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Bringing in revenue of $345.8 million and net profit after tax of $26.1 million aren’t enough to put the tech giant ahead for the FY23, when compared to FY22.
In an announcement to the ASX, Domain Holdings Australia Limited has delivered its full-year financial results for FY23, revealing operating costs of $251.2 million for the 12-month period, which is better than the previous guidance of around $255 million.
Over the same period, EBIDTA is down 13 per cent from $124.8 million to $108.6 million (excluding Domain Home Loans/DHL) which is treated as a discontinued operation by the business.
It follows last week’s news that REA Group revenue is up just 1 per cent over FY23, with its own announcement conceding that “challenging market conditions” are to blame for the dampened growth.
Domain chief executive officer and managing director, Jason Pellegrino, also acknowledged “the challenging market environment of FY23”, stating that the company’s “marketplace strategy and our talented hardworking team have served us well”.
Reaffirming that the company remains “ambitious in our aspiration to leverage all the opportunities available to our marketplace to become a much bigger business”, he noted Domain’s decision to “pursue a sale exit from our DHL joint venture”.
“We aspire to a business that has ability to scale and achieve profitable growth,” Mr Pellegrino continued, flagging how the decision to pursue a sale exit of DHL has impacted on the reported results.
“For FY23, excluding significant items and discontinued operations, Domain reported revenue of $345.7 million, down 0.5 per cent, expenses of $237.1 million, up 6.5 per cent, and EBITDA of $108.6 million. Net profit was $38.6 million, and earnings per share were 6.12 cents.”
In June 2023, Domain also reported its net debt sat at $185.8 million – which represented a leverage ratio of 1.92 times ongoing EBITDA.
For shareholders, a dividend of 4 cents per share was declared, bringing the full year dividend to 6 cents per share, which Domain noted was in line with FY22.
In the residential space, Domain reported its residential revenue declined 7 per cent to $223.1 million, reportedly reflecting the 13.8 per cent year-on-year decline in ‘for sale’ property listings.
But, despite the dampened listing numbers, it also reported 8 per cent growth in controllable yield, which Domain attributed to price increases, record-depth penetration, and the launch of the ‘Social Boost All’ social media add-on.
According to Domain, the result is “all the more impressive given the disproportionate listing volume declines of more than 21 per cent and 16 per cent respectively in Domain’s highest yielding markets of Sydney and Melbourne”.
Looking ahead, Mr Pellegrino said: “Despite the market backdrop, the business made significant progress with our strategic objectives, building on Domain’s differentiated micro-market approach, which is driving strong yield gains in less mature markets.”
He also identified that more than 15 per cent of customers “upgraded to higher-tier subscription or depth listing products for FY24”.
Looking forward to FY24, the business shares expectations of a recovery in new ‘for sale’ listings across the aforementioned Sydney and Melbourne markets, despite continuing impacts being seen nationally due to weaknesses across the Queensland and West Australian markets.
All in all, Domain said it expects to resume EBITDA margin expansion across the next 12 months, supported by improving listings and successful price increases, among other strategic moves.
On the tech side of things, it’s been a busy period for the giant.
Domain has fully finalised the integration of Realbase into the business, while the release of new features for the listing portal over the past month have marked “the most significant upgrade to its capabilities” since launching its app over a decade ago.
It has also unveiled a new AI tool designed to address key challenges being faced by agents within their CRMs.
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