Seek shares dive on weak earnings
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More news: Seek shares dived on the ASX after its full-year revenue and earnings were hit by a "significant reduction" in advertisement volumes across the Asia Pacific.
Shares were down 9.4% to $20.05 by 10:50am AEST.
What they said: E&P Capital analyst Entcho Raykovski called it a "weaker than expected result" and noted that "guidance will disappoint, albeit the lower guidance is largely driven by a much lower volume assumption, with the company assuming a low teens decline in Seek ANZ ad volumes in FY25 and high single digit yield growth".
"So certainly looks like the company is painting a conservative scenario," Raykovski said. "In any case, given the weaker than expected FY25 guidance, we’d expect the stock to trade down today."
Jarden analysts said it was "a disappointing result and downgrade to FY25 expectations".
"The miss was surprising given Seek provided an update to the market on the impairment of Zhaopin on 25 July but did not update guidance," they noted.
Seek earnings hit by lower job ad volumes across APAC
The news: Job listings platform Seek saw a slide in full-year revenue and earnings as the company was hit by a "significant reduction" in advertisement volumes across the Asia Pacific.
The numbers: Seek's sales revenue declined 17% year on year to $1.16 billion.
Revenue in Australia and New Zealand fell 8% compared to the prior corresponding period, as volumes reduced by 20%, consistent with "a range of employment indicators", including the rise in unemployment and the slowdown in job vacancies and mobility. Revenue in Asia slid 2% as a reduction in paid ad volumes of 21% offset yield growth of 24%.
EBITDA lowered 13% to $483.1 million as job ad volumes reduced from "record highs" in previous years.
The board declared a final dividend of 16 cents per share, taking its full-year dividend to 35 cents, down from 47 cents last year.
Seek set FY25 revenue guidance of between $1.02 billion and $1.14 billion, and EBITDA between $430 million and $500 million. The company said that it expects "weaker macroeconomic conditions in most of our markets".
The context: Seek lowered its full-year guidance in February after recognising a $141 million impairment charge related to its investment in Chinese business in Zhaopin in February.
The group attributed the impairment to Zhaopin not seeing a quick broad-based growth in China following the easing of Covid-19 restrictions in January 2023. Instead, recovery had been modest, with no clear visibility on sustained recovery in the white collar market in which Zhaopin operates.
What they said: Seek CEO and managing director Ian Narev said: "Seek's headline financial outcomes for the year were impacted by a significant reduction in job ad volumes across APAC relative to previous record highs, and the impairment of our investment in Zhaopin".
"Operational outcomes were pleasing," he said. "Beyond the completion of the ambitious platform unification project ahead of time and under budget, ANZ placement share was the highest in recent history, double-digit yield growth through the cycle reflected the benefits of ongoing investment, total expenditure was lower than previous guidance given to the market and our Latin American assets were sold to enable greater focus on the opportunities of the unified platform."
The sources: ASX announcement, E&P research, Jarden research
