In morning trade the SEEK Limited (ASX: SEK) share price has edged higher following the release of the job listings company's full-year results.
For the 12 months ended June 30, SEEK achieved revenue of $1,294.5 million and underlying net profit after tax (excluding significant items & Early Stage Ventures) of $229.5 million. This was an increase of 24.5% and 3.9%, respectively, on FY 2017's result. SEEK's revenue for FY 2018 was at the top end of its guidance range.
Reported net profit after tax came in at $53.2 million due to $147 million of significant items. A year earlier its reported net profit after tax was $340.2 million, but that included a $138.7 million Online Education Services fair value gain and other one-off items.
On a per share basis, SEEK posted reported earnings of 15.2 cents and underlying earnings of 65.5 cents. This allowed the board to declare a final dividend of 22 cents per share, bringing its full-year dividend to a total of 46 cents per share fully franked. This is a 5% increase on last year's dividend.
The key drivers of the strong top line growth were its SEEK ANZ and Asia businesses and the China-based Zhaopin business.
During the 12 months SEEK ANZ saw revenue increase 16% to $411.8 million. This 16% revenue growth was made up of volume increases (8%), a lift in average price per ad (2%), a negative mix shift (-1%), and a lift in depth products (7%). Segment earnings before interest, tax, depreciation, and amortisation (EBITDA) grew at an even quicker rate of 18% to $251.8 million.
SEEK Asia performed well and achieved 8% revenue growth to $151.3 million. Unfortunately, segment EBITDA didn't follow suit and was flat at $76.3 million as margins weakened.
In China the Zhaopin business delivered a 24% increase in revenue to $461.5 million. But like SEEK Asia, EBITDA growth was a touch disappointing. Zhaopin's EBITDA grew just 5% year-on-year to $84 million after the company reinvested as part of its focus on improving its business model and market share.
The Online Education Services business contributed strongly to total revenue this year after SEEK increased its stake to 80% last year. Online Education Services added $119.4 million to revenue this year, up from $28 million in FY 2017. Segment EBITDA rose to $37.5 million from $10.6 million.
This helped offset weakness in its Latin America business which saw revenue and EBITDA drop meaningfully. While management still sees a long-term opportunity in this market, it does expect it to underperform in the short-term.
Outlook.
According to the release, SEEK is expected to deliver a similarly solid result in FY 2019.
Management has provided guidance of revenue growth in the range of 16% to 20% and EBITDA growth in the range of 5% to 8% for next year.
Should you invest?
I think SEEK is one of the most robust tech shares on the Australian share market along with the likes of Carsales.Com Ltd (ASX: CAR) and REA Group Limited (ASX: REA). And while its earnings growth may be a touch underwhelming at present, this is due to the company investing heavily in its highest performing businesses where its expects to generate a high rate of return.
Because of this, I intend to continue to hold onto its shares for the long term.
