REA Group Limited (ASX: REA), the company behind Australia's number one property listings website realestate.com.au, delivered its first-half profit results shortly after midday on Thursday, reporting a strong increase in site traffic and group earnings.
The company's shares rose 2.7% to be trading at $50.63 shortly after the results were released.
So What: The online classifieds business continued to widen its already sizeable moat (sustainable competitive advantage) over the half, solidifying its position in the market going forward. It said that it had maintained a heavy focus on strengthening its relationships with agents, resulting in a 5% increase in agent numbers and a significant improvement in agent satisfaction.
As a result, 33.2 million people visited its realestate.com.au site each month for an average time of 6.9 minutes. That compares to 9.9 million monthly visits for the site's nearest competitor on which people spend an average of just 4.2 minutes, according to the company.
REA Group's chief financial officer, Tracey Fellows, attributed its strong half-year results to the initiatives outlined above. It reported a massive 34% increase in net profit ($94.7 million) on the back of a 25% increase in revenue ($261.5 million). Earnings per share (EPS) also rose 34% to 71.8 cents, which allowed the company to increase its interim dividend to 29.5 cents per share, also up 34% compared to last year's interim dividend.
Looking forward, the company has expanded its future growth pipeline, having entered into strategic investments in Asia and the United States. During the period, REA Group purchased just under 20% of iProperty Group Ltd (ASX: IPP), which is an Asian digital property advertising business, while it also acquired a 20% holding in US business Move, Inc.
The company noted: "We see many areas where we can contribute to the growth of these businesses and these investments will receive strong focus this year."