DRAFT Full year results - 30 June 2018 - Trade Me Group Ltd
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Full year results
30 June 2018
DRAFT
Jon Macdonald CEO
Caroline Rawlinson CFO
During F18, we
Be even more deeply ingrained in
outlined our Kiwis’ lives through online
ambitions for the experiences they love
next five years. Know our customers more intimately
than any competitor and provide a
relevant, engaging and personalised
experience
Be quick experimenters, expert in
growing new things
A brand that outshines all others in NZ
as the most loved and trusted
The workplace of choice – a magnet
for top local and offshore talent
2
We shared the strategic priorities that support our
ambitions.
Our vision To make life better for Kiwis through online experiences they love
Strengthen our core Expand our offer Grow our
Our propositions (same ecosystem
(extension of existing
strategic customers & businesses/markets)
(new
customers/
priorities markets)
businesses)
Continue to improve our organisational effectiveness so we can get
faster at delivering great stuff
Our values Customer
Customer Aroha
Aroha Hunger like Ed No ‘I’ in Trade Me Don’t be a dick
We expanded in detail on our strategy at our May 2018 investor day.
3
We delivered a good financial result.
Revenue EBITDA NPAT Dividend
F18
YoY $250m $164m $97m 19.6cps
+7% +6%1 +4%1 +6%
H2 $128m $85m $50m 10.5cps
YoY +6% +7% +5% +5%
Revenue growth was driven by the continued strong performance of our classifieds businesses.
Total expenses grew 7.1% to $86m due to headcount growth and increased cost of sales. Excluding cost of sales, expenses
grew 5.3% to $68m.
EBIT at $138m was up 3.8%1 on F17. NPAT growth was solid in H2 at 4.6%, resulting in a 3.9%1 increase for the full year.
A fully imputed dividend of 10.5cps will be paid in September 2018.
A fully imputed special dividend of 22.0cps will also be paid in September 2018.
Announcing a small investment in Wellington growth company Sharesies.
Note 1: Growth rates exclude H1 F17 one-off non operating items of $1.4m
4
Group Financials
Strong classifieds’ results grew revenue to $250m.
Motors
$71.7m up 12.7%
General Items
$71.3m up 1.3%
Other1
$6.7m down 25%
Payments
$6.1m up 6.0%
Insurance Property
$5.8m up 4.6%
$37.6m up 10.2%
Advertising
$19.5m up 3.7%
Jobs
$31.7m up 14.1%
Note 1 Other down 25% in part due to sale of Travelbug and BookIt. 6
Classifieds’ B2B revenues underpin the growth.
Our B2B offering is an increasingly important part of our classifieds businesses. B2B revenues have delivered great growth in F18,
driven by continued excellent momentum of depth revenue - which from motor dealers was +41% YoY, from real estate agents for
residential for sale was +38% YoY, and from recruiters purchasing volume packs / jobs plans was +45% YoY.
$72m
$38m
$64m $34m
$32m
MotorWeb
$28m
+12.9% +20.0%
+22.5%
Volume
Dealers Agents
Packs /
Job Plans
Directs Directs Directs
F17 F18 F17 F18 F17 F18
Motors Total Revenue Property Total Revenue Jobs Total Revenue
7
The details on our financial performance.
NZD $000s F18 F17 Movement • Revenue of continuing businesses was +6.9%.
Classifieds 140,968 125,480 15,488 12.3%
General Items 71,325 70,415 910 1.3%
• Increased COS reflects the mix of revenue growth
Other 38,070 38,986 (916) (2.3%)
Total revenue 250,363 234,881 15,482 6.6% (Motorweb and Jobs).
Cost of sales 17,802 15,515 2,287 14.7% • Expense growth is mostly due to increased people costs.
FTEs increased from 514 at Jun-17 to 561 at Jun-18.
Net revenue 232,561 219,366 13,195 6.0%
Employee benefit expense 39,923 35,828 4,095 11.4% • Promotion expenses were lower in F18 due to operational
Web infrastructure expense 5,472 5,620 (148) (2.6%) efficiency and great unpaid coverage.
Promotion expense 10,217 10,967 (750) (6.8%)
Other expenses 12,538 12,326 212 1.7%
Total expenses 68,150 64,741 3,409 5.3% • The associate losses includes losses from Harmoney Corp
Ltd and Allsorts Ltd (established during F18).
EBITDA before associates 164,411 154,625 9,786 6.3%
• There have been no non-operating items in F18.
Associate losses (634) (342) (292) 85.4%
EBITDA1 163,777 154,283 9,494 6.2%
• D&A growth is due to continued platform development,
Depreciation and amortisation 25,595 21,149 4,446 21.0% which is amortised over three years.
EBIT1 138,182 133,134 5,048 3.8%
Net finance costs 3,604 3,827 (223) (5.8%)
• Fully imputed dividend of 10.5 cps, supp. dividend 1.8529
Profit before tax1 134,578 129,307 5,271 4.1% cps with a record date 7 September 2018, payment date 18
September 2018.
Income tax expense 38,011 36,343 1,668 4.6%
Net operating profit1 96,567 92,964 3,603 3.9%
• Fully imputed special dividend of 22.0 cps, supp. dividend
Non-operating items - 1,416 (1,416) - 3.8824 cps with a record date 7 September 2018, payment
date 18 September 2018.
Net profit 96,567 94,380 2,187 2.3%
8
1 F17 EBITDA, EBIT, profit before tax and net operating profit are all prior to one-off non operating adjustments.
The details on our financial position.
Capital Expenditure and D&A 30-Jun-18 30-Jun-17
Total current assets 89.5 69.2
Total non-current assets 834.2 832.4
Total assets 923.7 901.6
Total current liabilities 32.5 31.4
Total non-current liabilities 144.3 144.5
Total liabilities 176.8 175.9
Contributed equity 1,070.1 1,069.9
Other reserves (485.5) (485.9)
Retained earnings 162.3 141.7
Total equity attributable to owners of the Company 746.9 725.7
Total equity and liabilities 923.7 901.6
• F18 Capital Expenditure was $27m, up 9% YoY due to
• Non current liabilities includes $136m of debt. During H2 we
increased capitalised development (totaling $23m with
refinanced one tranche of our debt in a syndicated facility with
more staff focused on building new, and enhancing
CBA and Westpac.
existing, products).
• Our net debt position is $64m with $72m of cash on hand.
• F18 D&A was 95% of capex - these expenses have
converged as our rate of headcount growth has slowed.
9
We declare a fully imputed 22.0cps special dividend.
Since F14 our gearing has been declining as surplus cash
has been used to repay bank debt.
Ratio
Net debt
We outlined at our Investor Day in May 2018: Net debt : EBITDA
● Our long run gearing target is ~1.0x net debt : EBITDA
● Our priority is to not constrain our growth, and to
ensure sufficient headroom to respond to a changing
environment
● We will continue to utilise the most appropriate
method for capital distributions
As at 30 June 2018 our net debt : EBITDA has fallen to 0.4x.
To increase our gearing levels towards our long run target,
we declare a fully imputed special dividend of 22.0cps.
During September we will increase our level of debt with
CBA and Westpac to fund the special dividend.
10Divisional Performance
Motors: superb results strengthening our core
propositions to dealers.
Strong revenue momentum driven by depth product uptake
Revenue growth YoY Dealer depth revenue growth YoY and record inventory numbers for the full year.
+12.7% +41.0% New depth features for dealers, including dealer branding,
was/now pricing and transparency of weekly repayment
MotorWeb revenue growth YoY Total listings growth YoY rates.
+15.7% +1.9% Continued investment in the core. E.g. enhanced customer
search experience by expanding filter options.
Directs revenue growth YoY
Australian vehicle data business expanding beyond core
+2.1% insurance, including via new data brokerage entity Vehicle
ID Australia.
Direct Yields Dealer Yields
+5.8% +1.7% +4.4% +18.6%
12Property: new depth product underpins success.
Revenue growth YoY For sale revenue YoY For rent revenue YoY
+10.2% +11.3% +7.5%
Directs revenue growth YoY For sale listing volumes YoY For rent listing volumes
+3.0% -0.4%
YoY
-2.4%
Agent for sale depth revenue growth YoY Agent for sale revenue YoY Agent for rent revenue
+38.2% +14.2% YoY
+7.4%
Continued depth revenue momentum through:
● Launch of new ‘Premium Listing’ product in March 2018
which raced to 7% penetration by June
● Package penetration now ~15% (was ~5% in June 2017)
Our inventory share vs nearest competitor continues to improve.
Audience advantage relative to nearest competitor continues to
widen (~2.5x).
13Property: excellent yield increases achieved.
Agent For Sale Yields Directs For Sale Yields
+2.2% +16.2%
+8.3% +13.0%
Agent For Rent Yields Directs For Rent Yields
+7.5% +7.5% +3.9% +18.1%
14Jobs: focus on improving recruiter outcomes
delivering returns. Volume Pack / Job Plans Yields
+11.3% +18.2%
Revenue growth YoY Total listings YoY
+14.1% +1.3%
Directs revenue growth YoY Total depth revenue YoY
+9.0% +34.3%
Continued strong growth in job profiles adding ~4k new Direct Yields
profiles per week.
Profile creation functionality added across Jobs and our iOS +11.3% +8.2%
and Android apps.
Positive response from recruiters involved in our candidate
database beta program, particularly those searching for
'blue-collar' candidates.
Account managed customer satisfaction of ~93%.
Highest job board brand awareness in NZ at 96%.
15Marketplace: Good progress on strategic priorities...
YoY GMS1 growth Unique buyers growth YoY
+0.3% +0.6%
to $838m
YoY new GMS growth Unique listers growth YoY
+4.4% -0.3%
YoY used GMS growth Overall take rate
-2.3% 8.5%
New goods inventory continues to grow with 175 new retailers
on site.
Afterpay goes from strength to strength, now on >3m active
listings. In June ~70% of new goods were purchased using
either Ping / Pay Now (~65%) or Afterpay (~5%).
We have and will continue to test subscription offers (named
Choice by Trade Me) - includes extending the proposition to
provide offers from 3rd parties.
Selling promos: Extended experiments beyond 100% off. i.e.
Secret Stash Saturdays, Community Buy/Sell, Happy hour.
1GMS = Gross Merchandise Sales is the total value of sales that Trade Me facilitates, excluding Classifieds and vehicles but including
16
motors parts & accessories...improving GMS for both New and Used.
Since December 2017 the Used Goods GMS growth rate has been improving and returned to positive growth in July 2018.
New goods GMS has seen a similar improvement, with Q4 of F18 above 3 of the 4 prior quarters and July 2018 delivered a strong
performance.
Marketplace GMS Growth (YoY)
17Our Ads, Payments and Insurance revenues grew.
Advertising Payments Insurance Other
$19.5m $6.1m $5.8m $6.7m
+3.7% +6.0% +4.6% -25%
Advertising: Revenue growth driven by new inventory placements and good yield management.
Payments: Ping (our new payments offering) out to 100% of our users, used for ~⅓ of daily Marketplace purchases in June 2018.
Insurance: Our Insurance business grew on increased new policies written.
Other revenue has declined partly due to the divestment of TravelBug and BookIt in December 2016
and a reduction in our 3rd party hosting activities.
18Outlook
We forecast solid revenue and profit growth in F19.
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.
In F19 we expect total revenue growth between 5 - 8% over F18. We also expect operating profit
after tax to grow at a similar rate (in percentage terms).
We expect capex to be ~$30m.
These expectations are contingent on wider economic conditions, including employer and consumer
sentiment, and real estate market volumes.
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