Despite a recovery in listing volumes and well-rounded growth, Domain shares are sliding to 3-month lows this morning.
The post Domain (ASX:DHG) share price down 3% after FY21 results appeared first on The Motley Fool Australia. –
Domain share price tumbles despite well-rounded growth
The Domain share price has tumbled to 3-month lows despite the business experiencing growth across key operating metrics. Its highlights included:
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $102 million prior to the impact of an accounting change, up 20.8% year-on-year
Net profit of $37.9 million, up 66% year-on-year
31% like-for-like growth in core digital EBTIDA
Record unique digital audience of more than 9 million
How did Domain perform in FY21?
The Domain share price is tipping lower despite its net profit exceeding Commsec estimates of $31.4 million.
The double-digit increase in financial metrics was underpinned by the continued growth of its core digital services which include residential listings; media, developers & commercial; and agent and property data solutions segments.
The residential segment hit record audience figures in March, with a unique audience of 9.6 million across print and digital streams, up 23% year-on-year.
Management observed high engagement metrics, with a 52% year-on-year increase in app launches, alongside strong growth in listing views and enquiries.
Encouragingly, management said that “we have seen a 55% increase in buyer enquiries, our most valuable audience interaction while reducing cost per enquiry by 25% year-on-year in the second half”.
Residential revenue increased 21% to $195.3 million or approximately 67.4% of total revenue. The company notes that revenue growth accelerated in the second half, increasing 32%.
The strong uplift in demand was supported by a recovery in listings from FY20 COVID-induced lows.
In addition to an uplift in audience, listings and revenue figures, the company successfully implemented a delayed price increase in July.
Domain’s media, developers and commercial segment contributes approximately 15.8% or $46 million of total revenues.
This business division experienced a 7% increase in revenues, with a strong recovery in the second half across all three verticals. The drivers of this single-digit increase included a recovery in property-related advertising categories, underpinned by growth in Domain’s overall audience.
Agent and property data solutions is another segment that makes a minor revenue contribution of approximately 8.4%. Management highlighted its applications such as Pricefinder, Homepass and Real Time Agent making strong contributions to growth.
In addition, the Domain share price announced a fully franked 4 cents per share dividend which will be paid to eligible shareholders registered on 24 August.
What did management say?
Domain CEO and managing director Jason Pellegrino commented on the results, saying:
Through the uncertainties of the past year and a half, Domain maintained the pace of business strategy evolution. The adoption of our Marketplace model is designed to make our solutions work better together, expand our addressable markets, and deliver on our purpose to inspire confidence for all of life’s property decisions. The actions we have taken have positioned Domain to take full advantage of an improving property market environment, with Core digital EBITDA growth of 31% like-for-like. The recovery in market listings has combined with an expansion in Domain’s controllable yield to deliver accelerating revenue growth in the second half.
What’s next for Domain?
Looking ahead, Domain cited that national listing figures are slightly up on last year.
Despite the recent sweep of lockdowns, the company said that it “[has] confidence in the resilience of the market, as evidenced by consistent patterns of sharp rebounds when restrictions ease”.
Expenses could be a drag on the Domain share price this morning, as the company said that ongoing costs are expected to increase in the high single-digit to low double-digit range from an FY21 ongoing expense base of $195.5 million.
No exact guidance figures were provided for FY22.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.