Why the Domain Holdings (ASX:DHG) share price is slipping today

The Domain Holdings (ASX:DHG) share price is falling today after the company released its half-year results. We run through the numbers.

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The Domain Holdings Australia Ltd (ASX: DHG) share price is in the negative territory today, after the company provided the market with its half-year results for FY21.

In response to the numbers, shareholders sold off the property technology and services business as much as 7.4% on open, down to $4.92. The Domain share price has since bounced back to $5.06 at the time of writing.

So, what has shareholders selling on today’s results? Let’s take a look.

Impacted revenues weighing on the Domain share price 

For the first half of FY21, Domain reported revenues of $137 million. This result is down 5.5% from the previous corresponding period on a like-for-like basis. However, Domain managed to reduce expenses year-over-year by 9.9% to $82.5 million – resulting in the company delivering improved earnings before interest, tax, depreciation and amortisation (EBITDA). Consequently, Domain increased net profit by 52.2% to $19.4 million for half.

Shareholders may have been disappointed that Domain has deferred consideration of a dividend until full-year results. The rationale behind this decision is the on-going uncertainty generated by COVID-19.

Interestingly, it appears Domain’s revenue for the half was heavily impacted by the reduction in its print business segment. Print revenue fell 65% to $6.2 million for the half – a result of printing being paused during COVID-19 lockdowns.

Constrained property listings also weighed on the group’s print revenues.

Forward outlook

Management remains optimistic, with several promising indicators of growth for the half-year ahead. As an example, Domain reportedly continues to see atypical seasonal patterns, particularly demonstrated by listing strength in Melbourne.

In the presentation, the company also points out a growing demand/interest in property listings compared to the same time last year.

However, it was noted that total costs are expected to increase for the full year by a mid-to-high single-digit percentage. The second half will bear the brunt of the Jobkeeper scheme ending, which benefitted Domain through the last 2 halves.

At the time of writing, the Domain share price is down 4.25% in today’s trade, but is up 11% year-to-date.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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