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Domain chief executive Jason Pellegrino says he can bring costs down at the real-estate listings business by the end of this financial year, as it fights what he described as the worst market conditions the company has experienced in more than five years.
Consecutive interest rate rises and weak consumer confidence have taken a toll on Domain’s profits in the first half of fiscal year 2023, with earnings [before interest, tax, depreciation and amortisation] falling 19.2 per cent and net profit after tax slumping 38.9 per cent to $15.9 million.
Domain chief executive Jason Pellegrino is confident he can bring costs down despite inflation.
Domain reported a 6.5 per cent rise in revenue to $186.6 million, driven largely by acquisitions.
Pellegrino said the numbers were “extraordinary” given the market volatility, which he described as worse than the downturn caused by the COVID-19 pandemic or the crackdown on lending after the banking royal commission.
“There’s a lot of shock and awe that’s out there because of the pace of nine interest rate increases within nine months,” Pellegrino said.
“What people are waiting for is a sense that they’re not going to be surprised going forward, so they can set their household budgets, they can set their intentions, they can set pricing, and they’re not going to be surprised by a scale of impact that’s outside of what they are budgeting for.”
Domain’s results included revenue from the acquisition of technology business Realbase last April, which boosted agent solutions revenue by 173 per cent. A six-month contribution from Insight Data Solutions, which it acquired in October 2021, boosted revenue in its insight business. However, the acquisitions have bumped up Domain’s costs for the period, up 20.2 per cent to $137.3 million. Nine Entertainment Co, the owner of this masthead, holds a 60 per cent stake in Domain.
‘There’s a lot of shock and awe that’s out there because of the pace of nine interest rate increases within nine months.’
Jason Pellegrino, Domain chief executive
Pellegrino said the rise in costs were due to acquisitions, and a $10 million to $15 million investment in technology products that would boost the company’s cybersecurity and privacy capabilities. He said he did not expect to take more costs out beyond the $25 million flagged last year.