The Seek Ltd (ASX: SEK) share price is having a tough start to the day.
At the time of writing, the job listings company's shares are down 10% to $19.97.
This follows the release of its full year results for FY 2024 before the market open.
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Seek share price sinks on results
- Sales revenue from continuing operations down 6% to $1,084.1 million
- Operating expenses up 1% to $615.2 million
- EBITDA down 14% to $468.9 million
- Adjusted net profit after tax down 33% to $177.4 million
- Reported loss after tax of $59.9 million
- Full year dividend down 25.5% to 35 cents per share
What happened in FY 2024?
Seek had a tough time during the 12 months ended 30 June and reported a 6% decline in revenue from continuing operations to $1,084.1 million. This reflects a significant reduction in job ad volumes from record highs in the prior corresponding period.
On the bottom line, Seek's adjusted net profit after tax was down a disappointing 33% to $177.4 million. This was largely due to lower EBITDA and higher D&A, which was partially offset by lower tax expense.
And on a reported basis, Seek posted a loss after tax of $59.9 million. This includes the $119.8 million impairment of its investment in China-based job listings company Zhaopin.
In light of its profit decline, the Seek board cut its total dividends by 25.5% to 35 cents per share. This comprises a 19 cents per share interim dividend and a final dividend of 16 cents per share. Both are fully franked.
Management commentary
Seek's CEO and Managing Director, Ian Narev, highlights the tough trading conditions the company was facing in FY 2024. He said:
SEEK's headline financial outcomes for the year were impacted by a significant reduction in job ad volumes across APAC relative to previous record highs, and the impairment of our investment in Zhaopin. Operational outcomes were pleasing. Beyond the completion of the ambitious Platform Unification project ahead of time and under budget, ANZ placement share was the highest in recent history, double-digit yield growth through the cycle reflected the benefits of ongoing investment, total expenditure was lower than previous guidance given to the market and our Latin American assets were sold to enable greater focus on the opportunities of the unified platform.
Outlook
In FY 2025, Seek is expecting revenue of approximately $1.02 billion to $1.14 billion. This compares to $1.08 billion in FY 2024.
Total expenditure is expected to be $740 million to $810 million. This comprises operating expenses of approximately $590 million to $640 million and capital expenditure of approximately $150 million to $170 million.
As for earnings, its EBITDA guidance is approximately $430 million to $500 million and its adjusted net profit after tax is expected to be approximately $130 million to $180 million. In respect to the latter, it would mean a disappointing decline of 27% to a modest increase of 1.5%. This guidance appears to be weighing on sentiment and the Seek share price today.
Mr Narev explained that this guidance is based on bleak economic forecasts. He said:
For FY2025, economists are forecasting weaker macroeconomic conditions in most of our markets. Based on our historical experience of similar conditions, we have assumed that paid ad volumes in ANZ will continue to decline throughout FY2025. For Asia, we have seen early signs that the slowdown is moderating and we expect a partial recovery in the second half. As we benefit from continued yield growth, we expect to maintain revenue at levels similar to the prior year.
Against that flat revenue outlook, we will keep total expenditure for FY2025 at the same level as last year, meaning that EBITDA should also be largely in line with last year. This is enabled in part by the nonrecurrence of Platform Unification spend. Should revenue be higher or lower than our base case assumption, total expenditure will vary accordingly. We will moderate discretionary expenditure within certain limits if conditions weaken, or increase strategic investment if conditions allow. This flexible approach is enabled by the foundations we now have in place, and will be continued into the future.
The Seek share price is now down almost 23% since the time last year.
