- Revenue up 7.7% YoY to $234.9m
- EBITDA* up 10.8% YoY to $155.7m
- Net operating profit** up 12.0% YoY to $93.0m
- Net profit after tax up 25.9% YoY to $94.4m
- Earnings per share for F17 up 25.9% YoY to 23.76 cents\
- Fully imputed final dividend of 10 cps to be paid on 19 Sept (full year dividend of 18.5 cps)
- Result in line with guidance with higher YoY growth rates for EBITDA and operating NPAT
- Set to grow Christchurch team significantly: up to 30 new hires
Online marketplace and classified advertising business Trade Me Group Ltd (“Trade Me”) released its full year financial results for the 12 months to 30 June 2017 this morning.
Trade Me chairman David Kirk said F17 had been another year of “excellent progress” with revenue, EBITDA and net operating profit all at record levels. “We’re proud to have delivered on the promises made to our 8,827 investors. It’s fantastic to see the consistently strong revenue growth in the three Classifieds businesses, and the continued revenue growth in our General Items marketplace too.”
Trade Me CEO Jon Macdonald said a multi-year period of accelerated reinvestment in people, product development, marketing and sales had set the company up for success over the medium to long term. “The investment we’ve made over the past few years has resulted in a fundamentally stronger business. The company is going well and we’ve delivered revenue and profit growth to our investors, and also demonstrated our continued ability to keep costs within our forecasts.”
Trade Me’s revenue reached a record of $234.9m in F17, up 7.7 per cent on $218.0m in F16. In the second half of F17, revenue grew by 6.7 per cent year-on-year. Trade Me’s net operating profit was up 12.0 per cent year-on-year to $93.0m, well ahead of last year’s $83.0m.
Earnings per share increased to 23.76 cents, up from 18.87 cents a year ago, and a fully imputed final dividend of 10.0 cents per share will be paid on 19 September 2017. In March 2017, Trade Me paid investors an interim dividend of 8.5 cents per share.
Mr Macdonald said that across F17, the rate of expense growth had continued to abate. “Total expenses grew by just 5.7 per cent year-on-year, down significantly on the 17.8 per cent increase in F16. We’ve been careful to target our investment in line with our strategy.”
Performance by segment
Mr Macdonald said he was “rapt” to see good growth in the General Items marketplace with revenue up 7.1 per cent year-on-year, more than double the 3.5 per cent growth reported in F16. “There’s been a strong focus on augmenting trust with the introduction of Buyer Protection and Seller Protection. We’ve also zeroed in on making buying and selling easier with a range of product enhancements including the imminent roll-out of Afterpay, and we’ve seen our ‘Book a courier’ service going well and recently surpass 500,000 bookings.”
Mr Macdonald said the Classifieds continued to do well, with revenue up 11.3 per cent year-on-year to $125.5m underpinned by improved products and strong growth in premium revenue.
“Our employment business, Trade Me Jobs, was again the star performer with revenue up 25 per cent year-on-year,” Mr Macdonald said. “The team has been doing an excellent job, bolstered by the tailwinds of the strong New Zealand employment market, and a big effort improving our mobile apps.”
The largest classified vertical, Trade Me Motors, reported a revenue increase of 8.2 per cent year-on-year and continued demand from vehicle dealers for premium products. Mr Macdonald also said MotorWeb had been doing well, particularly in Australia.
Trade Me Property reported revenue growth of 7.3 per cent year-on-year. Mr Macdonald said property for sale listing volumes remained “a challenge” in a tight market. Revenue from premium products sold to real estate agents increased by 32.4 per cent year-on-year. “We’ve also seen strong consumer interest in Property Insights, our tool that provides free property information for more than 1.6 million residential properties.”
In the Other segment, comprising Trade Me’s display advertising, travel, dating, insurance and payments businesses, revenue was down 1.4 per cent year-on-year. However, there was strong growth in payments, with revenue up 18.5 per cent year-on-year.
The number of staff at Trade Me has grown from 509 (487 FTEs) as at 31 July 2016 to 543 (512 FTEs) as at 31 July 2017.
“We’re proudly anchored in Wellington and the majority of our team is in the capital, but our Auckland office is now 150-strong,” Mr Macdonald said. “We also have big plans to expand our team in Christchurch and will be looking to hire around 30 primarily tech people over the coming months.”
There have been several changes to the Trade Me Executive team. Annie Brown joined as the inaugural Chief People Officer in June 2017, and Trent Mankelow became the inaugural Chief Customer Officer a month later. Alan Clark (Head of Trade Me Motors) and Jeremy Wade (Head of Trade Me Jobs) also joined the Executive team in July.
In September, Mark Rees will join as Trade Me’s first Chief Product and Technology Officer, bringing together the company’s product development, data and technology platforms.
Mr Macdonald also acknowledged the contribution of two executives set to move on from Trade Me in coming months, Head of Commercial Jimmy McGee and General Manager of Platform and Operations Dave Wasley. "Both have been fantastic contributors to Trade Me over the past decade. I would like to thank both Dave and Jimmy for helping to shape this company for the better."
There was one change to the Trade Me board in December 2016, with Auckland-based Simon West appointed, replacing Sam Morgan as an independent director. Simon has extensive experience in retail and technology businesses, and is the executive director of Max Fashions.
Investments and divestments
Last month, Trade Me announced its intention to acquire Christchurch-based Limelight Software, the operator of the cloud-based automotive dealer management platform, Motorcentral. “We’re very excited about prospects for this business, and eagerly awaiting clearance from the Commerce Commission to proceed,” Mr Macdonald said.
Trade Me’s accommodation website Travelbug and online booking engine BookIt were sold to a Hamilton company in December 2016, and its online escrow business SafeTrader was shuttered in July 2017.
Mr Macdonald said Trade Me had delivered a return to good profit growth in F17. “Looking ahead to F18, we expect total revenue growth similar to that reported in F17, however a soft property listing market means there is some downside risk.
"With our targeted investment plans, we intend to invest at a rate slightly above revenue growth in F18, but we still expect to deliver year-on-year EBITDA and operating NPAT growth in F18, albeit at lower growth rates than F17 due to that higher level of investment.
“Trade Me is a great business. We’ll continue to derive benefit from the investment we have made over the past three years, and we’re better placed than ever to convert on the opportunities in front of us and keep growing.”
*EBITDA (a non-GAAP measure) represents earnings before income taxes (a GAAP measure), excluding interest income, interest expense, depreciation, amortisation and impairment, as reported in the financial statements.
**Net operating profit excludes one-off non-operating gains of $1.4m in F17 and a one-off impairment charge of $8.1m for FindSomeone (our small online dating business) goodwill in F16.
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