On 30 April 2019, Rob Doyle, the CFO of Domain Holdings Australia Limited (ASX: DHG) delivered a presentation at the Macquarie Australia Conference in Sydney where the company provided the trading update in the March 2019 quarter.
During the period, the digital revenue was in line with the previous corresponding period. However, the total revenue was down by approximately 6%. In the March quarter, the total new market listings were down nationally as the auction volume was down by 30% in Sydney and Melbourne by 36%. It continued to deliver a double-digit growth in the Residential Digital yield. However, it got offset as a result of decline in the Residential sale listings of the company by 13%. There was an increase in the Residential depth revenue by 1%. The print revenue performance reflects these recurring conditions.
The CFO’s presentation also highlighted on how the company is growing its core listing business, growing new revenue in Consumer Solutions as well as simplifying and optimizing its business.
The strategy of the company will help in building a customer-centric Australian property marketplace. The core listings of the company consist of residential, agent services, developers and commercial real estate subscription and premium products. Through these powerful marketing platforms, the agents as well as the corporates would be able to grow and deliver results for their customers.
Consumer Solutions consists of partnerships with industry leading experts to leverage the large audiences of the company as well as deliver direct-to-consumer services such as home loans, insurance along with the utilities connections.
The presentation also stated that the company believes in delivering value to the customers at each stage of their property journey.
The core listings business of the company is supported by a marketplaces model, leveraging supply and demand to drive yield. The residential business of the company is the largest contributor to the revenue. The supply in the Residential business has been maximized to achieve effective listings parity with the major competitor of the company. The company also reported a growth in the demand with a cross-platform audience of 7.2 million Australians.
The company have also implemented a data-driven approach to segmenting its Residential markets. The company also provided an indicative profile of its established market showing its strong competitive position. The audience of the company is 90% of its major competitor. There are approximately 75% of agencies who have depth ‘all’ contract with Domain. Also, the pricing of the highest value Platinum premium product of the company is ~ $2000 and Platinum penetration is ~ 60%.
The indicative profile of the company’s Expanding markets shows the strengthening competitive position. Here, the audience of the company is ~ 75% of its major competitor. There are around 40% of agencies who have a depth ‘all’ contract with Domain. The highest value Platinum premium product’s pricing is ~ $600 with platinum penetration of around 20%.
The indicative profile of the company’s Emerging markets shows an early-stage foothold. Here, the audience of the company is ~ 50% of its major competitor. There are around 25% of agencies who have a depth ‘all’ contract with Domain. The highest value Platinum premium product’s pricing is ~ $200 with platinum penetration of around 10%.
The presentation also highlighted the Consumer Solutions businesses that operates in home loans, insurance as well as utilities connections markets. Here, the Home loans and insurance forms the two largest categories with a market size of $2 billion and Utilities around $150 million.
The simplifying and optimizing of Domain’s business include the maximizing of performance by increasing efficiency and effectiveness followed by improving system and processes. It also includes optimizing and building valuable user experiences using the data for Domain, Agent as well as consumers. Lastly, it also includes leveraging Nine to expand the reach of the company as well as the engagement and also drive the monetization of listing and audience.
Recently, the company released 2,175,316 fully paid ordinary shares from voluntary escrow on 29 March 2019
At present, the shares of DHG are trading at A$2.700 (as on 30 April 2019), down by 7.534% as compared to its previous closing price. DHG holds a market capitalization of A$1.7 billion and approximately 583.08 million outstanding shares.
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