Seek share price swings wildly amid first-half results release

Investors appear divided on this job listings giant's half-year results…

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Key points

  • Seek shares were sold off in early trade but have rebounded
  • This follows the release of the job listings giant's half-year results
  • Seek reported solid sales, profit, and dividend growth during the first half

The Seek Ltd (ASX: SEK) share price is having a volatile day on Tuesday.

At one stage, the job listings giant's shares were down as much as 6% to $22.89

The Seek share price has recovered since then and is currently trading flat.

This follows the release of the company's half-year results this morning.

Seek share price bounces around on half-year update

  • Revenue up 21% to $626.7 million
  • EBITDA up 13% to $283.4 million
  • Net profit after tax up 9% to $135 million
  • Net profit including one-offs of $978 million
  • Fully franked interim dividend up 4.3% to 24 cents per share

What happened during the half?

For the six months ended 31 December, Seek reported a 21% increase in revenue to $626.7 million and a 9% lift in net profit after tax excluding significant items to $135 million.

Including significant items, Seek's profit came in at $978 million. This includes a one-off gain of $840 million, reflecting the difference between the company's share of fair value of the SEEK Growth Fund and the carrying value of the assets.

Outside this, Seek's growth was driven by a 19% increase in ANZ revenue and an 8% lift in ANZ EBITDA, as well as a 25% jump in Seek Asia revenue and a 78% lift in Seek Asia EBITDA.

How does this compare to expectations?

Goldman Sachs was a touch disappointed with the result, noting that its revenue was marginally higher than expectations but its earnings fell a touch short due to its ANZ business.

It notes that "ANZ earnings were below given higher costs, while Asia was the clear out-performer (EBITDA +43% vs. GSe) given an improvement in depth revenues."

Management commentary

Seek's CEO and Managing Director, Ian Narev, commented:

Across our Asia Pacific markets, demand for labour remained high during H1 23 which led to increased job ad volumes. In the second quarter, volumes reduced moderately across all markets, and had the usual seasonal variation. Yield increased through adoption of depth products, particularly in Asian markets. SEEK maintained its market leadership positions with stable placement metrics and brand awareness, with JobStreet and JobsDB showing the benefit of last year's increased marketing investment.

Across ANZ, volumes were higher than in the corresponding half last year, but lower than the peaks we saw in H2 22. Yield increased through higher depth adoption and increased variable ad prices. Our dynamic pricing structure is providing the ability to respond to changes in the marketplace and better align price to value.

Outlook

Seek has updated its guidance for FY 2023. And while it expects to achieve its previous guidance, it will now be at the very bottom of its guidance range.

Management advised that it now expects revenue of $1.26 billion compared to previous guidance of $1.25 billion to $1.3 billion.

As for earnings, it is forecasting EBITDA of $560 million and net profit after tax of $250 million. This compares to previous guidance of $560 million to $590 million and $250 million to $270 million, respectively.

Narev concluded:

We are all aware of the potential for ongoing volatility in economic conditions across all our markets. As flagged at the November AGM, we are seeing a gradual moderation in key labour market indicators and our job ad volumes. Our guidance for revenue for the remainder of this financial year remains within the range we provided in August, albeit towards the lower end of that range. Our EBITDA guidance assumes no change to our investment plans for the remainder of the year, including Platform Unification.

Motley Fool contributor James Mickleboro has positions in Seek. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Seek. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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