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Highlights
- REA and ZIP show robust multi-year revenue growth
- REA leverages strong network effects in real estate tech
- ZIP turns profitable amid BNPL market shifts
As investors continue to evaluate opportunities within the ASX200 index, two growth-oriented companies—REA Group Ltd (REA) and Zip Co Ltd (ZIP)—are drawing renewed attention based on recent performance trends and strategic positioning.
REA Group (ASX:REA): Dominating Digital Real Estate
REA Group, founded in 1995 and headquartered in Melbourne, operates the popular property platform Realestate.com.au. With operations spanning 10 countries and around 20,000 property agents globally, REA maintains a dominant market position, particularly in Australia where its core website sees over 55 million monthly visits.
The company's revenue model hinges on charging fees for property listings via agents, while also generating supplementary income from financial services like mortgage broking. These adjacent services help REA diversify its income streams within the broader property ecosystem.
REA's competitive advantage is rooted in network effects. With a significantly larger user base compared to its closest competitor, REA enjoys pricing power and enhanced visibility, further reinforced by its scalable infrastructure.
Financially, REA has reported consistent revenue growth—expanding at a compound annual rate of 18.6% since 2021 to reach $1.68 billion in FY24. While net profit slightly declined from $323 million to $303 million in the same period, return on equity remains strong at 18.9%.
Zip Co (ASX:ZIP): A BNPL Comeback Story
Founded in 2013, Zip Co operates in the fintech space offering buy-now-pay-later (BNPL) services that have become popular with cost-conscious consumers. The company's platform enables interest-free instalment payments, generating revenue primarily through merchant fees and customer late fees.
In contrast to many peers in the BNPL sector, Zip has achieved notable financial progress. Over the past three years, the company has grown revenue at an exceptional annual rate of 75.7%, reaching $868 million in FY24. Impressively, it turned around its profitability, moving from a $678 million loss to a modest $6 million profit. While its return on equity is lower at 1.8%, the shift into profitability signals operational improvements.
Strategic Watchlist Addition
For those exploring emerging opportunities beyond traditional ASX dividend stocks, both REA and ZIP demonstrate attributes typical of tech-aligned growth companies—scalable models, disruptive services, and improving financial metrics.
While each business operates in vastly different sectors—real estate tech versus fintech—their recent trajectories and market roles make them worthy of consideration for anyone monitoring the evolving dynamics of the ASX200.
