Rising Costs and Market Challenges Test Domain’s Growth Strategy in FY25

Strong Financial Performance Amid Market Challenges

Domain Holdings Australia Limited (ASX: DHG) unveiled its half-year results for FY25, showcasing solid financial and operational momentum. The company reported statutory revenue of $223.8 million and a net profit after tax of $35.7 million, including a $2.6 million gain from significant items. Excluding these items, revenue rose 7% to $217.2 million, while net profit surged 28% to $33.1 million, reflecting effective cost management and operational leverage.

Domain’s earnings per share also improved, with adjusted net profit per share climbing 25% to 5.8 cents. The board declared a fully franked dividend of 2.0 cents per share, consistent with the prior year, signaling steady shareholder returns despite ongoing investments.

Audience and Listings Growth Drive Market Position

Key growth drivers included a 7% increase in new 'for sale' listings during the half, with January 2025 continuing this positive trend at 3% growth. Domain’s digital audience expanded impressively, with unique audience numbers rising 10% year-on-year and site visits surging 23%, outperforming its major competitor. This growth underscores Domain’s strengthening position in the competitive online property listings sector.

Agent adoption of Domain’s premium Platinum Edge product soared, with penetration increasing close to 50% year-on-year and now representing 80% of Platinum listings. This product innovation has bolstered pricing power and depth revenue, which grew 14% year-on-year, contributing significantly to residential revenue growth of 12%.

Marketplace Strategy and Technology Investments

CEO Jason Pellegrino emphasized the company’s ongoing investment in technology platforms as central to its Marketplace strategy. These investments aim to accelerate product innovation, improve pricing flexibility, and enhance user experience through automation and integration. Despite increased expenditure, Domain maintained stable EBITDA margins and strong cash flow conversion, reflecting disciplined cost control.

The launch of Audience Boost, a new product extending residential listings across digital channels, delivered an average 24% uplift in incremental views during campaigns. This innovation, alongside Platinum Edge, exemplifies Domain’s focus on delivering differentiated value to agents and consumers alike.

Segment Performance and Strategic Partnerships

Core Digital revenue rose 8% to $209.1 million, with residential listings leading the charge. Media revenue grew 14%, outperforming a declining broader display advertising market, while Developer revenue faced headwinds from market softness. Commercial Real Estate revenue remained stable despite sector challenges.

Domain also strengthened its collaboration with Nine, leveraging cross-platform branding opportunities such as during the Australian Open and the launch of a Victorian edition of Prestige magazine. Print revenues declined modestly by 6.8%, but readership increased 2%, highlighting the continued relevance of Domain’s print offerings in niche luxury segments.

Outlook and Investor Confidence

Looking ahead, Domain expects FY25 costs to rise in the high single-digit percentage range, reflecting ongoing investments to fuel growth. The company anticipates stable EBITDA margins, balancing growth initiatives with productivity gains. January trading data supports continued momentum with new listings up 3% year-on-year in a typically slower period.

Domain’s net debt stood at $147.3 million at December 2024, with a leverage ratio of 1.0x EBITDA, indicating a conservative capital structure that supports strategic flexibility.