Rounding up the first half of FY24, digital real estate portal Domain (ASX: DHG) was relieved to find a positive environment in Sydney and Melbourne, with early signs of improvement in smaller markets. As buyers dealt with higher interest rates and cost of living, demand continued to soar, benefitting real estate companies.
Domain reported a statutory revenue of $203.5 million, marking an 11% increase compared to the same period last year. Net profit after tax stood at $24.4 million, with EBITDA soaring by 32.1% to $68.4 million. It also saw a significant items loss of $0.5 million. A dividend of 2.0 cents per share has been declared, in line with H1 FY23.
Domain Chief Executive Officer and Managing Director, Jason Pellegrino, said, “The first half of FY24 has seen a pleasing turnaround in the property market environment in Sydney and Melbourne, although other markets have remained challenging, impacted by rising interest rates and cost of living pressures.
“We have retained our disciplined Marketplace approach, with operating expenses increasing less than 3% year-on-year in the first half.”
Pellegrino also discussed Domain’s strategic decision to exit its Domain Home Loans joint venture, paving the way for alternative avenues to pursue profitable growth.
The Company’s core digital revenue experienced a notable increase of 12%, reaching $193.4 million, while core digital EBITDA surged by 25% to $86.2 million. Residential revenue witnessed a substantial uptick of 16%, with a record high depth as a percentage of total revenue, demonstrating strong adoption of premium offerings like Platinum Edge (allowing sellers to bump up their listings to a featured section).
The national ‘for sale’ market listings showed a significant rebound, particularly in Sydney and Melbourne, although challenges persisted in other regions, notably Queensland. Against that backdrop, Domain successfully implemented price increases and achieved controllable yield growth of 15% in H1 FY24.
Commercial Real Estate emerged as a standout performer, registering a remarkable revenue growth of 24%, supported by increased listings and enhanced depth penetration. Additionally, media revenue surged by over 30%, attributed to Domain’s robust audience engagement and strategic partnerships.
Looking ahead, Domain remains optimistic about its growth prospects, with ongoing growth in new listings observed in Sydney and Melbourne. The Company reaffirmed its cost guidance of $237.1 million for FY24 and anticipates EBITDA margin expansion, driven by improving listings, successful pricing strategies, and prudent cost management.
Recently, REA group (ASX: REA) also reported strong results despite market volatility. Higher prices and increased marketing activity contributed to REA Group’s revenue surge, offering a glimmer of hope in a market marred by uncertainties.
However, REA foresees a softer market in the second half as the cup tips in the favour of buyers with reduced interest rates and prices. But this might be short-lived.
For Domain, the stronger Sydney and Melbourne markets, exit from DHL and a focus on its core digital platform is expected to drive growth in FY24.
Alinda is a Business Reporter for The Sentiment
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