Trade Me hits prospectus forecast
Announcement: Trade Me
22 August 2012
Full year result: Trade Me hits prospectus forecast
Prospectus targets achieved for this
NPAT of $75.6 million (up 10% on forecast)*
EBITDA of $110.4 million (up 11% on F11, up 5% on forecast)*
Earnings per share of 19.1 cents (up from 17.6 cents in F11)
Dividend of 7.8 cents per share to be paid in September (15% higher than forecast)
Announcing the acquisition of Tradevine, to further strengthen new goods proposition
On track for 31 December 2012 prospectus target
* Figures include $3.3 million gain on AutoBase transaction.
Online marketplace and classified advertising business Trade Me Group Ltd (“Trade Me”) released its inaugural full year financial results for the 12 months to 30 June 2012 this morning.
Trade Me chairman David Kirk said the results were good to see, especially in “variable” economic conditions. “The business has made a smooth transition to life as a public company. We’ve delivered on the numbers set out in the IPO documents back in December and turned in another year of record profit. We’re looking forward to issuing our first ever dividend as a listed company in September.”
Trade Me CEO Jon Macdonald said there had been varied levels of strength across Trade Me’s business portfolio but “no big surprises”.
“Our core General Items marketplace performed in line with our expectations, with a definite shift in activity towards mobile. Throughout the year, we’ve also seen the proportion of fixed price transactions continue to grow as buyers move toward new goods and an instant ecommerce experience.”
The Classifieds businesses –Trade Me Motors, Trade Me Property, and Trade Me Jobs – all delivered a strong performance during F12. “A number of factors are at play here, including a semblance of returning market confidence, good uptake of our premium promotional products, and the positive impact of our acquisition of vehicle listing aggregator AutoBase,” Mr Macdonald said.
In the Other segment, revenue was below forecast, and Mr Macdonald attributed it to two main causes. “First, our Advertising business fell short of our revenue expectations. The online display advertising industry has been patchy over F12, and we’ve seen the growth of international publishers at the expense of existing local players.
“Second, Treat Me came in below a bullish forecast. We view group buying as a young and uncertain industry, but one that still has potential. Separately, we recorded good performances from our dating business FindSomeone and our travel businesses Travelbug, Holiday Houses, and BookIt.”
Mr Macdonald said Trade Me’s expenses were tracking predictably and under control. “In particular, we were restrained in our advertising and web infrastructure spend.”
Trade Me had been focused on expanding its mobile offering throughout the year. “Mobile now accounts for 8% of sales in our General Items business,” he said. “We’ve built and released a suite of mobile apps and smartphone-optimised sites across Trade Me and a number of our individual businesses, including Travel, FindSomeone and Treat Me.”
New goods also remained a high priority, Mr Macdonald said. “We’ve continued to work on improving the buyer and seller experience for those trading in new goods. We welcomed aboard well-known Kiwi retailers like Hallensteins, Glassons and The Warehouse this year. Back in April we also announced a deal with global ecommerce platform provider ChannelAdvisor to facilitate supply from offshore retailers, and we’re on track to have some of these sellers trading before Christmas.”
Mr Macdonald also announced the acquisition of Tradevine, a cloud-based inventory management tool with integration into Trade Me and other ecommerce channels. “Tradevine provides sellers with a dashboard to manage sales, inventory and listings and we think it will also be a valuable tool for retailers. We’re delighted to welcome the Tradevine team on board.”
The Trade Me team had grown in line with IPO forecast. Mr Macdonald said a small Christchurch office had recently been established, tapping into the labour pool of talented Canterbury developers. In Wellington, Trade Me has entered into an agreement for the lease of 1 Market Lane, a new building on Cable St due to be ready for occupation in mid-2014.
Looking ahead, Mr Macdonald said: “In the short term, we believe the New Zealand economy remains fragile, but we are starting to see some activity out of the Christchurch rebuild, as well as better support in the Auckland property market. We remain committed to delivering on the final part of our IPO forecast over the 6 months ending 31 December 2012.
“In the longer term, we’re confident about the prospects of our business and its foundations. Growth in mobile, online retail, and the migration of advertising yield online all provide excellent opportunities for Trade Me over the coming years.”