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Seek Ltd (ASX:SEK), a leading job listings company, is experiencing a challenging day in the market. The company’s share price has dropped sharply, down 10% to AU$19.97, following the release of its full-year results for FY 2024. This downturn reflects the difficulties Seek has faced over the past year, marked by declines in revenue, profitability, and a substantial impairment of investments.
For the fiscal year ending June 30, Seek reported a 6% decrease in revenue from continuing operations, totaling AU$1,084.1 million. This decline is attributed to a significant reduction in job ad volumes from the record highs seen in the previous period. Operating expenses also saw a slight increase of 1%, reaching AU$615.2 million. This combination of lower revenue and higher costs led to a 14% drop in EBITDA, which fell to AU$468.9 million.
The company’s adjusted net profit after tax (NPAT) experienced a dramatic decline of 33%, amounting to AU$177.4 million. The sharp drop in profitability was primarily due to decreased EBITDA and increased depreciation and amortization (D&A), although lower tax expenses provided some offset. Additionally, Seek reported a loss after tax of AU$59.9 million, which includes a substantial impairment of AU$119.8 million related to its investment in the China-based job listings company, Zhaopin.
In response to these financial strains, Seek’s board decided to reduce its full-year dividend by 25.5%, setting it at 35 cents per share. This includes a 19-cent interim dividend and a 16-cent final dividend, both fully franked.
Seek’s CEO and Managing Director, Ian Narev, addressed the challenging trading conditions impacting the company during FY 2024. He noted that the significant reduction in job ad volumes across the Asia-Pacific (APAC) region, combined with the Zhaopin impairment, heavily influenced the company’s financial results. Despite these setbacks, Narev highlighted some positive operational outcomes, including the successful and cost-effective completion of the Platform Unification project, high placement shares in Australia and New Zealand (ANZ), and a strong yield growth throughout the cycle.
Narev also pointed out that Seek’s Latin American assets were sold to focus more on the unified platform’s opportunities, reflecting strategic adjustments made during the year.
Looking ahead to FY 2025, Seek has provided revenue guidance in the range of AU$1.02 billion to AU$1.14 billion, compared to AU$1.08 billion in FY 2024. The company anticipates total expenditure between AU$740 million and AU$810 million, comprising approximately AU$590 million to AU$640 million in operating expenses and AU$150 million to AU$170 million in capital expenditure.
Seek’s EBITDA guidance for FY 2025 is projected to be between AU$430 million and AU$500 million, while adjusted net profit after tax is expected to range from AU$130 million to AU$180 million. This represents a potential decline of 27% or a modest increase of 1.5% compared to the previous year. This cautious guidance, reflecting expected weaker macroeconomic conditions and ongoing challenges in ad volumes, is contributing to the negative sentiment surrounding Seek’s stock.
Narev explained that the company’s revenue outlook is based on anticipated economic softness across its markets. However, he noted that there are signs of a potential recovery in Asia and emphasized the flexibility Seek has in managing its expenditure based on revenue fluctuations.
As a result of these developments, Seek’s share price has fallen nearly 23% from the same time last year. The market’s reaction underscores the challenges Seek faces as it navigates a difficult economic landscape while striving to maintain operational efficiency and strategic growth.
