SEEK Faces Profit Pressure but Raises Dividend on Strong Cash Flow

Overview of SEEK's Half-Year Performance

SEEK Limited, the leading online employment marketplace in Australia and Asia, released its half-year financial results for the period ending 31 December 2024, revealing a mixed performance amid challenging macroeconomic conditions. Sales revenue from continuing operations declined by 4% to $536.2 million, primarily driven by a reduction in job advertisement volumes across its core ANZ and Asian markets. Despite this, the company maintained double-digit growth in job ad yield, reflecting successful pricing strategies.

Adjusted profit from continuing operations fell 28% to $77 million, impacted by lower earnings and increased amortisation expenses following the recent completion of SEEK’s Platform Unification program. This comprehensive technology integration, completed in FY2024, unified SEEK’s core online employment platforms across ANZ and Asia, enabling operational efficiencies and cost reductions.

Strategic Highlights and Operational Efficiency

SEEK’s strategic focus on growing placements and yield was evident despite the revenue headwinds. The company reported an increase in placement share in ANZ and regained leadership in all SEEK Asia markets. Job ad yield grew by 10% in ANZ and 19% in Asia, driven by variable pricing models, premium ad products, and AI enhancements such as conversational search and AI-assisted ad writing.

Operating expenditure, including capitalised expenditure, was reduced by 6% compared to the prior corresponding period, reflecting disciplined cost management and the benefits of the Platform Unification. Operating expenses remained flat year-on-year, offsetting inflationary pressures and reduced gains from foreign currency derivatives.

Robust Cash Flow and Dividend Increase

Free cash flow from continuing operations nearly doubled, rising 93% to $81.8 million, supported by strong cash conversion and lower capital expenditure following the platform integration. This robust cash generation underpinned SEEK’s decision to increase the interim dividend by 26% to 24.0 cents per share, reflecting confidence in the company’s financial position and future prospects.

SEEK’s balance sheet remains solid with net assets of $2.77 billion and net debt of approximately $1.05 billion. The company successfully refinanced its debt facilities during the period, extending maturities and rebalancing currency exposure, which enhances financial flexibility.

SEEK Growth Fund and Portfolio Developments

The SEEK Growth Fund, in which SEEK holds an 83.8% interest, saw its portfolio valuation increase by 5% to $2.21 billion. The Fund’s investments span HR SaaS, online education, and contingent labour sectors. Notably, Employment Hero, a key HR SaaS asset, achieved a valuation uplift of approximately 19% in a recent partial sell-down to KKR-managed funds, with proceeds earmarked to reduce SEEK’s drawn debt.

While some portfolio segments faced subdued macroeconomic conditions, several assets demonstrated strong revenue and earnings growth, supported by ongoing product innovation and AI-driven solutions.

Looking Ahead

SEEK’s half-year results highlight the company’s resilience and strategic agility amid a softer hiring environment. The combination of yield growth, operational leverage from platform unification, and disciplined capital management positions SEEK well for navigating ongoing market uncertainties. However, the decline in job ad volumes and adjusted profit underscores the sensitivity of SEEK’s core business to macroeconomic fluctuations.

Investors will be watching closely how SEEK leverages its technology platform and growth fund assets to drive sustainable earnings growth in the second half of FY2025 and beyond.