The REA Group Limited (ASX: REA) share price is pushing higher on Tuesday afternoon.
At the time of writing the property listings company’s shares are up 1% to $104.20.
Why is the REA Group share price on the rise?
Investors have responded positively to the release of the REA Group annual general meeting presentation this afternoon.
That presentation provided investors with a reminder on its performance in FY 2019 and its expectations for the year ahead.
Chairman Hamish McLennan noted that REA Group “had another year of strong performance” despite the “challenged market conditions.”
The company delivered revenue growth of 8% to $874.9 million and EBITDA growth of 8% to $501.2 million. On the bottom line the company posted a 6% increase in net profit to $295.5 million.
A key driver of this growth was its flagship site, realestate.com.au. It continues to be the clear market leader in Australia with an average of 76.8 million visits across all platforms each month. This is nearly 3 times more than its nearest competitor – Domain Holdings Australia Ltd (ASX: DHG).
The company’s Chief Executive Officer, Owen Wilson, then spoke about its first quarter performance.
During the September quarter the company recorded revenue of $202.3 million and EBITDA of $114.9 million. This was a 9% and 14% decline, respectively, on the prior corresponding period.
As well as being impacted by tough market conditions resulting from a sharp decline in listings volumes in Melbourne and Sydney, its performance was impacted by the extended duration of Premiere All listings from 45 to 60 days.
This increased REA Group’s revenue deferral for the period. Mr Wilson notes that this is purely a timing issue which will balance out over the course of the financial year. Adjusting for this, revenue would have declined 6% and EBITDA would have fallen 9% during the quarter.
Mr Wilson appears optimistic that market conditions beginning their turnaround.
He said: “Buyer activity on our site is up over 30% on this time last year and auction clearance rates are back at the levels we saw before the market correction. We know the buyers are back and it’s only a matter of time before the sellers follow.”
“We remain excited about the year ahead. The fundamental strength of our business positions us well to benefit from the market recovery we believe has commenced,” he added.
No concrete guidance was given for FY 2020, other than management expecting the second half to be the stronger half.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.