Half year results 31 December Jon Macdonald Caroline Rawlinson

Transcription

1 Half year results 31 December 2016 Jon Macdonald Caroline Rawlinson CEO CFO

2 Overview H1 YoY Revenue $115m +9% Expenses $40m +5% EBITDA 1 $74m +12% EBIT 1 $64m +12% Operating NPAT 1 $45m +16% Dividend 8.5cps +9% A record revenue performance, along with low expense growth, has resulted in a strong 16.0% increase in operating net profit This is an excellent half-year result. It marks the successful completion of our multi-year period of investment. We have accomplished our ambitions Revenue was up 8.8% on H1 of last year. This was underpinned by an excellent uplift in Jobs revenue and our Marketplace business continuing to grow. Property revenue growth was subdued, due to soft market listings volumes We have continued to put in place meaningful building blocks for the long term e.g. free residential real estate data with Property Insights, and Buyer Protection in our Marketplace Reported profit after tax was up 19.6% YoY. As well as operating performance, this was driven by an improvement in contribution from associates, lower financing costs, a small gain on sale and a small revision down of an earn-out provision An interim fully imputed dividend of 8.5 cps will be paid in March 2017 There is no change to our previously stated ambition for year-on-year EBITDA and operating NPAT growth rates in excess of F16 for the full financial year 1 EBITDA, EBIT and Operating NPAT exclude non-recurring gains of $1.4m 2

3 Overview: Investment period a success In 2013 we commenced a period of substantial investment in the business through increasing headcount in product development, sales and marketing as well as increasing our marketing spend Simultaneously we maintained consistent levels of revenue growth in our classified businesses In H2 F16 our rate of expense growth declined and H1 F17 continues this trend. Our annual rate of cost growth has now dropped below the rate of revenue growth for the first time since 2013 Major achievements during this recent investment period include: Marketplace returned to revenue growth Property business stabilised and strengthened Product development velocity substantially increased Refresh of the Trade Me brand and 7% increase in brand preference Improved premium uptake from improved product offers, sales capability and customer engagement (shown with B2C premium revenues up 28% in Motors, 26% in Property and 55% in Jobs for the half) A smooth transition from desktop to mobile centricity; over 60% of visits are now from mobile devices We are now stronger and better positioned than ever to maintain and grow our relevance to Kiwis. We continue to focus our efforts on strengthening our competitive advantages given increased global competitor activity 30% 25% 20% 15% 10% 5% 0% YoY Growth Rates H1 Revenue Expenses Operating Profit 3

4 Overview: Revenue growth in line with expectations H1 Revenue Composition ($m) General Items: Growth was higher than H2 F16 with revenue up 9.3% YoY. This was driven by gross merchandise sales (GMS) growth of 5.6% YoY and improvement in the take rate to 8.3% LifeDirect $2.7 Other $5.2 $5.3 Payments $2.9 Advertising $9.3 Jobs $12.8 General Items $35.2 Classifieds: Overall Classifieds revenue was up 9.9% YoY. Jobs was the stand out classified performance with 23.3%YoY revenue growth with a buoyant employment market; Property was below expectations at 4.8% YoY growth due to soft market volumes; Motors delivered 7.5% YoY revenue growth Property $16.4 Revenue Growth ($m) Motors $30.5 Other: Payments (+22.7% YoY) and Advertising (+4.3% YoY) delivered healthy revenue growth. LifeDirect revenue is behind last year (-11.3%) after re-weighting traffic back to our core. Two of our non-core businesses, Travelbug and BookIt, were divested in December H1 +8.8% F12 F13 F14 F15 F16 F17 H1 H2 4

5 Divisional performance

6 Marketplace: GMS and revenue growth continues KEY METRICS Solid GMS 1 growth of +8.0% in new goods and +4.1% in used goods. Total GMS growth of +5.6% to $422m Range expansion continues with listing volumes +20.6% YoY. New goods +21.8% YoY Member engagement increasing with items purchased and unique buyers both up on the prior year (+2.5% and 4.1% respectively) Overall take rate has improved to 8.3% PRODUCT & INVENTORY Buyer Protection programme launched in February, providing our members with easier recourse if the product is not delivered or is not as described Machine learning frameworks in the ios listing process providing suggestions for categories, prices and closing times speeding up the sell process Book-a-courier re-use rate now at 82%, demonstrating strong demand from our members (Dec bookings 35k). The service is also now available on mobile and in native apps $450.0 GMS 10.0% $300.0 $ % 5.0% 2.5% $0.0 Jun 15 Dec 15 Jun 16 Dec % Used (LHS) New (LHS) YoY growth (RHS) 1 GMS is the total value of sales that Trade Me facilitates, excluding Classifieds and vehicles but including motors parts & accessories 6

7 Motors: Premium revenue and yield growth delivered KEY METRICS Revenue +7.5% YoY to $30.5m, led by dealers +13.1% Total listings up 2.0% YoY, further strengthening market leadership position Dealer premium revenue continuing its strong growth at +28.1% YoY. MotorWeb revenue up +13.3% YoY PRODUCT & AUDIENCE Editorial news and reviews unique audience has rapidly grown to ~40k/mth since launch, supported by daily articles. Through CY2017 this will scale further with tailoring of content to target segments and deeper integration within Trade Me Motors $3.0m $2.5m Motors dealer premium revenue DealerBase (our vehicle management system) design improvements have made listings and premium product management easier for our dealers $2.0m $1.5m $1.0m The introduction of a new lower pricing tier for cars <$500 at a lower price point (of $19) has more than doubled listing volumes in this price bracket increasing total revenue from this segment $0.5m $0.0m Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 New leadership in place; Alan Clark appointed to Head of Motors role effective 1 January

8 Property: Share and yields improved but market volumes soft KEY METRICS Revenue +4.8% YoY to $16.4m; Directs -10.8% to $4.4m, Agents +11.1% to $12.0m Agent For Sale listings +5.6% YoY and Agent For Rent listings basically flat (-0.6% YoY) Market volume soft; new listings to Dec 16 were down 4.6% on the prior 6 month period Agent For Sale yield +6.2% YoY (driven by premium revenue +26% to $4.5m) PRODUCT & AUDIENCE Property insights launched in October with ~1.6m property records searched. Our property value estimation tool has driven very strong engagement from members with more than 400k properties viewed in the first 3 months Total sessions were up 26% YoY across native apps, mobile and desktop TMP s net promoter score has more than doubled in the 12 months to December 2016 $2.5m Property agent for sale premium revenue $2.0m $1.5m $1.0m $0.5m $0.0m Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec

9 Jobs: Strong growth driven by buoyant economy KEY METRICS Economic tailwinds helping deliver excellent revenue growth of +23.3% YoY Listings +14.8% YoY; largely driven by job packs and volume plans +16.8% Yield growth of +9.9% in directs and +8.1% in job packs and volume plans driven by price changes and increased premium penetration As at Dec our listing share relative to nearest competitor has risen from 88% to 94% Total premium revenue up +54.7% YoY Members with a CV uploaded up +27% YoY $1.2m $0.9m $0.6m $0.3m $0.0m Jobs premium revenue Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 PRODUCT New Trade Me Jobs Android app released. ios due for release in H2 F17 Video mega-stripe launched allowing advertisers to showcase their workplace on the Trade Me home page and Trade Me Jobs landing page Other improvements made to feature products 9

10 Other: Payments and Ads performing strongly Advertising Strong display income growth of 18.1% but total revenue growth a modest 4.3% due to a reduction in Google AdSense and business partnership revenue Payments Another strong result for Payments, with 22.7% growth on the prior year with both Paystation (+36.2%) and Pay Now (+20.0%) showing strong growth Display revenue continues to be bolstered by programmatic growth and building momentum in our mobile advertising products Pay Now revenue grew 20%, due to GMS growth and an increase in penetration. 32% of GMS now transacted via Pay Now due to improvements to our offering Advertising on mobile devices becoming more mature industry-wide. Provides good opportunity given portion of engagement with Trade Me on mobile devices Non-core businesses The divestment of Travelbug and BookIt (TB/BI) on 1 December reflects a desire to eliminate management distraction of non-core businesses with weak sources of competitive advantage and limited growth prospects (revenue for TB/BI the five months to 1 December was $619k, -18% YoY) Insurance LifeDirect revenue YoY decline of 11.3% caused by a drop in traffic following a planned redesign of the Trade Me home page which redirected traffic to core Trade Me classifieds TMI platform rebuild delivering immediate improvement in sales volumes (albeit off a small base) New leadership is in place and work underway to better leverage TME s audience with positive early signs 10

11 Financials 11

12 Summary financial performance NZD $000s F17 H1 F16 H1 Movement General Items 35,163 32,183 2, % Classifieds 59,654 54,298 5, % Other 20,061 19, % Total revenue 114, ,571 9, % Cost of sales 7,209 6, % Net revenue 107,669 99,010 8, % Employee benefit expense 17,610 16,329 1, % Web infrastructure expense 2,841 2, % Promotion expense 5,932 5, % Other expenses 6,612 7,066 (454) (6.4%) Total expenses 32,995 31,712 1, % EBITDA 1 before associate 74,674 67,298 7, % Associate losses (Harmoney) (413) (1,045) 632 (60.5%) EBITDA1 74,261 66,253 8, % Depreciation and amortisation 10,164 9, % EBIT1 64,097 57,034 7, % Net finance costs 2,084 2,984 (900) (30.2%) Profit before tax1 62,013 54,050 7, % Income tax expense 17,320 15,508 1, % Net operating profit 1 44,693 38,542 6, % Non-operating items 1,416-1,416 n/m Net profit 46,109 38,542 7, % Revenue growth driven by Classifieds and General Items Operating expenses growth low following the completion of our reinvestment phase albeit some is due to timing of promotional spend Equity accounted losses of Harmoney are reducing as the company reduces its cost to acquire new customers and improves cash generation Depreciation and amortisation growth slowed considerably and at $10.2m is only slightly lower than capex for H1 of $12.1m (of which $10.4m was capitalised development costs) Net finance cost decreasing due to favourable movement in fair value of swaps (+$418k vs +$122k in F16), and the reduction in net debt Fully imputed dividend 8.5cps, supplementary dividend 1.5cps, record date 10 March 2017, payment date 21 March 2017 Non-operating items include a gain on the sale of our Travelbug and BookIt businesses (effective 1 December) and the reversal of surplus provision for earn out payments in connection with our acquisition of LifeDirect ($3.6m paid of total $4.5m) 1 EBITDA, EBIT, profit before tax and net operating profit are all prior to one-off non operating gains 12

13 Expense growth less than half that of revenue growth NZD $000s F17 F16 Movement Cost of Sales 7,209 6, % Employee benefit exp 17,610 16,329 1, % Web infrastructure exp 2,841 2, % Promotion expense 5,932 5, % Other expenses 6,612 7,066 (454) (6.4%) Total 40,204 38,273 1, % Excluding cost of sales 32,995 31,712 1, % Employees (FTE) Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Rate of expense growth (excluding cost of sales) at 4.0% now lower than rate of revenue growth (8.8%) Low growth in headcount over the last 12 months has resulted in single digit people cost growth (December headcount numbers include approx. 15 summer internships each year) Cost of sales grew broadly in line with revenue growth; although slightly faster given the strong growth of our lower margin Payments and MotorWeb businesses Advertising and promotional expenses are slightly lower than expected due to project timing Reduction in other expenses driven by lower rent costs as we optimise our tenancies and non-recurring F16 expenses 13

14 Outlook

15 Looking Ahead: Outlook for H2 We have delivered an excellent half-year result, in line with guidance we provided at our last results announcement and AGM We expect the full year total revenue growth rate to be slightly lower than H1. Assuming continued softness in property market listing volumes, we expect Trade Me Property to continue its subdued performance through the remainder of F17 With the deferral of some marketing spend from H1 to H2, we expect year-on-year expense growth in H2 to be ahead of H1 but below our August 2016 guidance of ~10% Full year D&A and capex expectations remain unchanged at $22m and $24m respectively There is no change to our previously stated ambition for year-on-year EBITDA and operating NPAT growth rates in excess of F16 for the full financial year Looking to F18 and beyond, we are stronger and better positioned than ever to grow and to defend our existing businesses. We will continue to invest as needed to further strengthen our trust and relevance with the New Zealand public, and to make the most of the opportunities in front of us 15

16 Questions? Web investors.trademe.co.nz