REA Shares Plunge 18% in Today’s Market Downturn

REA Group Ltd (ASX: REA) experienced a significant decline in shares, plunging 18% to $150.01 following its half-year earnings report. The drop reflects market reactions to the financial results released earlier today.

Quarterly Performance Overview

For the six months ending December 31, the realestate.com.au operator reported total revenues of $916 million. This marks a 5% increase compared to the previous year, driven by an 8% rise in Australian revenue. However, international revenue fell sharply by 31% during the same period.

Details of Revenue Growth

• Australian Residential revenue rose 7% to $658 million.
• Commercial and New Homes revenue increased by 10% to $121 million.
• Financial Services revenue grew 11% to $58 million.
• Other revenue sources added 8%, reaching $35 million.

Operating Expenses and Profit Margins

The company’s operating expenses climbed 3% year-over-year to $347 million. Despite these rising costs, net profit after tax improved by 9%, totaling $341 million. Correspondingly, earnings per share also saw a 9% increase, moving to $2.58. However, these figures fell short of market expectations.

Website Performance Metrics

During the first half, REA Group boasted impressive metrics, demonstrating its lead in the Australian property market:

• Average monthly visitors reached 12.7 million, peaking at 13.2 million in November.
• Realestate.com.au attracted 6.4 million exclusive users.
• Overall, the site recorded an average of 146.1 million visits, outpacing its closest competitor by 105.9 million visits.
• Buyer inquiries grew by 20%, seller leads surged by 38%, and active members increased by 10%.

CEO Insights and Future Outlook

CEO Cameron McIntyre highlighted the success of the first half, attributing it to substantial growth in yield within the residential sector. He expressed optimism for ongoing enhancements in consumer engagement through innovative product features.

Looking ahead, REA Group forecasts a residential Buy yield growth of 12% to 14% for FY 2026. However, the potential for growth could be influenced by geographic market conditions in the remaining months of the year.

Conclusion

As REA Group navigates this challenging market, the emphasis on innovation and market responsiveness will be crucial for sustaining growth and profitability.