The PEXA Group Ltd (ASX: PXA) share price is having a difficult finish to the week.
In morning trade, the property technology company's shares were down as much as 10% to a 52-week low of $11.21.
Pexa's shares have bounced back since then but remain down by 5% at $11.93. This has been driven by the release of the company's FY 2023 results.
Pexa share price tumbles on profit decline
- Revenue up 1% to $283.4 million
- Operating earnings before interest, tax, depreciation, and amortisation (EBITDA) down 26% to $98.7 million
- Net loss after tax of $21.8 million (down from profit after tax of $21.9 million)
- Net profit after tax before amortisation (NPATA) down 71% to $17.6 million
What happened in FY 2023?
For the 12 months ended 30 June, Pexa reported a 1% increase in revenue to $283.4 million. This reflects growth from new revenue streams such as Pexa International and Informed Decisions, as well as a resilient performance from the Pexa Exchange.
Revenue from the company's emerging business rose from $1.3 million in FY22 to $20.3 million and now represents approximately 7% of revenue.
Things weren't anywhere near as positive for the company's earnings. Operating EBITDA was down 26% to $98.7 million due to challenging market conditions and growth investments, which were partially offset by a range of management actions.
In line with guidance, Pexa invested $51 million in its international expansion and $22 million in Digital Growth, excluding M&A activity.
Finally, its loss after tax of $21.8 million was the result of lower operating EBITDA, combined with higher levels of depreciation and tax expense.
Management commentary
Commenting on the result, Pexa's managing director and CEO, Glenn King, said:
The 2022-23 financial year was one of solid growth for PEXA. We navigated considerable market headwinds while also investing for future growth, diversifying our revenue streams and increasing our reach in Australia and the UK. Through strategic investments and considered acquisitions, we continued the development of the PEXA Group into a multi-brand, multi-jurisdiction network of businesses and digital offerings, serving a larger footprint of customers.
FY23 was a highly challenging year for property markets, with house prices and transaction volumes receding from the record highs of FY22. In the face of these headwinds, the PEXA Exchange again demonstrated its resilience, with the impact of reduced volumes and a shift in mix towards lower-margin refinancing transactions, partly offset by pricing changes and continued growth of usage in Queensland and the ACT.
Outlook
Management notes that trading conditions remain tough in the property market. Nevertheless, it is guiding to operating Pexa Exchange EBITDA margins in a consistent 50% to 55% range in FY 2024.
It also expects its group margin to reach a floor at current levels of 35%. This means if it delivers top-line growth, its earnings should return to growth in FY 2024.
King concludes:
Despite market headwinds, we are well on the way to deliver against our strategy in FY24 and strengthen our position as a leading prop-tech company.
The Pexa share price is down 20% over the last 12 months.
