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Trade Me beats forecast on classified sales, smartphone aps

Trade Me beats IPO forecast on classified sales, smartphone apps

By Hannah Lynch

Aug. 22 (BusinessDesk) - Trade Me, the online auction site spun off by Fairfax Media in December, beat its prospectus forecast for earnings on classified sales growth and the roll out of new smart phone applications.

Profit rose 8.4 percent to $75.6 million in the 12 months ended June 30, the Wellington-based company said in a statement. Sales increased 13.8 percent to $142 million. Analysts had expected profit of $70 million on revenue of $146 million.

Earnings before interest, tax, depreciation and amortisation increased 11.3 percent to a record $110.4 million, beating its prospectus forecast by 4.7 percent.

A "strong performance" of revenue from the sale of general items through the website was led by an 8 percent increase in trading via mobile phones after the development of smartphone applications across the company's individual businesses. Trade Me's classified business - motors, property and jobs beat expectations following the acquisition of vehicle listing aggregator AutoBase.

"Our core general items marketplace performed in line with our expectations, with a definite shift in activity towards mobile," chief executive Jon Macdonald said. "Throughout the year, we've also seen the proportion of fixed price transactions continue to grow as buyers move towards new goods and instant ecommerce experience."

“Growth in mobile, online mobile and the migration of advertising yield online all provide excellent opportunities for Trade Me over the coming years,” he said.

The company’s Treat Me venture “came in below a bullish forecast,” he said. Group buying was “a young and uncertain industry, but one that still has potential.”

Trade Me today announced the acquisition of cloud-based inventory management tool Tradevine. It will provide users with a dashboard to manage sales, inventory and listing. That follows April's venture with e-commerce software company ChannelAdvisor in a deal that will let retailers from around the world list their products on Trade Me in time for Christmas.

Trade Me shares last traded at $3.79 and have gained about 34 percent this year. The stock is rated 'outperform' based on the consensus of two Reuters analysts.

The online auction site will pay a dividend of 7.8 cents per share in Sept. 25.

(BusinessDesk)

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