REA : H1 FY22 Financial Information Released

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ASX Announcement

4 February 2022

REA Group delivers an exceptional H1 performance

Financial highlights from core operations1 compared to prior corresponding period:

• Revenue2 of $590m, up 37%
• EBITDA3 (including associates) of $368m, up 27%
• Net profit4 of $226m, up 31%
• Interim dividend of 75.0 cents per share, up 27%
• EPS of 171 cents, up 31%

REA Group Ltd (ASX:REA) today announced its results for the half-year ended 31 December 2021. Group financial highlights from core operations include YoY revenue growth of 37% to $590m, an increase in EBITDA including associates of 27% to $368m, and a 31% increase in net profit to $226m. Reported net profit increased to $221m, reflecting one-off impacts in both periods (see Appendix 1).

The Group result includes the consolidation of REA India from 1 January 2021 and Mortgage Choice from 1 July 2021. Excluding the impact of these acquisitions, core revenue increased by 25%, EBITDA including associates1 increased by 27% and NPAT1 was up 33%.

Revenue growth was underpinned by increases in all major lines of business, including a 31% increase in Australian Residential. This reflected a strong market recovery despite the impact of Melbourne and Sydney lockdowns in the first quarter.

Core operating costs, excluding acquisitions increased by 17% during the half. This reflects reduced operating costs in the prior period as the Group navigated through COVID uncertainty, continued investment to deliver strategic initiatives, and higher salaries in a tight labour market. The strong growth in add-ons such as Audience Maximiser has also driven an increase in variable costs related to these products.

The Board has determined to pay an interim dividend of 75.0 cents per share fully franked, which reflects a 27% increase on the prior year.

REA Group Chief Executive Officer, Owen Wilson commented: "REA Group delivered an exceptional first half result as the business continued to successfully navigate the impacts of the global pandemic.

"As anticipated, the removal of COVID restrictions saw a wave of new listings on realestate.com.au, with sellers making up for the time lost in lockdown and taking advantage of the significant buyer demand. Combined with record take up of our premium listing products in Residential and Commercial, we delivered very pleasing revenue growth.

"Our flagship site realestate.com.au continued its position as the number one address in property. In October, a record of 145.5 million visits to realestate.com.au were achieved and the site has grown to be Australia's seventh largest online brand."

A summary table of the key financial information from core operations1 is presented below. The information is presented in Australian dollars and is prepared under AIFRS. All financial growth rates refer to YoY comparisons unless otherwise stated.

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									YoY		YoY growth
	AUD$m (unless stated)		H1 FY22			H1 FY21		growth		(ex-acquisitions)5
	Revenue	590		430			37%			25%
	Operating expenses	(224)		(145)		54%			17%
	Operating EBITDA (excluding share of		366		285		29%			30%
	profit/losses from associates)
	EBITDA (including share of		368			290			27%			27%
	profit/losses from associates)
	NPAT attributable to owners of		226			172			31%			33%
	parent
	Earnings per share (EPS) (cents)	171		131		31%			33%

AUSTRALIA - PROPERTY & ONLINE ADVERTISING

In Australia, REA Group operates the leading residential and commercial sites realestate.com.au and realcommercial.com.au6, and data and insights business, PropTrack. Revenue of $525m was up 25% for the half, driven by growth in all major Australian lines of business.

A summary of the quarterly residential listings and project commencement changes is outlined in the table below, showing changes against the prior corresponding period:

	Q1'21	Q2'21	Q3'21	Q4'21	Q1'22	Q2'22	H1'22
Residential Buy listings change7
National	0%	6%	8%	54%	11%	22%	17%
Sydney	25%	9%	6%	64%	-7%	39%	14%
Melbourne	-41%	17%	14%	64%	79%	25%	43%
Project commencement change	3%	12%	14%	44%	-37%	-10%	-24%

Residential revenue increased 31% to $387m. Buy revenue experienced strong growth, benefiting from national new listings growth of 17%, increased depth and Premiere penetration, an 8% average national contracted price rise from 1 July, and continued growth in add-on products such as Audience Maximiser. Rent revenue benefited from increased depth penetration and product mix and a 6% price rise, however this was offset by a decline in rental listings, which remain depressed largely due to the continued lack of interstate and international migration.

Commercial and Developer revenue increased 7%, despite the negative impact of lockdowns in Sydney and Melbourne in the first quarter. Commercial revenues were up YoY, driven by price changes from 1 July and increased depth penetration. Developer revenues were flat YoY, with benefits from the growth in project launches in FY21 and increased project profile durations, largely offset by a 24% YoY decline in project launches for the half.

Media, Data and Other revenue grew by 14% during the half. Data revenues increased by 23%, with PropTrack benefiting from new contracts and increased automated valuation model (AVM) volumes, and Media revenues were up 15% reflecting increased developer display and programmatic revenue growth. Other revenues, which is largely flatmates.com.au, declined YoY.

Following the divestment of the Malaysia, Thailand and Hong Kong businesses, Myfun is the only remaining business from the Group's Asia segment. Given Myfun syndicates Australian premium Residential, Commercial and Developer listings to its Chinese website, the Group has restated its

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Australia - Property & Online Advertising segment to include Myfun and the results of Malaysia, Thailand and Hong Kong, including prior periods.

Realestate.com.au maintains leadership as Australia's number one property site

REA Group's flagship site, realestate.com.au, consolidated its leadership position8, delivering record audience numbers.

"realestate.com.au remains the clear leader in online real estate and we continued to consolidate audience engagement during the half. Holding the largest and most engaged audience of property seekers is core to our success, and the level of demand from the 12.6 million people visiting our site each month helped drive a record number of buyer enquiries," added Mr Wilson.

Key realestate.com.au audience highlights included:

• 12.6 million people visited each month on average9; with a record 13.2 million in October10 or 65% of Australia's adult population11;
• 128.8 million average monthly visits, up 12% YoY12, with a record of 145.5 million visits in October13;
• 3.3x more visits than the nearest competitor each month on average14;
• 42% YoY increase in buyer enquiries15;
• 24% increase in active members16; and
• 53% YoY increase in active property owner tracks17

AUSTRALIA - FINANCIAL SERVICES

Financial Services revenue was $41m, up 24% YoY on a pro forma basis assuming REA Group owned Mortgage Choice in the prior period18. Revenues benefited from a 39% increase in settlements, driven by continued broker network growth and increased productivity in a buoyant housing market, partly offset by higher broker payout ratios.

The Mortgage Choice integration is progressing well, with plans announced to transition Smartline brokers to the Mortgage Choice platform, and to rebrand the combined business to Mortgage Choice in 2022. The integration is expected to be completed by Q3 FY23.

INDIA

REA India has delivered an impressive performance during the half, with revenue growth of 125% to $24m19. Revenue growth was driven by Housing.com's property advertising business, with increased search engine optimisation (SEO) driving audience growth of 55% YoY20. Revenue has also benefited from growth in lower margin adjacency products on the Housing Edge platform, such as Rent Pay, Mortgages and Property Management.

INTERNATIONAL INVESTMENTS

REA Group has a 20% investment in Move, Inc. which operates realtor.com®, a leading property portal in North America. Move revenue increased 19% for the half, driven by both traditional lead generation and referral model growth21. The traditional lead generation product benefited from increased yield, while the referral model benefited from higher average home values and transaction volume and generated approximately 32% of total Move revenues. Lead volumes declined by 14% YoY in the half and 9% in Q2, reflecting strong prior year comparatives.

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Move saw higher employee and marketing costs as the business continued to reinvest to drive their core businesses and expand into adjacencies. This resulted in a $1m decline in Move's equity accounted contribution to $8m.

Average Q2 monthly unique users of realtor.com®'s web and mobile sites increased 6% YoY to 85 million22, consistent with 7% YoY growth in Q123.

REA Group also holds an 18% stake in PropertyGuru Pte. Ltd. (PropertyGuru), which contributed an equity accounted loss of $4m in H1 to core group EBITDA. PropertyGuru operates leading property marketplaces in Singapore, Vietnam, Malaysia and Thailand. REA Group's investment in PropertyGuru provides exposure to one of the fastest growing regions globally, with macro tailwinds of urbanisation, middle class expansion and digitisation driving activity within the digital real estate marketplace.

"As a strategic shareholder, REA is excited to be part of the next phase of growth for the PropertyGuru business. The strong network of brands creates a competitive advantage and positions PropertyGuru perfectly to transform these markets," said Mr Wilson.

RETURNS TO SHAREHOLDERS

The Board has declared an interim dividend of 75.0 cents per share fully franked, a 27% increase on the prior year. The 2022 interim dividend dates are:

Ex-dividend date	7 March 2022
Record date	8 March 2022
Payment date	22 March 2022

OUTLOOK

Residential property market conditions remain positive, with high levels of buyer demand underpinned by increased supply in late 2021 following the end of lockdowns. January 2022 National residential new listings were up 14% YoY, with Sydney listings increasing 19% and Melbourne up 5%. YoY growth rates are expected to slow in the second half compared to the first half as we cycle very strong prior period listing volumes. Other factors such as the federal election and potential regulatory measures to slow house price inflation could also negatively impact listing volumes.

The Group is targeting full year positive operating jaws, excluding the impact of the REA India and Mortgage Choice acquisitions. Operating cost growth excluding acquisitions is expected to slow to high-single digit growth in the second half, reflecting a more normalised prior period comparative and continued investment in growth initiatives. The group expects full year operating cost growth of low-double digits, up from high-single digits previously anticipated, primarily reflecting an increase in revenue-related variable costs.

It is anticipated that a positive full year equity accounted contribution from Move will be offset by losses from other new associates as they invest for future growth.

"REA Group has emerged from another disruptive year in excellent shape, and we expect the favourable market conditions to continue into 2022. While COVID and the federal election may throw some curveballs, the effect on our market should be temporary. We are excited about new products scheduled to enter the market this year as well as the excellent progress we have made with our adjacent businesses," said Mr Wilson.

-ends-

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For further information, please contact:
REA Group Ltd Investors:	REA Group Ltd Media:
Alice Bennett	Umesh Ratnagobal
Executive Manager Investor Relations	Acting General Manager Corporate Affairs
M: [phone]	M: [phone]
E: [e-mail]	E: [e-mail]

The release of this announcement was authorised by the Board.

HY Results Presentation webcast link

About REA Group (www.rea-group.com):

REA Group Ltd ACN 068 349 066 (ASX:REA) ("REA Group") is a multinational digital advertising business specialising in property. REA Group operates Australia's leading residential and commercial property websites - realestate.com.au and realcommercial.com.au - as well as the leading website dedicated to share property, Flatmates.com.au. REA Group owns Smartline Home Loans Pty Ltd and Mortgage Choice Pty Ltd, Australian mortgage broking franchise groups, and PropTrack Pty Ltd, a leading provider of property data services. In Australia, REA Group holds strategic investments in Simpology Pty Ltd, a leading provider of mortgage application and e-lodgement solutions for the broking and lending industries; Realtair Pty Ltd, a digital platform providing end-to-end technology solutions for the real estate transaction process, Campaign Agent Pty Ltd, Australia's leading provider of Buy Now Pay Later solutions for the Australian real estate market and Managed Platforms Pty Ltd, an emerging Property Management software platform. Internationally, REA Group holds a controlling interest in REA India (formerly Elara Technologies Pte. Ltd.), operator of established brands Housing.com, Makaan.com and PropTiger.com and owns a leading portal in China (myfun.com). REA Group also holds a significant minority shareholding in Move, Inc., operator of realtor.com in the US, and the PropertyGuru Group, operator of leading property sites in Malaysia, Singapore, Thailand and Vietnam.

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