REA Group Ltd

ASX:REA

Earnings Call Analysis

REA Group Foresees Continued Growth in FY24

REA Group reported robust growth, with quarterly revenue up 12% to $341 million, and operating EBITDA rising 13% to $198 million. Growth was driven by the Australian residential sector and REA India, seeing revenue increases of 11% and 25%, respectively. New listings in Sydney and Melbourne grew by 16% and 14%, contributing significantly to the revenue. Though national listings only rose by 1%, and financial services revenue declined, the company anticipates a 3-5% growth in year-on-year listings for FY '24. While operating costs increased by 10%, REA Group aims for double-digit residential yield growth and low to mid-teens operating cost growth for the fiscal year. Despite some uncertainties, the outlook for FY '24 remains positive.

REA Group Reports Strong First Quarter Amidst Property Market Uptick

REA Group, a company operating in the property market, has kick-started the financial year with robust quarterly results. Revenues climbed by 12% to $341 million, and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), excluding associates, rose by 13% to reach $198 million. These promising figures are attributed to heightened buyer demand, stable interest rates, and overall positive sentiment within the Australian property markets, particularly in Sydney and Melbourne. The firm has also reaped benefits from its Indian business, enjoying rapid revenue and audience escalation.

Strengthening Core Operations and Market Presence

REA's strategy centered on creating a preeminent property experience has borne fruit, leading to Australia's most visited property website, realestate.com.au, capturing a premium monthly audience of 10.4 million, over half of which are unique to the platform. The company has succeeded in turning its substantial audience numbers into powerful consumer engagement, with buyer inquiries ramping up by 11%. Moreover, active membership soared by 16%, enhancing consumer insights and fueling machine learning advancements to further personalize user experiences.

Technological Advancements and Service Innovations

Innovations such as the new financial services tab and the property valuation tool 'realEstimate' have driven substantial traffic to REA's platforms. Customer upgrades to premium listing services have also contributed notably to the company's revenue growth. With the introduction of products such as 'PropTrack' and a diverse range of analytics tools, REA has solidified its value proposition to real estate agents and brokers, providing them with crucial market data to enhance their decision-making capabilities.

International Operations and Product Expansion

Internationally, REA Group has made significant headway as REA India registered 25% year-on-year revenue growth, with Housing.com preserving its audience leadership position. The group has launched innovative products like 'GuruPicks' in Southeast Asia, marking its commitment to maintaining a competitive edge through technological enhancement.

An Optimistic Outlook Amid Market Challenges

REA Group maintains a cautious but optimistic outlook for the future, acknowledging the potential for rapid market shifts. Nonetheless, current market stability and continued strong buyer interest suggest promising prospects if these trends persist. Investor sentiments are buoyed by the active property market, with a record number of property views in October, although the Group remains vigilant about changing conditions.

Earnings Call Transcript 2024-Q1

[Operator]

Good day, and thank you for standing by. Welcome to REA Group Limited Q1 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Alice Bennett. Please go ahead.

[Alice Bennett, executive]

Thank you, and good morning, and welcome, everyone. My name is Alice Bennett, Head of Investor Relations, and I'd like to thank you for joining us to discuss REA Group's results for the first quarter ended 30th of September, 2023. Before we commence, I'd like to acknowledge the traditional owners of country throughout Australia and recognize the continuing connections to land, water and community. We pay our respects to Aboriginal and Torres Strait Islander cultures and to Elders past, present and emerging.

This morning, you'll firstly hear from our CEO, Owen Wilson, who will provide a brief business update. Then Janelle Hopkins, REA's CFO, will talk to the financial highlights for the quarter. And following this, we'll be happy to take your questions. Just as a reminder, our quarterly numbers are top line results only. So we're restricted by the amount of detail that we can provide.

And without I'll pass across to Owen to get us started.

[Owen Wilson, executive]

Thanks, Alice. I'd like to welcome everyone this morning and also acknowledge the traditional owners of the land on which we're meeting and pay my respects to the elders past, present and emerging.

REA Group has delivered a strong first quarter result. The increasing value delivered to customers through our premium products, coupled with the strengthening property market and achieving the pleasing performance of our Australian business. Momentum has also continued in our Indian business with rapid growth in revenue and audience. Looking at our results from core operations for the quarter. Revenue was $341 million, an increase of 12% and EBITDA, excluding associates, was $198 million, an increase of 13%. Higher buyer demand and the stabilization of interest rates during the quarter resulted in improved seller sentiment. Year-on-year, the country's 2 largest markets, Sydney and Melbourne, started the financial year with high levels of activity. Contributing to the growing market confidence, national house prices returned to peak levels in September and have now entirely recovered from the falls in the prior year.

REA strategic objectives remain clear and consistent. Our purpose is to change the way the world experiences property. We do this by delivering Australia's largest and most engaged consumer audience, providing our customers with superior value and leveraging our unique data and insights to extend our core business as we build next-generation marketplace. Our operational highlights for the quarter reflect strong progress across our strategic agenda. Our flagship site, realestate.com.au is Australia's #1 address in property across every market. The quality of our audience continues to grow as we foster deeper consumer engagement with more personalized experiences.

Before I highlight audience metrics, it should be noted that in line with the Australian digital industry, we are transitioning the reporting of our audience metrics to the new IAB endorsed digital audience rating system, Ipsos iris. Differences in the Ipsos methodology mean the audience volumes we're reporting today cannot be compared to previous audience metrics, which were based on Nielsen. That said, while the way we measure our audience has changed, the leadership of our flagship site continues. We've remained strong and our realestate.com.au audience delivers superior value to our customers.

Under the Ipsos methodology, 10.4 million people visited realestate.com.au each month during the quarter, of which 53% were exclusive to our platform. This means our products and services provide exclusive access to over 5 million consumers. In a sign of the underlying health of the market, consumer demand for property continues to strengthen. Monthly buyer inquiries through realestate.com.au increased 11% year-on-year to an average of 2.2 million each month.

Our personalized experiences are key to the high level of consumer engagement on our platforms. Our aim is to convert our unparalleled audience into realestate.com.au members who are 3x more likely to engage with properties and result in high-value leads for our customers. Our active membership base provides us with deep insight into the behavior of our consumers. These insights feed our machine learning models, enabling us to deliver richer experiences and more meaningful connections between consumers and customers. During the quarter, active members increased 16% year-on-year.

Our property owner experiences drive valuable seller leads to our customers. Key to this is our property valuation tool realEstimate, which powered a record number of visits to our Property Owner Dashboard. In a milestone for property owner tracks, more than 3 million unique properties are now tracked by their owners, an increase of 41% year-on-year.

In July, we launched a new financial services tab in the dashboard. This feature enables owners to track their loan and supports the delivery of valuable leads to our brokers. It's a relatively new experience, but engagement has been strong in the first few months.

Moving to customers. Strong growth in the upgrade to Premiere+ made a healthy contribution to the group's revenue in the quarter. Customers have responded positively to new and enhanced Premiere+ features, which enable them to get the very best performance out of listing campaigns. Residential customers increasingly preference REA as the place to buy social extension products, which saw our audience maximize the product achieved record penetration this quarter. Ratings and reviews are an important driver of seller leads. Recent enhancements now enable customers to integrate consumer reviews captured by realestate.com.au onto their own platforms. This has already proved very popular with leading agencies.

At the end of the last financial year, I spoke about the launch of our Pro subscription. Pro further empowers our customers to better engage with and nurture leads. Early to uptake has been in line with our expectations and is steadily increasing. A Pro subscription unlocks rich audience data, including access to a valuable seller propensity score and helps agents appropriately prioritize leads. In agency services, we had strong growth in our customer self-service platform, Ignite. The 23% year-on-year increase in monthly active users was driven by the addition of valuable features, including the integration of seller leads into Ignite and the ability of customers to access market-leading PropTrack data via our CMA product. PropTrack delivered double-digit year-on-year growth for the quarter. PropTrack's data and solutions power many of our unique products and experiences and deliver significant value across our business. Our suite of propensity models continues to develop and represents a substantial opportunity for agents, brokers and our banking customers.

PropTrack also launched a new valuation solution, which brings together digital, digitally-enabled and traditional valuations into a single end-to-end workflow. This supports our banking customers with efficient lending decisioning. Market-related challenges continued in our Financial Services business. However, investment in our brand and product innovation are delivering significant value to our growing broker network. Mortgage Choice's partnership with Athena Home Loans, which launched in late FY '23, is tracking well above our expectations, and we're very pleased with the performance of this white label product suite. Demonstrating the strength of our brand and broker offering, we were pleased to be recognized as the Aggregator of the Year at the Australian Mortgage Awards last month.

Moving to our international businesses. The exciting momentum behind REA India continues with the delivery of strong year-on-year revenue growth of 25%. The flagship site, Housing.com, continued its audience leadership position with a 16% year-on-year increase in audience to 21.3 million. From a product perspective, price estimates are now available in 10 cities, which is contributing a significant amount of traffic to the platform, helping drive almost 1 million monthly views. The product is similar to realEstimate with an AI-powered price trend engine supporting users in their decision-making when buying and selling. REA India achieved further customer growth during the quarter, with a strong increase in the number of customers across all segments.

In Southeast Asia, PropertyGuru Group will announce its quarterly results on November 21. From a product perspective, the group launched [ GuruPicks ], which leverages machine learning to deliver a personalized feed of property listings to consumers. As mentioned on the News Corp call, despite challenging market and competitive conditions in the U.S., Move has made solid progress in Q1 across a number of strategic areas. These include expanding sell-side offerings, including the launch of a listing agent toolkit, deepening collaboration with the News Corp's powerful global platform to drive further audience reach and the recent launch of a new brand campaign.

REA is committed to a sustainable future and our environmental, social and governance agenda is a key focus. In September, we published our fifth annual sustainability report and our first ESG data book. During the quarter, we were delighted to see our Australian and India businesses recognized in the Great Place to Work, top 5 workplaces in Australia and Asia, respectively. REA Group and REA India were also both recognized in their respective top 50 Best Workplaces for Women's list.

Before I hand over to Janelle, I'll make a few comments regarding the current market. Australian residential property market conditions are healthy. Sydney and Melbourne experienced stronger than typical conditions during winter, and this has continued into spring. Strong demand underpinned by near-record employment and high levels of immigration has given sellers confidence to bring their properties to market. And this demand has continued into October, where we've seen a record 200 million views of properties in the buy section on realestate.com.au.

The stabilization of interest rates for several months, which ended with this week's rate rise, played a key role in building market confidence. This increase and further increases in rates from current levels could have a negative impact on sentiment. While residential activity has strengthened, the rental and developer markets remain challenged. Demand continues to outstrip residential rental supply. Our latest PropTrack rental report highlights an historic low national rental vacancy rate of 1.02% in October, and we expect significant challenges for renters to persist. Labor shortages and the cost of construction continue to impact visibility for some developers. However, we are seeing elevated interest on our platform, and this market will eventually recover, although the timing remains unclear.

In the commercial market, activity remains strong across sale and lease. There is a healthy demand for quality assets as businesses continue to reevaluate their needs. After a pleasing first quarter, we continue to work on delivery of new products and experiences for our customers and consumers. We are well positioned to continue growth for the remainder of FY '24.

I'll now pass to Janelle to provide more detail on our financial results.

[Janelle Hopkins, executive]

Thanks, Owen, and good morning, everyone. REA delivered a strong result for the quarter, driven largely by growth in our Australian residential business and REA India. Group revenue for the quarter increased 12% to $341 million. Operating expenses from core operations increased 10% to $143 million, and the group delivered operating EBITDA excluding the results from our associates of $198 million, up 13%. For our Australian operations, revenue increased 11% and operating costs increased 10%. And excluding the impact of the CampaignAgent acquisition, Australian revenue increased 9% and operating expenses by 7%.

As we have highlighted previously, Sydney and Melbourne led the market into the downturn last year and are leading on the way out. We saw some evidence of that occurring in the fourth quarter, and this has continued into Q1. Sydney and Melbourne new listings saw a growth of 16% and 14%, respectively. However, national listings ended Q1 up just 1%, with most other metro markets down year-on-year. Brisbane, our third highest yielding market, was down 10% and Perth was down 13%.

The Australian residential business had a strong quarter with revenue increasing 12%. Buy revenues benefited from the 13% average national price rise and from a strong re-contracting period, driving year-on-year premier penetration growth in all states, plus a positive impact from geographical mix with Sydney and Melbourne markets outperforming. This was partly offset by significant negative deferrals with stronger end to the quarter, resulting in more revenue than deferred from Q1 into Q2 than in the prior year. Rent revenue was up year-on-year with an 8% average price rise and increased depth penetration, partly offset by a 3% decline in rental listings in what is continuing to be a supply-constrained environment.

Turning to commercial and developer. Revenues increased in Q1, with growth in commercial and flat developer revenues. Commercial revenue trends were similar to our residential business, with revenue driven by an average 11% price rise and continued growth in depth penetration and higher listings in both sales and lease markets. Developer revenue was largely flat with continued lower project commencements, offset by increased project duration and the slower effects of the prior year's price rise. Media, data and other revenues were flat when you exclude the impact of the CampaignAgent acquisition. Data revenues increased due to higher valuation volumes and increased data and insights product monetization. This was partly offset by lower programmatic media display and a decline in developer display as cost pressures continued to impact marketing budgets. We're pleased with the positive contribution CampaignAgent has made since the acquisition in July, achieving record funding requests, driven by the stronger markets in Melbourne and Sydney and the addition of new agencies to the platform.

Financial services revenue declined for the quarter. The market remains challenged. And while our residential listings have stabilized, our mortgage business is yet to see this translate into settlement, which declined 7%. The sequential trend on submission declines has improved over the last 4 quarters with Q1 down 4%. Recruitment momentum continued with the broker network up 5% year-on-year to 1,078 at the end of Q1.

REA India continued its momentum during the quarter with revenue up 25% year-on-year. We saw strong revenue growth for Housing.com's property advertising business, which benefited from continued audience, customer growth and upselling customers to the higher yielding premium products.

Turning to operating costs. Both Australian and group core operating expenses increased 10%, respectively. This was due to increases in employee costs, impacted by salary increases from 1 July and continued investment in both Australia and India to deliver strategic initiatives. Technology costs driven by supplier price rises and higher data usage and marketing costs driven by timing of campaigns in Australia and continued brand and marketing in India as we seek to grow our audience.

Excluding the impact of CampaignAgent acquisition, Australia and group costs both increased 7%. As is often the case, we will see quarterly phasing vary across FY '24, particularly from marketing campaigns and employee costs, resulting in higher year-on-year growth rates across the remainder of the year. The group's combined share of associates contributed a $6 million loss to core EBITDA compared to a $5 million loss in the prior period.

Before I talk to current trading conditions, I just wanted to highlight that the group refinanced its $600 million syndicated debt facility in September to extend the [ tenure ] and CampaignAgent's $83 million warehouse facility was also refinanced at more favorable rates post-acquisition. As at 30 September, the group's total drawn debt was $401 million.

Moving to current trading conditions. We have previously flagged that year-on-year growth rates in Q2 would reflect very weak comps. And this was evident in October, which saw national residential buy listings up 16% year-on-year, with Sydney listings increasing 33% and Melbourne up 32%. You will recall listings in October last year were the lowest in 20 years. Listings for October were 1% above the 6-year average. If this trend continues for the remainder of the financial year, we would anticipate FY '24 year-on-year listing growth of 3% to 5%.

Our expectations for yield growth remains unchanged with residential buy yield anticipated to grow double digits in FY '24. We continue to target full year positive operating jaws and low to mid-teens group operating cost growth for FY '24. Excluding the impact of the CampatAgent acquisition, operating costs for both Australia and India are expected to increase high single digits to low double digits. EBITDA losses in India are anticipated to be lower in FY '24 compared to FY '23.

On a final note, while there's still a level of uncertainty in the current economic climate, we remain positive about FY '24 and the many growth opportunities we have across all our businesses.

I'll pause there. Operator, we will now open for questions.

[Operator]

[Operator Instructions] Our first question comes from Lucy Huang from UBS.

[Lucy Huang, analyst]

I have 3 questions. I [ must ] ask them all together. Just firstly, are you able to quantify what the deferral impact was that you saw in the first quarter, given your [indiscernible] that number more recently. And just how are you thinking about the unwind for sort of the next few quarters? And then just secondly, in terms of the volume picture, have you seen recently any impacts to listing activity in response to the recent [ rate levels that ] we've seen this month? And then just thirdly as well, given the visibility of marketing budgets that you're getting after CampaignAgent, can you talk to us around some of the trends in this side of the marketing budget to be seen a bit more pressure? Or have they been pretty healthy relatively speaking?

[Janelle Hopkins, executive]

Lucy, I'll take those questions. Yea, we're really pleased with our performance of our resi business for the first quarter. Deferral clearly was a drag on the results. And if you -- residential revenue was up 12%, if you exclude the impact of deferrals, probably closer to 20%. And as you said, that will unwind, deferrals is the timing issue. The impact of the unwind in Q2 will really depend on what happens in December and how much of that -- the December performance then flows through into Q3. But overall, we're very pleased with our residential performance for the quarter.

[Owen Wilson, executive]

I'll take the other questions, Lucy. In terms of volumes, look, we're not seeing any impact of the rate increase yet on existing volumes. It's way too early. There's a lot of noise in the volume this week, particularly in Victoria, Melbourne Cup moved this year from sort of the 1st of November to later. Derby Day, things like that moved from October to November. But we're seeing no impact of that rate increase on volumes at this stage. It's too early to call that.

In terms of CampaignAgent, look, marketing schedules are holding up very well. So they're not any -- they had a very pleasing start to -- under our ownership, both in terms of signing up new customers, but also the volume of flows coming through. There's no sign of pressure on marketing budgets that we can see.

[Operator]

Next, we have Eric Choi from Barrenjoey.

[Eric Choi, analyst]

Owen, I heard you were literally getting sick [indiscernible] those questions. So sorry, there's 3 more. Just on...

[Owen Wilson, executive]

I might be a little bit sick, Eric, that's not from the questions.

[Eric Choi, analyst]

You've probably been [ cool ]. But just on the revenue deferrals, a bit of a 2-parter, like as a public service announcement, can you just kind of remind us of when you recognize all this, how many days you recognize those listings over? And then in your response to Lucy, I think you were inferring maybe like an 8% drag from the revenue deferral, which would be pretty similar to remain. And I just would have thought the numbers a little bit less, given your different geo mix. And maybe can you clarify that? Second question -- sorry, just on geo mix. I guess, if you've got a big negative revenue deferral, then it implies geo mix is bigger as well.

And I remember in the last conference call, the thinking was geo mix would be flat over FY '24. But now obviously, listing is a bit better and Sydney, Melbourne mix is better versus Brisbane as well. So I'm just wondering on a full year basis, if you're prepared to budget for a positive geo mix now? And then last question, going earlier, but just in the [indiscernible] every few conference calls on the FY '25 pricing, is it crazy to think with kind of slower house price growth and rate rises you guys did a headline price increase at 13% this year, but maybe next year needs to be more in line with historic high single digits? Is that crazy?

[Janelle Hopkins, executive]

Okay, Eric, I'll take the first 2. So in the public service announcement. On average, we would recognize the revenue for listing over 60 days. So that strong August and September would be flowing into October and November. So that's how we think about the revenue from and how we defer it, the impact of deferral. So 7% to 8% is about the right number to think about from impact of deferral for us for the quarter. So that's 12% getting towards the 20%.

Your question around geo mix, look, it was a positive for the first quarter. We were unsure at the full year what it was likely to be. Sydney and Melbourne were absolutely stronger. But as I said in my speaking notes, Brisbane was down 10%, and that's our third highest yielding in city and Perth was also down. So geo mix for the quarter was a sub-5% benefit for us.

And then we're not willing to call for the full year's impact yet for geo mix because we just don't really know what's going to be the impact for the full year. Thinking about the fact that Melbourne and Sydney have come out first, the rest of the country we would expect to come out over the remainder of the year, and then that will start to neutralize some of that geo mix benefits. But it clearly has had a benefit for the first quarter.

[Owen Wilson, executive]

Look, in terms of FY '25 pricing, we've got the teams building on the value that we're going to deliver to underpin our price change next year. I'm not going to flag at what level that's going to be. The market dynamics obviously plays into it. But I remind everyone that we put through the 13% average price increase in an environment when listings were down in April, May this year. So the guidance we've given is double-digit yield growth through the cycle. And that might mean strong double-digit on a year and so lower the following year. But on average, we're very confident of delivering that double-digit yield growth through the cycle. So the quantum of FY '25 price increase, quite frankly, hasn't been decided yet. We know the value we're building. And obviously, as everybody say, the customers will hear about it first.

[Operator]

Next we have Andreas Koski from BNP.

[Andreas Koski, analyst]

So my first question is just on October listings, I mean you've given some very useful context around where they were last year. But they do -- that growth rate looks particularly strong when we compare both to [indiscernible] spoke about earlier in the week. I'm just interested in your perspective whether you think it's methodology differences perhaps driving that difference? Because again, if you look at that headline number 16%, it looks like a pretty big growth rate. I've got a couple of others, but maybe I'll wait for your answer on this one first.

[Owen Wilson, executive]

Sure. No, I don't think any methodology differences. I mean these are genuine listings that are being put on our side in our residential section. And let me be really, really clear. There are no commercial listings in these numbers. Our commercial listings are on a different app on a different website. So these are purely residential listings. I would say probably the difference is we've got a much clearer view of the entire market than those other names you mentioned. And the fact that there are differences between their numbers and ours would reflect that they probably just don't have the view of the market that we have.

[Andreas Koski, analyst]

Okay. No, I appreciate it's difficult to comment on others. And then I mean sort of linked to that, what was the rationale for providing the 3% to 5% listings growth number? I'm conscious you rarely give full year listings guidance. So how were you thinking about that internally? Was it a matter of people not just getting too carried away with the October numbers, and that's why you thought you'd throw that number in there and I guess, your level of confidence you can get to that range? Or is it still highly uncertain depending on what happens in [indiscernible]?

[Owen Wilson, executive]

Yes. Look, it's -- you're spot on. There's been a lot of sort of volatility in the numbers. The October numbers reflect the week October last year, particularly in Melbourne and Sydney. So they have Melbourne, Sydney up 30%. That's not typical, and it reflects the weak number last year. And so we just wanted to give a bit of clarity of that. Just to be really clear, this is not guidance. This is just saying mathematically, October seems to be around that 6-year average, slightly above 1%. So if the rest of the year kind of stays around that 6-year average or slightly above. mathematically, you'll end up with 3% to 5% growth. It's not our guidance. It's just a way of thinking about what might happen if we're just going to stay around this sort of level that we're at, that seems to be in line with the 6-year average. But again, there are so many things that could impact that. We've just had a rate rise and we haven't seen the impact of that flow through. If you believe the commentary, that's not the last rate rise that's coming. And if we end up in a situation like we did last year, we just got month-on-month rate rises, then all bets could be off. But as it stands today, October seemed to be kind of back towards more normal conditions. And if that continues, that's the sort of number you should be thinking about for year-on-year growth on a mathematical calculation basis rather than guidance.

[Andreas Koski, analyst]

Okay. Great. And just a final one for me. Do you still expect the associates in FY '24, the associate losses to be modestly higher than last year? It looks like you've admitted that comment from the release, and I'm conscious that Q1 was a negative $6 million. So if you annualize that, you get to $20 million losses, but perhaps there's some variability. Is that -- am I reading too much into the [ emission ] or is it still consistent that -- modestly high still consistent with your thinking?

[Janelle Hopkins, executive]

Andreas, yes, our guidance is unchanged as well on associates at the moment. You're right. You can't look at one quarter and extrapolate that over the full year because the results can change quarter-on-quarter. So at the moment, we're only at quarter-end, and our guidance is unchanged, and we'll have a look at it again at the half.

[Andreas Koski, analyst]

And I'm sorry, what's the biggest swing factors that generally move performance given [indiscernible]?

[Janelle Hopkins, executive]

Yes, it will be Move's performance in light of the tough trading conditions.

[Operator]

Next, we have Darren Leung from Macquarie.

[Darren Leung, analyst]

I might just ask 2, please. And the first one, just on Premiere product. And I know Owen you mentioned in your comments that you're seeing very good success so far. Do you have perhaps some numbers around how much of the 10,000-odd agent pool that you've signed up to or at least showing the product to?

[Owen Wilson, executive]

No, we're not going to put that out. We're -- this is -- we've said before, this is going to be a long burn and this is a different type of product to purchase. We've started our conversations. Those conversations will continue over the course of the year. As I said in my remarks, the sign-up is exactly in line with what we expected. And it is growing month-on-month. So it's quite pleasing. The feedback from the comments -- sorry, the discussion from customers is very positive, but it's a longer been decision for them to sign up to this. So we're very pleased with where it's at at the moment. It's exactly where we thought it would be, but this will be a long burn before it becomes a meaningful number in the P&L.

[Darren Leung, analyst]

Got it. And then just the second one. There's been a lot of excitement around [indiscernible]. Just your thoughts there and your competitive response on this front, please?

[Owen Wilson, executive]

Yes. Look, there's been a bit of hype and quite a lot of advertising going on, et cetera. The way I think about this is just let's go back to basics, let's go back to audience numbers. And when you look at the audience of that business, it hasn't moved that we can see for a year. Now they've done this advertising campaign, we may see some increases. But to put it in context, they're approximately a 20th of our size. There's the #5 site and Property.com is the clear #3. So without audience, you can't deliver leads, and that's obviously the value that customers are buying for. So yes, a lot of noise, but not seeing any demonstrable movement in user numbers yet.

[Darren Leung, analyst]

That makes sense.

[Operator]

Our next question comes from Nick Basile from CLSA.

[Nicholas Basile, analyst]

Just a quick question in the operating costs. There's a comment around anticipating to see higher year-on-year growth rates for the remainder of the year regarding marketing and employee costs. Are you able to just provide some context to those comments?

[Janelle Hopkins, executive]

Yes. Look, that was just really reflecting the fact that our Q1 overall cost growth is lower than our full year guidance around cost growth and the fact that they're phasing in the numbers. So we are expecting our increase in marketing spend to be more to be phased to the second half as well as we have planned increases in employee costs in the second half as we roll out a number of our strategic initiatives. So it's really just a phasing comment. But our overall guidance around cost for the full year remains unchanged.

[Nicholas Basile, analyst]

Okay. And then I guess, on the marketing side, I would have thought seasonally, you would typically be trying to promote the platform sort of for spring. Is there a difference in a way you're seeing the market this year in terms of where -- or the timing of your marketing dollars investment? Or I'm just trying to understand...

[Janelle Hopkins, executive]

Yes, there is absolutely still investment in marketing in Q1 and Q2 [indiscernible] anticipated more in Q3 and Q4.

[Operator]

Next, we have Siraj Ahmed from Citigroup.

[Siraj Ahmed, analyst]

I will ask 3 questions. I'm asking in order. The first one, in terms of -- since you're talking about FY '25 in some ways, but I know you don't give specifics, but thinking about new growth next year, this year is more about price. You have spoken about strategic initiatives in new products. How are you thinking about -- should we think it's more about depth and new products for growth next year? Any color you can give us on that?

[Owen Wilson, executive]

Look, no. I mean we do have products that we know we're going to bring to market in FY '25, but there's no way we're going to give advanced notice of that. It's just commercially sensitive. And similarly on the price, we're working on the value. We've got the teams currently building the value that will underpin that price and what level that ends up at involves a lot of factors. And again, we're not going to flag that in advance. It's commercially sensitive. We're just being confident that there will be a price increase and that we have got products coming to market.

[Siraj Ahmed, analyst]

Yes, just sort of a try. But just to clarify to talk about new products, it's not true, right? It's other things that you're talking about, which should be launched in the...

[Owen Wilson, executive]

Yes. No, we've got other products, and we'll be bringing to market in FY '25.

[Siraj Ahmed, analyst]

Okay. Secondly, Owen just in financial services and the new dashboard you're referring to, so even maybe acquisition you spoke about doubling market share. We haven't seen that to date. But just to understand how you think about the cadence of growth and the leads coming in from property totals when do you expect that to start coming through?

[Owen Wilson, executive]

Yes. Partially, what you're seeing with financial services is also the distraction that naturally comes about with an integration. We spent the last 12 months moving all of our brokers onto a new CRM platform, which is way better, but that's a distraction. It's been a distraction for our brokers. And for the Smartline brokers, they also had to move on to a new operating platform. So there were 2 big changes in their business. And that, I think, naturally distracted them in FY '23. Now that's complete. We've still got further enhancements to come, but the productivity improvements that will start to flow through in terms of conversion, the amount of loans that they can write per broker and their loan writer. The finance tab in the Owner Dashboard that is starting to drive really good leads. And we're also seeing good leads come off our Property Coach offering on property.com. So we expect to see a ramp-up in leads.

Changing market share in this business is tough. I mean you're talking about massive volumes. This is a huge market, but we're confident over time we can grow our market share.

[Siraj Ahmed, analyst]

Okay. But just [indiscernible] I mean, it's still early to become meaningful [indiscernible] is that the way to think about it?

[Owen Wilson, executive]

You'll see a substantial increase in the leads coming from realestate.com.au into our broking network.

[Siraj Ahmed, analyst]

Sure. Okay. Last one in India. I understand you get further details in a couple of weeks. But just in terms of the growth rate that you're starting to see, it sounds like the portal is driving growth in housing.com, but previously, you had the Housing Edge driving growth, seen that's slowing. Any color on what's happening there?

[Owen Wilson, executive]

No, that's -- you are spot on. Housing.com is really growing strongly, higher than that 25% number. And Edge has slowed a little bit for various reasons. We're really pleased that it's Housing.com that's driving that, and that's reflecting the investment we've made in the consumer experience, the improvements in our SEO performance. So we're delighted with the progress in India. And look, it's a long game there. Our ambition is to be #1. But the progress has been great, and we look forward to sharing more on that in a couple of weeks.

[Operator]

Next, we have Roger Samuel from Jefferies Australia.

[Roger Samuel, analyst]

I've got 3 question. I might just ask them in one go, if that's okay. Firstly, I think in August when you set the guidance for FY '24, you were assuming that listings are going to be a bit flat for FY '24. And is if you get listings going up by 3% to 5%, do you think that your cost will be more due towards that mid-teens rather than on the low teen side? Secondly, for October, I just want to confirm if you're still experiencing -- whether you experienced any negative drag from deferrals in October? And lastly, on the cost side in this first quarter, was there any restructuring costs that you recognize below the EBITDA line and perhaps CampaignAgent, is that still loss-making? Or did you manage to neutralize the EBITDA loss?

[Janelle Hopkins, executive]

Okay. So I'll take all of those. So the first one, you're right. When we did the original -- second -- our full year results, we were anticipating flat listings as an expectation. So if we think the higher that will obviously create additional revenue and from a cost perspective, we haven't changed our guidance. Our cost guidance may be towards the higher end of the range. But as we said at the full year, we want to wait until we see what happens at least for the first half then review whether we might want to bring forward any additional investments in our strategic initiatives that will help us to generate revenue more quickly into FY '25.

In relation to deferral, yes, we have seen again because of strong October, the revenue being deferred out into November and December. And in relation to CampaignAgent, it is effectively EBITDA neutral. And there are some small integration costs that will be specifically included in noncore for the quarter and for the half, and you'll see that at our half year results.

[Operator]

Next, we have [ Annabelle ] from Goldman Sachs.

[Unknown Analyst]

I've just got 3. So following up on geo mix, if we get the listings trend above the 6-year average and the 3% to 5% growth for the full year, are we able to get a sense of the quantum of the geo tailwinds that would come through might be? And on India, EBITDA, did the losses improve in the first quarter? And should we be expecting further improvements in the first half? And lastly, just on Commercial and Developer. Do you think you'll be able to maintain the growth for the rest of the year as you lap the development price rise?

[Janelle Hopkins, executive]

So geo mix, we're not providing guidance on geo mix for this year because it really will just depend on what happens around investment [ in around the ] 2 things in Melbourne and Sydney versus what's going on nationally. So we can't provide any guidance around that. In relation to India, our losses did come down in Q1, and we are anticipating them as we flagged to come down for the full year. We're not giving explicit view around how much that will come down because that will really depend on what's going on from a revenue perspective and what we'd like to invest. However, as a rough guide, I think we could assume it's going to come down somewhere in the order of where it was back in FY '22. And Commercial and Developer growth, again, very hard to determine what will happen for the rest of the year. We are seeing [indiscernible] commercial business is going very well with the benefit of price and yield. But from a listings perspective, that will really depend on what's happening from the market.

[Owen Wilson, executive]

Yes. Look, the developer has to turn in some things. I mean we have such a housing shortage in this country. Immigration is running at almost record levels at the moment and people need something to live. So construction costs, materials costs are starting to come down, steel has come down quite a bit. And with immigration labor supply has to improve at some stage. I think a lot of developers have projects kind of ready to go once they've got the confidence that they can do it at kind of a low-risk way that they're going to go to move them at a profit. So it feels like it will turn. But what we are seeing is increased duration of our project profiles, which is offsetting that. We had the price increase that we got the benefit of in Q1. So in a world where volumes were down, but revenue was flat. We're ready for when it turns, and at some stage, it's going to become a tailwind.

[Operator]

I see no further questions at this time. I will now turn the conference back to Owen Wilson for closing remarks.

[Owen Wilson, executive]

Thank you, everyone, for your attendance today. We are really pleased with our Q1 results that we're off to a very good start. And as you can see from October and the comparables for last year, we are set up for a good Q2. So we're very pleased with the outlook for FY '24 and look forward to seeing you in the coming weeks. Thanks, everyone.