Trade Me posts record revenue
New Zealand's largest online marketplace and classified advertising business Trade Me has released its full year financial results for the 12 months to June 30, 2018 (F18) this morning.
Trade Me chairman David Kirk said the full year period had seen another record result with net operating profit up 3.9 per cent on last year to $96.6 million, while revenue was up 6.6 per cent.
"We're proud to have delivered another record result for our investors. It's great to see our Classifieds businesses continue to grow strongly this year, and it was pleasing to see solid growth in new goods in our General Items marketplace too," said Kirk.
Trade Me CEO Jon Macdonald, pictured above, said Trade Me was operating in a competitive environment but continued to deliver growth and good returns for investors.
"We're well placed to meet the challenges in front of us and continue to grow, and we see a lot of opportunity. We're also pleased to deliver a result in line with what we forecast at the end of the 2017 year and reiterated in March 2018."
The numbers
Trade Me's revenue reached a record $250.4m in F18, up 6.6 per cent on $234.9m in F17. In the second half of F18, revenue grew by 6.4 per cent year-on-year.
Earnings per share increased to 24.33 cents, up from 23.76 cents last year and a fully imputed final dividend of 10.5 cents per share will be paid on 20 September 2018.
Kirk also said the board had decided to pay a special dividend of 22.0 cents per share in September too.
The board had "determined that the best use of $100 million of capital is to pay a special dividend to shareholders," having consistently accumulated cash and reduced debt since listing on the NZX nearly seven years ago.
Total expense growth in F18 was 7.1 per cent year-on-year, up slightly on 5.7 per cent growth in F17, but well down on F16 and F15.
Trade Me Motors reports a record increase in revenue
Trade Me's largest business, Trade Me Motors, was the star performer reporting a 12.7 per cent year-on-year increase in revenue and continues to be the market leader in the automotive category.
This result was underpinned by a 41.0 per cent year-on-year revenue increase from dealer depth products.
"Trade Me Motors, Trade Me Property and Trade Me Jobs are still growing strongly, with a combined revenue growth of 12.3 per cent year-on-year to $141.0m. Their success was largely due to strong growth in depth revenue derived from features and premiums," said Macdonald.
'Our employment business, Trade Me Jobs, had another great year with revenue up 14.1 per cent year-on-year. The team have been doing a fantastic job, coupled with a strong New Zealand employment market. They've also released Job Profiles this year, aimed at giving recruiters access to passive job hunters.
Trade Me Property reported revenue growth of 10.2 per cent year-on-year, in a tougher market and led by strong demand for depth products from 'for sale' real estate agencies which saw revenue up 38.2 per cent on F17.
In the Other segment, comprising Trade Me's display advertising, travel, dating, insurance and payments businesses, revenue was down 2.3 per cent year-on-year, mostly due to the sale of some smaller interests at the end of 2017. There was good growth in payments, with revenue up 6.0 per cent year-on-year.
Trade Me announces investment in 'Sharesies'
"We're hugely excited today to announce a small investment in Wellington growth company Sharesies. We've got to know the team there over the last few months, and think they have enormous potential," said Macdonald.
'We like their ambition of giving someone with $5 the same investment opportunities as someone with $500,000, and we think that making investing more consumer-friendly can do great things for New Zealand while opening up big revenue pools. This is also another step in us building out a vibrant New Zealand online ecosystem that ensures our growth in the long term."
One opportunity that did not work out was a proposed acquisition of Christchurch-based dealer platform, Motorcentral.
"We were disappointed the Commerce Commission declined our bid to acquire Motorcentral, with a prolonged ten-month process. However, we've since signed a commercial agreement with Motorcentral and we'll work closely with them to provide greater value to our dealer customers."
Outlook
"We are well-placed to execute on our strategic priorities - strengthening our core proposition, expanding our offer to extend our existing businesses, and growing a vibrant NZ online ecosystem," said Macdonald.
"In F19 we expect total revenue growth of between 5 - 8 per cent over F18. We also expect operating profit after tax to grow at a similar rate in percentage terms."
