It is not just a tough environment for job seekers but also for job portals like SEEK (ASX: SEK), which are grappling with lowered ad revenue.
In H1 FY24, SEEK reported a 5% decline in revenue compared to H1 FY23, totaling $596.8 million. EBITDA saw an 11% decline to $252.9 million, while net profit after tax (NPAT) fell by 24% to $107.5 million. The primary contributor to this revenue downturn was SEEK’s ANZ division, which experienced a 10% decline in revenue to $412 million. Despite this, both the Brasil and Mexico divisions recorded modest growth rates of 8% and 5% respectively, while Asia saw a marginal 1% decline.
SEEK CEO and Managing Director, Ian Narev said, “From a financial perspective, the expected reduction in volumes from all-time highs in the post-COVID rebound period impacted APAC revenue and profit. In the ANZ business, total volumes were similar to FY19 levels, albeit with a changed customer mix.
“Dynamic pricing responded to continued growth in wages and applications per job ad, leading to a 13% rise in yield in the period. Depth adoption also increased. The Asia business saw similar paid ad volume declines. However, revenue was up slightly on a reported currency basis due to yield growth of 32%.”
Some of this increase stemmed from lower-yielding basic ads contributing more to the decline in volume than their higher-yielding counterparts, a trend that began in the second half of CY23. The remainder of the increase resulted from a sustained uptake of depth products.
Additionally, improvements were noted in both Mexico and Brasil Online’s financial performances. EBITDA increased by 17%, driven by revenue growth, while Brasil Online experienced moderate revenue growth coupled with a significant reduction in costs.
Operating expenses across SEEK remained consistent with those of the previous period. Costs associated with Platform Unification have been successfully phased out of the business as anticipated, with approximately 95% of the additional expenditure now eliminated. Furthermore, specialised product and technology capabilities have been reallocated to the growth initiatives.
SEEK made big moves during the period, such as the initiation of market trials for Pay Per Application and the Recruiter Network in ANZ, along with the expansion of JobStreet Express in Asia. Additionally, businesses within the SEEK Growth Fund’s portfolio demonstrated robust growth, with a notable 15% increase in look-through revenue. Although the market conditions resulted in a slight dip in portfolio valuation during this period, the current valuation remains 32% higher than the fund’s inception.
The Company has announced a dividend payout of 19 cents per share, representing 100% of Cash NPAT less capital expenditures.
Looking ahead to FY24, revenue is expected to range between $1.15 billion to $1.21 billion, with operating expenses estimated at approximately $670 million. SEEK anticipates EBITDA to fall within the range of $490 million to $530 million, while adjusted NPAT is projected to be around $190 million to $220 million.
Given the revenue outlook, SEEK’s projected expenditure for the year will align with the lower end. The observed yield growth underscores the advantages of maintaining a long-term investment approach.
Finally, with the unified platform now in place, SEEK reaffirmed its commitment to pursuing the $2 billion revenue opportunity.
Alinda is a Business Reporter for The Sentiment
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