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Highlights
- REA Group continues to expand its property-tech dominance
- Zip Co sees a major turnaround in profitability
- Growth-focused investors eye potential in tech-driven ASX players
Australian investors are keeping a close watch on REA Group Ltd (REA) and Zip Co Ltd (ZIP), two companies showing signs of strength in early 2025. While REA Group has posted steady share price growth since January, Zip Co is drawing attention with its sharp rebound in financials, despite trading well below its 52-week high.
REA Group (ASX:REA)
REA Group is a leading digital real estate platform based in Melbourne. Operating across 10 countries, its flagship site, Realestate.com.au, draws more than 55 million monthly visits in Australia alone. The company’s revenue model is primarily built around advertising fees charged to property agents, with additional income streams from financial services such as mortgage broking.
Despite global operations, REA Group remains strongly anchored in the Australian market. Over the last three years, the company has achieved a compound annual revenue growth rate of 18.6%, with FY24 revenue reaching $1,677 million. However, net profit slightly declined from $323 million to $303 million in the same period. The company's return on equity (ROE) stands at a healthy 18.9%, reflecting efficient capital utilisation.
REA's scale advantage and network effects give it a competitive edge over rivals. Its diversified involvement across property listings, advertising, and financial services positions the business well within the real estate technology sector.
Zip Co (ASX:ZIP)
Founded in 2013, Zip Co operates in the buy-now-pay-later (BNPL) space, enabling customers to spread payments across interest-free instalments. The fintech earns revenue through merchant fees and late fees.
After facing significant losses in previous years, Zip Co has turned a corner. Revenue has grown at an impressive 75.7% per year over the last three years, reaching $868 million in FY24. Notably, net profit swung from a $678 million loss to a $6 million profit, indicating stronger financial discipline. Its most recent ROE stood at 1.8%, a modest figure but a significant improvement given its earlier position.
For growth-focused portfolios, both REA and Zip Co may offer potential exposure to technology-enabled sectors within the broader Australian market. While they may not fall into the category of traditional ASX dividend stocks, their momentum could complement income-generating assets or round out a diversified strategy.
Both companies are listed on the ASX200, underlining their significance within the Australian equities landscape. Their evolving fundamentals and market presence continue to attract investor attention as 2025 progresses.
