REA Group Ltd

ASX:REA

Earnings Call Analysis

REA Group's Exceptional Q3 Performance

REA Group reported a strong third quarter with a 24% increase in revenue to $334 million and a 30% rise in EBITDA to $177 million. Key drivers included strong yield growth in Residential and Commercial segments and significant revenue growth of 31% in REA India. Sydney and Melbourne listings surged by 20% and 18% respectively, fueling a robust market. The company maintains confidence for FY '25, with a 10% price increase for Premiere+ set for July. Operational highlights included a 50% increase in seller leads and expanding engagement on realestate.com.au.

Strong Quarter Performance

REA Group has reported exceptional third-quarter results, demonstrating significant improvements in revenue and EBITDA. Revenue increased by 24% to reach $334 million, while EBITDA excluding associates rose by an impressive 30% to $177 million. This robust growth was primarily driven by the performance of the Australian Residential and Commercial segments, as well as substantial contributions from REA India.

Residential and Commercial Growth

The standout performance in REA's Residential business saw revenue growth of 27% during the quarter. National listings were up by 6%, with significant year-on-year increases registered in Sydney (up 20%) and Melbourne (up 18%), far exceeding historical averages. The yield, a major factor driving residential performance, grew by 19% for the quarter, bolstered by a 13% average price rise and increased Premiere+ product penetration.

Operational Highlights

REA's platform continued to dominate the Australian property market, with realestate.com.au maintaining its position as the top property website, reaching 11.2 million people monthly on average. Other platforms such as property.com.au and realcommercial.com.au also recorded high visitor numbers, reinforcing REA’s strong market presence. The introduction of AI-powered tools and enhancements to the user experience have further strengthened consumer engagement.

Guidance and Market Outlook

Looking forward to FY '25, REA expects to maintain its positive growth trajectory. The company has set an operating cost growth target in the mid- to high-teens, excluding M&A activities, with specific guidance of a 10% price increase for its high-penetration product, Premiere+. REA anticipates continued recovery and growth in various metro markets, though listing volumes may fluctuate depending on economic conditions such as interest rate changes.

Challenges and Opportunities

While the Australian market remains strong, with stable interest rates supporting seller confidence, some challenges persist. Metro markets like Perth and Adelaide are experiencing negative listing trends, and the rental market remains subdued due to ongoing low vacancy rates. Despite these challenges, REA's strategic initiatives, including leveraging data insights and enhancing product offerings, are expected to drive continued growth and market leadership.

Earnings Call Transcript 2024-Q3

[Operator]

Good day, and thank you for standing by. Welcome to REA Group Limited Q3 Financial Results. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Alice Bennett, Executive Manager, Investor Relations. Please go ahead.

[Alice Bennett, executive]

Good morning, and welcome, everyone. I'd like to thank you for joining us to discuss REA Group's results for the third quarter ended 31st of March 2024. Before we commence, I'd like to acknowledge the Traditional Owners of country throughout Australia and recognize the continuing connection to land, waters and communities. We pay our respect 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. Following this, we'll be happy to take your questions. Just as a reminder, our quarterly numbers are top line results. So we are restricted by the amount of detail we can provide.

With that, I will pass over 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 their Elders past, present and emerging.

REA Group has delivered an exceptional third quarter result with strong yield growth underpinning the performance of our Residential and Commercial businesses. REA India also continued to deliver significant revenue growth.

Looking at our results from core operations for the quarter. Revenue was $334 million, an increase of 24%. And EBITDA, excluding associates, was $177 million, an increase of 30%. Stable interest rates during the quarter drove seller confidence, particularly in our 2 biggest markets of Melbourne and Sydney, where listings were up significantly year-on-year. In this strong market, our customers continue to preference our premium products and services to leverage our highly engaged audience. Underpinning the market's confidence, national house prices reached a new record in April with strong buyer demand absorbing the rise in listings.

REA strategic priorities remain clear and consistent, and our purpose is to change the way the world experiences property. To deliver on this, we engage Australia's largest consumer audience, provide our customers with superior value, leverage our unique data and insights and extend our core businesses as we build next-generation marketplaces.

Our operational highlights for the quarter reflect strong progress towards our strategic objectives and underpin our financial results. Our leading platforms hold 3 of the top 4 audience rankings across all Australian property websites. Our property research site, property.com.au, reached 2 million unique visitors for the first time this quarter and realcommercial.com.au recorded its highest number of visitors under Ipsos metrics. Our flagship site, realestate.com.au, remains Australia's #1 address in property across every market, reaching 11.2 million people on average each month.

In the latest Ipsos data, we were pleased to see the audience gap between realestate.com.au and our nearest competitor widened to almost 5 million people, up from 4 million in April last year. Our personalized experiences foster loyalty among Australians who consistently return to realestate.com.au. Throughout the quarter, we achieved 130 million average monthly visits. That's 4x the number of visits compared to our nearest competitor.

Our rich experiences drive deep engagement and our audience spent 2.9x longer on our platform compared to visitors on our nearest competitor site. The quality of our audience and the value it delivers to our customers is tied to our membership strategy. Our aim is to convert consumers into active members, and we achieved an 18% year-on-year increase in our membership base. Our Property Owner experiences drive valuable seller leads to our customers. We achieved a 50% year-on-year Increase in seller leads with almost half of all seller leads directly attributable to owner experiences.

3.5 million Australian homes are now tracked by their owners on realestate.com.au through our Property Owner dashboard. That's a 38% year-on-year increase. Our consumer strategy is centered on delivering the best experiences, and we are constantly innovating to ensure we're meeting challenging changing expectations.

In February in Victoria, we introduced a change to realestate.com.au to support price transparency on listings. Prices are now automatically displayed on both the search results page and on the listing page. Pleasingly, as we anticipated, this change has resulted in deeper consumer engagement, including increases in inspection bookings and property sales. We are currently expanding this program of work to further support price transparency in other markets.

Moving to customers. Increased Premiere+ penetration continued to make a contribution to the group's revenue. New pricing for Residential and Commercial customers comes into effect on July 1 with an average 10% price increase in our Premiere+ product. Customers are already reaping the benefits of additional Premiere+ value with release of the first stage of many new features in March. This includes the introduction of the AI-powered listing strength check, which scores every listing based on what matters most to our consumers. The feature then offers customers data-driven recommendations to improve this score such as property features to highlight.

In addition to the latest brand of Premiere+ value, we also relaunched our social extension product, Audience Maximizer. This popular product achieved record penetration in the quarter. As we prepare for a cookieless feature, we've shifted to click based packages, which further leverage our leading audience. The enhanced Audience Maximizer 2.0 places more control and flexibility in the hands of our customers. It includes new options for targeting plus the addition of a complementary Sold Boost feature to specifically target potential vendors.

In Agency services, the addition of new features in Ignite continues to generate greater customer activity on the platform with a number of Ignite monthly active users increasing 24% year-on-year. Along with powering many of our unique products and experiences our data business, PropTrack also delivers significant value to its banking customers. PropTrack's latest valuation solutions brings together digital, digitally enabled and traditional valuations into a single end-to-end flow. It's designed to support efficient lending decisioning. We are pleased to have recently signed our first major customer. We look forward to expanding this solution in market.

Our Financial Services business continues to be challenged by soft lending conditions with total mortgage lending commitments across the market, down 3% year-on-year for the quarter. Settlements were also impacted by the timing of Easter this year. We're seeing some positive signs with a modest increase in year-on-year submission volumes for the quarter. And pleasingly, we also continue to see growth in lead volumes.

Mortgage Choice Freedom, our white label product powered by Athena continues to perform extremely well and is on track to achieve over $1 billion in settlements, less than a year after it was launched. The product is resonating with borrowers. And last week, we launched Mortgage Choice Freedom on realestate.com.au as part of our evolving digital mortgage marketplace.

REA India's strong momentum continued in the third quarter with revenue up 31% year-on-year, driven largely by the core Housing.com business. The third quarter is seasonally strong with the Happy Home -- Happy New Homes event running from February through to mid-March. The event brought together the country's leading developers across 27 cities and offer property seekers an unparalleled opportunity to explore new housing projects. Our focus on SEO and target marketing continue to support Housing.com's audience leadership position with the site achieving 1.3x more monthly visits than the closest competitor.

Before I hand over to Janelle, I'll make a few comments regarding the market. Despite speculation that interest rates may stay higher for longer, we are operating in good conditions and the Australian residential property market remains strong. Key fundamentals, including low unemployment and high levels of immigration, along with record property prices continue to support seller confidence and buyer demand. Interest rates are likely to trend down at some stage next year and some economic modeling has indicated the incoming tax cuts in July will have the equivalent impact of 2 interest rate cuts.

With a boost for borrowing capacities, these cuts will further support the health of the market in FY '25. We should note that we'll be cycling over a very strong comparable volumes in Melbourne and Sydney. But any year-on-year weakness in these markets could potentially be offset by growth in other markets.

As we've said before, listings are notoriously hard to predict, and the trajectory can change rapidly. With that said, my best guess is that overall listings will be flat in FY '25, which would be 2% above the 7-year average including this year. This would still be a very healthy market. We're in an excellent position to continue our growth into FY '25 with a strong pipeline of new products and consumer experiences.

I'll now pass to Janelle to take us through the financials in more detail.

[Janelle Hopkins, executive]

Thanks, Owen, and good morning, everyone. REA has delivered an exceptional result for the quarter, driven largely by growth in our Australian Residential and Commercial businesses and REA India. Group revenue for the third quarter increased 24% to $334 million. Group operating expenses from core operations increased 18% to $157 million, and the group delivered operating EBITDA excluding the results from our associates of $177 million, up 30%.

Excluding the impact of the CampaignAgent acquisition, Australian revenue increased 21% and operating expenses by 15%. Our Residential business has had a standout quarter with revenue growth of 27%. National listings were up 6%, with the first half Sydney and Melbourne outperformance continuing into Q3. Sydney and Melbourne listings were up strongly year-on-year, increasing 20% and 18%, respectively, and were also well above historical averages. Other metro markets remain subdued. Brisbane, our third highest yielding city, showed some signs of improvement. However, listings was up only 1% for the quarter. Perth and Adelaide was still firmly in negative territory, down 8% and 7%, respectively.

While listings were a positive contributor, the biggest driver of our residential performance was our strong buy yield, which was up at 19% for the quarter. Yield growth was supported by the 13% average price rise, increased Premiere+ and total depth penetration and a 3% positive impact from geo mix. And after being a 3% negative drag on the first half residential growth, revenue deferral reversed in Q3 to a positive 3% contribution.

Turning to Commercial and Developer. Revenues increased in Q3 with strong growth in Commercial and flat Developer revenues. Commercial revenue trends were similar to our Residential business, with performance driven by an average 11% price rise and continued growth in depth penetration and higher listings. Developer revenue was largely flat with continued lower project commencements, offset by increased project duration.

Pleasingly, the commencements trend was still negative, has been sequentially improving over the course of the year. Media, data and other revenues were up year-on-year. Data revenues increased due to improved data and insights product monetization and media revenues grew with the higher developer display, partially offset by lower programmatic display. Other revenues saw strong growth from both Flatmates and CampaignAgent, which is benefiting from the stronger market in Melbourne and Sydney and the addition of new agencies to the platform.

Financial Services revenue grew modestly with a 2% reduction in settlement more than offset by growth in our white label products, driven by the Mortgage Choice Freedom product and growth in our loan book.

REA India continued its momentum during the quarter with revenue up 31% year-on-year. Housing.com's core advertising revenue during the quarter was driven by another successful Happy New Homes online customer event, increased depth penetration and improving monetization in Tier 2 cities. We also saw a return to growth for the adjacency services on the Housing Edge platform, Rent Pay on Credit, in particular.

Turning to operating costs. Group core operating expenses increased 18% or 14% excluding the impact of the CampaignAgent acquisition. This was due to increases in employee costs impacted by accelerated investment in Australia to deliver strategic initiatives and higher employee bonuses in line with higher revenue and marketing costs due to timing of campaigns in Australia and continued brand and marketing investment in India as we seek to grow our audience.

Australian operating expenses increased by 15% or 20%, including CampaignAgent. As is often the case, we will see quarterly [ phasing ] vary across FY '24, particularly for marketing campaigns and employee costs, resulting in higher absolute costs and year-on-year growth rates in the fourth quarter.

The group's combined share of associates contributed a $9 million loss to core EBITDA, which compares to $0.5 million loss in the prior period. This reflects continued market -- tough market conditions in the U.S. and investment for future growth from early-stage investments.

Move's equity accounted losses reflect a 6% decline in revenue with lower transaction volumes, partly offset by growth in leads, which turned positive during the quarter and increased by 4% year-on-year. Higher marketing costs were partly offset by employee cost savings. For more information on Move, please refer to the News Corp results release.

Moving to current trading conditions. In terms of listings, there were 2 things that impacted March and April. Firstly, the timing of Easter with Good Friday in March this year compared to April last year. And secondly, the fact that April in 2023 was particularly weak in a historical context, indeed the weakest April we've seen in the last 20 years, excluding the first year of COVID in FY '20. The outcome was a 9% decline in national listings in March, while April has increased by 32%, with Sydney up 45% and Melbourne increasing by 53%. Year-to-date national listings are up 7%. Based on current market conditions, we would anticipate listings growth of 5% to 7% for FY '24.

With just 1 quarter to go, we would anticipate FY '24 Residential buy yield year growth to be between 18% and 19%. Looking forward to FY '25, buy yield will primarily be driven by an average 10% price increase in our highest penetrated product, Premiere+. In line with previous guidance, we are on track to deliver our positive operating jaws in FY '24 with group operating cost growth in the mid- to high teens anticipated.

Excluding M&A, operating cost growth for both Australia and India is expected to increase low to mid-teens. EBITDA losses in India are anticipated to be lower in FY '24 compared to FY '23. The group expects losses from combined contributions from associates in FY '24 to be between $25 million and $30 million.

On a final note, we are incredibly pleased with the performance we've delivered to date and are well positioned for a strong end to the financial year. We remain excited by the opportunities ahead, and we'll continue to invest prudently to drive future growth into FY '25 and beyond.

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

[Operator]

We will now conduct the question-and-answer session. [Operator Instructions] Our first question comes from Lucy Huang of UBS.

[Lucy Huang, analyst]

Owen and Janelle. I've got three. So firstly, volumes are looking really strong with April number up 32%. And, I guess, you guys have upgraded your listing volumes forecast for the full year. Any color you can give us on early May, just to give us a guide into how to think about the range of volume growth we should be looking at for fourth quarter?

And then my second question is on Premiere+, the recent amount of discussions with agents. Have we seen a similar level of new sign-ups entering into FY '25?

And then just thirdly, just any color you can shed on the Australian rentals listings business. I noticed that listings were down 5% last year. Just wondering, what the trend is at the moment in the last quarter?

[Owen Wilson, executive]

Thanks, Lucy. Look, in terms of volumes, that April number being so strongly up, that is entirely due to the movement of Easter from April last year into March this year. Plus, as Janelle said, April last year was particularly weak. It was one of the weakest April's we've seen in something like 20 years or so. So that April number is not normal, unique. If you combine March and April, you get a much more realistic outlook.

In terms of momentum into May, look, it's still a very healthy market. As I said, Melbourne and Sydney is still leading the charge. If you look at Q3 for Melbourne and Sydney, they were comfortably above the 6-year average. I think Melbourne was 13% above the 6 year average for the quarter. Sydney 11% above and so we'll continue sort of that momentum into early May. What I would say about volumes though for Q4 is, we've got to remember that June this year has 2 less working days than June last year, and that absolutely has an effect on the volumes, and that's what's reflected in our guidance of 5% to 7% for the full year around listings.

In terms of Premiere+ the early kind of rollout of pricing has been very pleasing. Customers have accepted the change. They never like a price change, but they've accepted it. We do expect some further sign-ups to Premiere+ but not significant. And in terms of rentals, that market is really subdued. I think you don't you want to pick up any paper to replace that -- rental vacancies are still tracking at decade lows, which means you don't need to advertise every time you get a vacancy, you put 1 ad on, you get 50, 60 applicants and you can spread it amongst properties. So I think you're seeing that in the existing volumes. And I think that will continue until we see more investors coming back to the market, more rental stock coming back to the market that rental listing market will remain quite subdued.

[Janelle Hopkins, executive]

I think the good thing, Lucy, is whilst we're seeing the rental listing is down, we're still seeing revenue growth in rentals. We've got the benefit of price and also depth penetration in the rent space as well. Clearly, not the strength we've seen in buy, but we've been able to offset some of that listing softness in rent.

[Operator]

Our next question comes from Eric Choi of Barrenjoey.

[Eric Choi, analyst]

Good results. Three for me as well. Just can I follow up on that listings question, just my math is wrong, but if you just do the math, given you've done 32% in April, it kind of suggests May and June would need to decline maybe 5% to 6% in aggregate. And just picking up what you're putting down, Owen, it feels like you're -- like May might be up, but you're baking in a negative June number to get to that aggregate number. So aggregate 5% to 6% decline. So, I guess, the question is, have I mapped that right? And is there still a bit of conservatism, I guess, in that 5% to 7%.

Second question, just on, I guess, fourth quarter versus third quarter, just in terms of the identifiable pieces of what's going to accelerate versus decelerate? Listings is obviously up in the air. But are we basically balancing a weak finance result in the fourth quarter versus the potential for revenue deferrals to go back to negative and therefore, it's kind of up in the air where the fourth quarter will accelerate or decelerate versus third quarter?

And then last one, sorry if I missed this, Owen, but I think you said if you're flat next year, you'll be about 2% above the 7-year average. Just wondering where that puts Sydney and Melbourne, though versus the 7-year average. And then whether you'll be factoring a negative or a potential for negative market mix when you're setting your FY '25 budget and cost guidance?

[Owen Wilson, executive]

Okay. I'll take the questions 1 and 3, Eric, and I'll leave the 4Q versus 3Q to Janelle. I think the thing that -- no, the 5% to 7% outlook is a full year number, and we're talking about a very short period of time between now and 30 June. So there's several things factored into that outlook. I think you're right, to get down to 5% it would need to be negative. But June, as I said, 2 less working days, that will have an impact on June year-on-year growth rates in listings.

The second thing is Melbourne and Sydney, June last year is when they started to take off. So that we expect the comparables for Melbourne and Sydney to obviously be softer as we go into a stronger comp. And so that's why that number looks the way it does. And you're right, it would have to be negative to get down to 5% and it has to be extraordinarily positive to get up to 7%, given it's a short period of time, and we're talking about a full year number here.

In terms of next year, yes, you did hear right that if we had flat listings year-on-year, that's about a 2% uplift on the 7-year average. Within that -- we're not predicting individual cities. But as I said in the opening remarks, Melbourne and Sydney will be cycling over incredibly strong comps. And so within that flat number, I would predict Melbourne and Sydney will probably likely to be negative.

And -- but the other markets that have been softer this year are likely to be positive. Now they're notoriously hard to predict. If we get rate cuts earlier than people are forecasting, then the market will definitely be strong. And it might mean Melbourne and Sydney stay strong. So it's very hard to predict. But our best guess at the moment is flat, and that's what we're working with. And within that, we're not going to put [ that city ] guidance.

[Janelle Hopkins, executive]

When you look at Q3 versus Q4, you're right, Eric, in the Q4 numbers last year, we had the Financial Services valuation impact. As we sit here today, we'll do that process this quarter, but we're not expecting that to have a material impact on the Q4 results. So that will be a benefit. Deferral, as you know, is really hard to predict. We have had a strong Q3, that's flowing into Q4. The impact on Q4, if it's positive or minus will really depend on when May or June land and the timing of those listings and then whether we have a strong or weak deferral out. When we look at deferral both for the full year, we're expecting deferral to be effectively a net neutral impact. So that will be one of the swing factors. And then where geo mix lands in the last quarter with the other swing factor in resi, depending on what happens with Melbourne and Sydney listings as we've talked about and then overall listings. But I think we're on track for a good -- strong Q4 overall.

[Operator]

Our next question comes from [ Andre Rakowski ] from E&P.

[Unknown Analyst]

My first question was around any early thoughts you have on your OpEx plans into FY '25, particularly now that you've got the price increase locked in for next year. I mean I presume you're going to be targeting positive jaws. But are you able to elaborate at all on how you think about the product development spend into next year relative to this year and what your broad thoughts are?

[Janelle Hopkins, executive]

Yes. Look, so it's a bit early around FY '25 detailed cost conversation. But I would say we would continue to target open jaws for the group and open jaws have historically been in that 1% to 3% range. When you look at the market this year and how strong it's been, we have made the decision to draw the wider open plus we've also accelerated our investment. When we look forward into next year, we obviously have the pricing that's known, but there are other swing factors of what happens around listings and those sort of things. But we -- as we do our budget planning, we do target open jaws outcome.

When you look at the investments we've made this year, we deliberately made the decision to accelerate some of those and they will flow-through into next year. We do have the impact of inflation, but coming through still into the things like employee costs and salaries. But we feel like we've balanced the investment in the right way to deliver the revenue growth into '25 and '26 and onwards and continue to invest in things like privacy, product enhancements, cyber, all those type of things, which are also critical to invest in. So we feel like the balance is right at this point in time. But as you've seen us do in the past, we can flex that up and down, speed up and slow down investment, depending on what's happening in the market.

[Unknown Analyst]

Okay. My second one is on the [ Lux ] products, which I'm sure many people are aware, you've introduced [ Sparta ] new packages. Can you confirm whether this is very much pitched as a high-end product, given it's a pretty chunky premium to Premiere+, I think, about 9%? And how do you view the addressable market for that product?

[Owen Wilson, executive]

Look, it is a premium product, and it's priced accordingly. It gives you exposure on the home page of both app and the web. You get larger listing and additional photos on the screen results page, you get push notes, you get a lot of value in that. It is a premium product. It's priced according to our normal zone pricing. So the price of [ Lux ] will be very different to [indiscernible]. And -- but we think that vendors who really want their property to pop the best it can and will find this attractive. But as we've done with every product rollout, I'll say this time and time again, this will be a very slow uptake. But it is absolutely -- the addressable market is basically repricing date.

[Unknown Analyst]

Okay. And final one for me, again, just on the new pricing structure. You've introduced a low-value asset exception for lower-priced properties. In terms of your rationale for introducing that, do you see this effectively as an opportunity to increase Premiere+ penetration? Or is it maybe about providing a bit of an offset to the price increase in case agents are looking for some savings?

[Owen Wilson, executive]

They've always had exceptions. And so -- the reason why is exception didn't matter. So this is -- we just make it a bit easier for them. If you've got a low-value property in a high-priced zone just to knock it down. And what we have said is if you use this, then it won't come out of your other exceptions in terms of account, I don't think it's not -- we actually there's a significant feature of the value of Premiere+ that we're bringing a lot more value than that.

[Unknown Analyst]

Okay. Got it. Yes. So it doesn't feel like that's going to be a key driver.

[Owen Wilson, executive]

No.

[Operator]

Our next question comes from Siraj Ahmed from Citigroup.

[Siraj Ahmed, analyst]

Can you hear me okay?

[Janelle Hopkins, executive]

Yes.

[Siraj Ahmed, analyst]

Just first one, just I think following up Lucy's question on yield outlook into next year. Can you just -- I think you mentioned that there's positive upgrades in the Premiere+, but just comparing to last year any kind of [Technical Difficulty].

[Owen Wilson, executive]

Sorry, you cut out Siraj. Can you repeat that? Siraj?

[Janelle Hopkins, executive]

Yes. Operator, have we fully lost Siraj?

[Operator]

We can come back to Siraj. Siraj, please requeue and come up. Our next question comes from Tom Beadle of Jarden.

[Thomas Beadle, analyst]

I just had one follow-up question just on cost. Just that core operating cost growth of 14% in the third quarter was probably a little bit better than I had expected. But with the maintenance of your guidance, it probably means you might do above 20% core operating cost growth into Q4. So I'm going to follow-on to Eric Choi's question. I'm just trying to work out the momentum of that cost growth into FY '25. I realize there's always a few moving parts. But just could you help us understand what those moving parts are in Q4? And if there's any sort of timing issues or one-off costs that you're expecting to incur in Q4 that may not be reflective of the underlying momentum and cost growth into FY '25?

[Janelle Hopkins, executive]

Yes. Thanks, Tom. It's a good question. So when you look at the phasing of our costs, we always say that's right, there is the lumpiness in phasing. A great example of that is marketing spend in Q4. We've got 3 marketing programs going out in Q4 this year compared to last year and compared to what we had in the first 3 quarters of the year. So there is lumpy phasing and higher costs, particularly in marketing.

And the other one that's a swing factor as we start to land closer to the year-end results as what it means from an employee incentive outcome. And whether we are continuing to track above or below and what are expectations around incentives. They're just 2 examples of where some of the phasing can change. So, yes, I wouldn't use Q4 as a momentum into FY '25 at all and more look to our full year guidance.

[Operator]

Our next question comes from Kane Hannan from Goldman Sachs.

[Kane Hannan, analyst]

Just a few quick ones for me as well. Can you give any comments around the subscription revenue trends you're seeing, so whether that has returned to growth with the Pro subscription launch last year?

[Janelle Hopkins, executive]

Yes. Look, it's really early Kane on subs. When you think about product really just only been in market since October. And so it's not having a massive impact at all on our overall subscription revenue. And plus, we are still seeing customers come off no debt into debt. So they then go from a higher subscription to a lower subscription cost. So it's a pretty net neutral impact for subs for the quarter and year-to-date actually.

[Kane Hannan, analyst]

Yes. No, perfect. And then the acceleration in your revenue growth, I mean, you guys said that [indiscernible] sort of previously last year, which I think at that time you were talking about a bit of a pull forward from the fourth quarter last year. I mean is there any noise this time around or things we should be thinking about heading into the 4Q for India?

[Janelle Hopkins, executive]

It's a similar thing actually. So that Happy New Homes event was very, very well supported this year. We had a record outcome for that in Q3 this year. So we see that benefit flowing through year-on-year. It's always just uncertain whether that means the activity that might have happened in Q4 that get brought forward into that event. So it could have a minor impact on the Q4 India growth rates, but it's unclear at this point in time what impact it will have.

[Kane Hannan, analyst]

Perfect. And lastly, just developer. I think you called out flat developer revenues in the release, but developer display in the media business. Talk a bit about the sort of difference there, whether one leads to the other or anything we should be [indiscernible].

[Janelle Hopkins, executive]

Yes. Look, we're pretty pleased with the overall developer outcome in what is continuing to be a super tough market. When you look at what's happening in that flat developer revenues, what you're seeing is overall project launches still down year-on-year. But actually, the projects staying on the site longer. So that duration is extending out. So that's supporting the revenue.

And then in developers display, our sales team do a really fantastic job with offers in market to -- the developers to keep them on site. So we are seeing that benefit flow-through. Developer will absolutely be a tailwind for us at some point. The benefits we just have to have more development coming into this country. As I said in the speaker notes, sequentially, it's getting better, but we're still not back in positive territory around project commencements yet. So hopefully, that will start to benefit into 2025.

[Operator]

[Operator Instructions] Next, we have Roger Samuel from Jefferies Australia.

[Roger Samuel, analyst]

I've got 3 questions. I'll ask them one by one. Firstly, just on your outlook for listings for next year. I mean you sort of [indiscernible] on interest rates are likely to decrease next year. But what if you -- we've got rate increases this year and maybe it will stay higher for longer next year as well. Do you think that there is a risk to your listing outlook?

[Owen Wilson, executive]

If interest rates increase significantly this year, which I don't think anyone's forecasting, then absolutely, that will have an impact on the market. I think the economic commentators are saying probably no mill rate rises. And if we get one more, my view is that the market would take one more rate increase in its stride. What we've probably spoke the market is there any rhetoric from the RBA they're going to keep going with multiple rate increases when they -- as they did previously. I just don't see that happening.

I think we are in a market where rates -- if you look at the sort of 10-, 20-year averages, rates are kind of where they've been for a long time. And this market is again taking new strides. So with one more increase, I don't think will impact the market. If we've got 3 or 4, yes, it would, but I don't think anyone is predicting that. So our forecast is predicated on a lot higher for longer. But eventually, the next movement at some stage next year is likely to be down. And I think what you'll see is if everyone is confident that the next move is down, as that confidence builds, the market will move ahead of any cut. That's what consumers [indiscernible].

[Roger Samuel, analyst]

Yes. Okay. My next question is just to clarify on your previous commentary around deferral into Q4. I thought given the strength in listings in Q3, then you should bang a pretty strong revenue deferral -- like positive deferral into 4Q. But I think your commentary before was suggesting that it could be neutral.

[Janelle Hopkins, executive]

We're saying it's neutral for the full year. The impact -- you're right, we've had a strong Q3. So we're seeing that positive deferral into Q4. The net impact for Q4 will depend on what happens in May and June as to how much of that revenue gets deferred out into Q1 next year. So it's too early to tell the net impact to the people here.

[Roger Samuel, analyst]

Yes. Okay. And my last question is on Australian residential revenue. Just wondering if that includes CampaignAgent. And maybe just an update on CampaignAgent, what's the take-up of the product given that some vendors may feel the cost of leaving pressure?

[Janelle Hopkins, executive]

No. Australian Residential revenue doesn't include CampaignAgent. CampaignAgent goes into our media, data and other line. Look, overall, we've been super impressed and happy with the performance of CampaignAgent this year. We're seeing -- it is a listings related product. So we are seeing overall volume of usage of Campaign going up, but also a substantial percentage of people selecting [ Pay Later ] which is where we generate the revenue. And so -- and plus also the benefit we've now just trialing our sales team starting to refer CampaignAgent sales in New South Wales, and that's extending into Queensland. So we're getting additional agencies taking up the product as well. So super pleased with our CampaignAgents going this so far this year.

[Operator]

Our next question comes from Siraj Ahmed of Citigroup.

[Siraj Ahmed, analyst]

Hopefully, it doesn't drop out now. Sorry, I was just asking in terms of the growth in next year, you sort of mentioned you had a positive start to Premiere upgrades right -- Premiere+ upgrades. But just has it been better than last year just because you're adding quite a bit of value this year. I'm just trying to understand how it's tracking relative to last year?

[Janelle Hopkins, executive]

Look, we have just added pricing process now with our customers. We won't know the impact of the take-up of additional customers to Premiere+ until we finish that pricing conversation. Last year, we weren't as fully penetrated on Premiere+. And so we had a larger take-up, but we still see more runway absolutely in the Premiere+ depth over time, but it's unlikely to be as big as it was in 2023.

[Siraj Ahmed, analyst]

And, Owen, just on seller leads, it looks like it's had a massive acceleration. I think was 50% this quarter to 11% in the half. What's driving that? And can you touch on conversion as well into prospect of actual listings?

[Owen Wilson, executive]

Yes, the seller lead delivery to our customers, up 50% has been spectacular, and we're delighted. And it's really the result of our strategy to engage consumers more with their own property. As I said, a lot of those leads are coming from the Property Owner dashboard, and increasing claim properties and that increasing engagement by consumers with their property means that at the time they're starting to think about selling, they're on our site, they're using our experiences and they're clicking through from us to agents. And these are high intent potential vendors. So we've spoken before. We get about a 30% to 35% conversion of leads to listings, which is exceptionally high quality. So we were really delighted that all of that work is starting to come to fruition.

[Siraj Ahmed, analyst]

Okay. So conversion is actually holding up. Great. Last one, Janelle, in terms of cost -- just in terms of cost for FY '25, Janelle, I know it's early in the budgeting process. But just looking at your hiring activity, there's a step up, as you mentioned in the March quarter. You said job listings are tracking down now. I'm not sure if it's because of the hire for longer or just uncertainty next year? It seems like you're not really adding as many employees or not looking for that. Any comments on that?

[Janelle Hopkins, executive]

Sorry, is your question that are we continuing to hire in Q4?

[Siraj Ahmed, analyst]

It seems like your hiring activity is slowing, right, heading into FY '25?

[Janelle Hopkins, executive]

Well, I think there's -- no, I would say we are still on track with our planned accelerated investment in the second half of 2024. I think what you are seeing potentially is lower turnover. So what's happening in the market with uncertainty out there, we're seeing record low turnovers of our employees at the moment. So having to do as much hiring because we're keeping our team members for longer and they're also very happy, which is good. So that could be playing into it, but I think there's no change in our planned hiring for the work that we need to deliver.

[Operator]

Our last question comes from Nick Basile of CLSA.

[Nicholas Basile, analyst]

Owen and team, just 2 questions from me. The first one on Financial Services. Just interested to understand some of those new products you mentioned relative to the headline numbers. It sounded like headline numbers are a bit more modest as far as revenue growth, but the new products are doing quite well. So just help us understand any kind of base effect there?

And then second one, just on the buy yield for '25. Just trying to understand the potential swing from geo mix given, as you said, the potential decline in Sydney and Melbourne listings, how that might move around your yield relative to, say, the 19% you've just done in the third quarter.

[Owen Wilson, executive]

I'll take the FS one. Yes, look, the Mortgage Choice Freedom product is going way above our expectations in terms of the volume we've written so far [indiscernible]. And we should bear in mind that we were rolling that new product out across the year. So we're not really seeing the full impact of that across our broker network yet. And to remind everyone that white label product that's powered by Athena is significantly more profitable than a typical bank loan written out of our broker network. So we're delighted with the penetration to date. We expect that to go up over time. And so yes, performing well, and it is offset -- helping offset some of that weakness you're seeing in the overall market for mortgages. I'll let Janelle take that.

[Janelle Hopkins, executive]

Geo mix is an interesting one. Normally, historically, we don't have to talk about it too much because they had a very minimal impact. But if you think back to FY '23, the impact of Melbourne and Sydney leading us down into the downturn had a net 5% impact on geo mix. We look year-to-date this year, Melbourne, Sydney leading us out a positive 3% year-to-date. So it could be somewhere in that range is probably the bookings, but hopefully it's a more muted impact going forward. But we can't predict where it's going to have an impact on overall yield into next year at this point in time.

[Operator]

Thank you. This concludes the Q&A session. I will now turn the conference back to Owen.

[Owen Wilson, executive]

I would just like to thank everyone for joining us this morning. We're delighted to present those exceptional results and look forward to finishing the year strongly. Thanks, everyone.