we’re putting in the market around our other products that drive yield. Luxe is a great example of that. In terms of the subs, this is the first time we’ve adjusted our subs prices for about ten years. So and yet we’ve been delivering significant value into that sub line.
You know, Ignite in particular is is an incredible high value add, offering for agents to to manage their listings, to manage their inquiries, to manage their inspections. And and, you know, that we haven’t priced for that at all in the last ten years. So and you recall when we also when we launched pro, we deliberately put that in what I’ll call an entry level price. Now the value that we are delivering that is just getting higher and higher, particularly with the volume of seller leads that are going to pro customers. And so we’ve adjusted that price accordingly.
But we’ve also changed the packages to give our customers greater flexibility and greater choice. It is something that they value and so we’ve changed the construct across the kind of whole portfolio of product offering to give them value and choice and flexibility so they can kind of choose their own adventure with our products. So we’re very pleased with the construct that’s gone out. Think as I said, the feedback from customers so far is quite positive. In terms of Dhruv’s move in India, look, that doesn’t change our view of the Indian market.
It is an exciting market. If you take a long term view of the Indian economy and the Indian property sector, it’s
: an
Owen Wilson, CEO, REA Group: undeniable, prize to go after. Drew’s been in that business for a very long time. He founded PropTiger. It’s time for him to do something different. He’s going to go off and probably start again in terms of founding another business, not in this space obviously.
And he goes without good wishes. And again, sort of the nature of the guy is he doesn’t have an end date. He’s going to stick with us until we’ve found his replacement. We’ve actually had a bit of a refresh in the team there. We’ve got a brand new CTO in the business, which is a fantastic talent.
And so we’re very excited about India, albeit it is a very competitive market because everyone else wants the prize as well.
Alice Bennett, Head of Investor Relations, REA Group0: That’s great, Erwin. Just a follow-up on subscription cost. Do you think you can flex it higher over the coming years? Because when I compare your subscription cost to some other classifiers, like even core sales, I think $800 a month for Pro is not that high for the value you are delivering in terms of seller leads and agent elevate, etcetera, etcetera. So is this gonna be a slight change in pricing strategy, which is gonna continue beyond the $5.26?
Any color on that? I know it’s early days and Yeah.
Owen Wilson, CEO, REA Group: Look. No. No. You’re right. Even at the current price, it it’s exceptional value.
I mean, you you only need a couple of converted seller leads, and you’re you’re effectively buying for the product. I’m not gonna speculate on future price changes, though. It wouldn’t be wouldn’t be wise for me to do that.
Alice Bennett, Head of Investor Relations, REA Group0: Thank you.
Conference Operator: Thank you. And one moment for our next question. Our next question comes from the line of Nick DeVille with CLSA. Your line is open. Please go ahead.
Alice Bennett, Head of Investor Relations, REA Group1: Morning, team. Thanks very much for the opportunity. First question is if you can just comment a little bit about the mobile app strategy and the growth in your membership numbers. I think it was up 6%. Just trying to understand how important that is to your dominance versus the nearest competitor, and does that help you drive more efficient marketing spend even if, I think, as others have alluded to, CoStar, you know, were to spend a lot of marketing in in this market or in other markets?
And the second question is on REA’s m and a strategy. I think it was mentioned that from Owen’s perspective, it’s only the number one marketplace models that are attractive investments. So just curious, I guess, in a scenario where CoStar’s marketing spend did drive the results they are seeking, would that increase the attractiveness of looking for more assets offshore to bulk up the group’s cash flow and marketing firepower. Yeah. I guess I’m sort of interested in general how we should think about your MA strategy.
Thanks.
Owen Wilson, CEO, REA Group: Thanks, Nick. Look. In terms of app and audience, I’ll remind everyone that most of our audience is organic. It’s not paid audience. And so it’s not like we go out and pay for the 12,000,000 people that come to our site.
They come there organically because they know where to get the best experience and they know that they need to go to see more properties. So, the membership strategy is important and for two reasons. One is, you know, if we know who a consumer is, we can better personalize the site. We can remember what they did last time on the site and the time before that and the time before that. And using AI we can predict what they’re likely to do next and create really rich, engaging experiences.
That’s why we’d like every user to be a member, which effectively means they’re logged in and we know who they are because we can give them a better experience through that. It also helps us drive better value to the customers. And so again knowing, who the consumer is we can provide richer information through to the customers and again give that consumer a better experience when they interact with our customers. So it’s kind of a win win strategy and we’re very pleased with the growth in our membership, but we’re not done there. I think I’ve covered the marketing.
I don’t think anything that costar did here around marketing will change our M and A strategy at all. As I said, look, we’ve observed what they’ve done with marketing in other markets, and it just really hasn’t driven their audience numbers at all, independently measured. I mean they have internal measures which say it’s higher. But if you look at independent measures, there’s no movement. And so look, our strategy around M and A hasn’t changed.
We would ideally, if we were going into a new market, we’d want the number one. Or if it was the number one, want to be very confident you could get to number one. And similarly, in Australia, we look at sort of small investments because ultimately, got to be driving our strategy in a small, obviously, a non portal space given our position in the market.
Alice Bennett, Head of Investor Relations, REA Group1: Thank you. And
Conference Operator: I’m showing no further questions at this time. And I would like to hand the conference back over to Owen Wilson for closing remarks.
Owen Wilson, CEO, REA Group: Thanks, everyone, for your time today. We are delighted with the result we delivered for Q3, and we’re on track for a strong finish to the year. And I look forward to seeing you all at our year end results announcement in August. Thank you.
Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.
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