Trade Me reports H1 revenue down to category level
09 Mar 2017
The financial reports of Trade Me (NSX: TME), a marketplace and auction site in New Zealand, are interesting for a completely different reason. It is, namely, the only general classifieds platform in the world, as far as we know, which breaks its revenue down to category level. (We trust that will be standard practice soon – editor.)
Not that the headline numbers were uninteresting. Trade Me had a good first half. In H1 of FY2016/17 (to end-December) revenue was up 8.8 percent to $114.9 million NZD ($83 million U.S.). The company attributed the strong performance to a 9.3-percent jump in revenue generated by the stuff category. (That was, in itself, very interesting: that stuff can be such a prolific revenue-generator.)
Earnings before interest, tax, depreciation and amortization (EBITDA) was up 14.2 percent y-on-y to $75.7 million NZD ($54.7 million U.S.).
In H1 net operating profit after tax (NPAT) climbed 16 percent to $44.7 million NZD ($32.3 million U.S.). The company saw this as proof that the “multi-year investment phase had been completed successfully”.
Drilling down, we now get to the category performances. The category responsible for most revenue was stuff ($35.2 million NZD, or 30.6 percent of total revenue), followed by autos ($30.5 million NZD, or 26.5 percent), property ($16.4 million NZD, or 14.3 percent), and jobs ($12.8 million NZD, or 11.1 percent) (pie chart below).
Stuff and autos brought in the lion’s share of Trade Me’s revenue — $65.7 million NZD. The company ascribed this result to “the sustained investment in both categories”.
This included upgrades to its vehicle management site, an investment in editorial content to drive users to the vertical, and a buyer-protection service for new and used items purchased anywhere on its platform.
Many of the new services, such as its courier service, are part of a wider strategy to shore Trade Me up against new entrants to the market.
Only difference: small start-ups and disrupters don’t pose the greatest risk any more. The company faces a strong competitive threat from global players Facebook (which rolled its marketplace service last year), and Amazon, which will launch in September.
Despite CEO Joe Macdonald telling the National Business Review he had a “healthy paranoia” about the threat of Facebook and Amazon, the company (officially) remains optimistic, telling shareholders that the company is “better positioned than ever to grow and defend our existing businesses”.
“We will continue to invest as needed to further strengthen our trust and relevance with the New Zealand public, and to make the most of the opportunities in front of us,” the company said.
Read the full financial report here.