REA Group Faces Rising Costs Despite Strong Earnings and Market Lead

Strong Financial Performance Across Core Operations

REA Group Ltd (ASX: REA) has reported an impressive set of results for the half-year ended 31 December 2024, showcasing robust growth across its core operations. The company recorded revenue of $873 million, up 20% year-on-year, while EBITDA (excluding associates) rose 22% to $535 million. Net profit attributable to owners increased by 26% to $314 million, reflecting solid operational execution and market demand.

Reported net profit surged 246% to $441 million, boosted by a significant one-off gain from the sale of its stake in PropertyGuru. However, the core operational results provide a clearer picture of the company’s underlying momentum.

Australian Market Drives Growth Amid Healthy Listings

Australia remains the cornerstone of REA Group’s success, with revenue climbing 19% to $809 million. This growth was supported by a healthy listings environment and strong vendor confidence, as sales volumes consistently outpaced the prior year. Residential revenue increased 21%, buoyed by a 14% rise in Buy yield and a 5% increase in national listings. The company’s flagship platform, realestate.com.au, further cemented its market leadership, attracting an average monthly audience of 11.9 million, significantly ahead of its nearest competitor.

Financial Services revenue also grew 13%, driven by higher volumes and increased penetration of higher-margin products. Commercial and Developer segments saw a 10% revenue increase, supported by price rises and deeper market penetration. Despite some softness in project commencements, overall demand dynamics remain positive.

India Operations Accelerate with Digital Focus

REA India delivered a standout performance with revenue up 46% to $64 million. Growth was led by adjacent services on the Housing Edge platform, which surged 153% due to increased customer acquisition and usage. Housing.com also posted a 15% revenue increase, benefiting from stronger activity in Tier 2 cities, although PropTiger experienced a 26% revenue decline amid a competitive market and reduced stock volumes.

The company’s app-first strategy in India is paying dividends, with Housing.com’s app sessions rising 37% and capturing 54% of app downloads in the online real estate classifieds sector. While EBITDA losses in India are expected to be marginally lower for the full year, the region remains a key growth focus.

Cost Management and Capital Position

Group operating expenses increased 18%, reflecting strategic investments in marketing and employee costs, as well as higher revenue-related expenses linked to Audience Maximiser and Rent Pay on Credit offerings. Australian costs rose 16%, while India’s operating expenses grew 24%, largely due to marketing and revenue-related costs.

Following the sale of PropertyGuru, REA Group eliminated its external debt of $209 million and maintains a strong balance sheet with $338 million in cash and a $400 million undrawn facility maturing in 2028. This financial flexibility supports ongoing investment and shareholder returns.

Outlook: Balanced Market and Continued Growth

REA Group remains optimistic about the property market outlook, supported by strong employment, high immigration, and anticipated interest rate cuts in 2025. The company expects continued double-digit growth in residential Buy yield, although growth may be moderated by geographic mix effects. Operating cost growth is now expected to be in the low double digits, higher than previously forecast, due to increased revenue-related expenses.

CEO Owen Wilson highlighted the market’s shift towards a more balanced supply-demand dynamic and reaffirmed REA’s commitment to enhancing consumer experiences and delivering value to customers. The company’s dominant market position and diversified revenue streams position it well to navigate evolving market conditions.