Green Shoots Emerging For Seek

This story features SEEK LIMITED, and other companies. For more info SHARE ANALYSIS: SEK

The company is included in ASX50, ASX100, ASX200, ASX300, ALL-ORDS and ALL-TECH

Improving job advertisement trends and management initiatives suggest to analysts potential upside for Seek after a prolonged share price malaise.

-Positive job trends and investor day for Seek
-Seek index data show slowdown of decline
-Management confident in revenue with moderate cost increases
-Bell Potter’s favoured exposure among Australian classifieds

By Mark Woodruff 

At around $24.00, shares of Seek ((SEK)), which specialises in online employment marketplaces, are not trading materially higher than peaks achieved in 2018, despite exceeding $35 in late-2021.

Back in February, Morgan Stanley identified the primary problem for the company centred around ongoing weak job advertisement volumes. This view contrasted with the (apparent) consensus opinion at the time that Seek was a structurally broken business.

The missing ingredient for Seek, explained the analysts, was a return to flat and then a period of positive job advertisement growth, to drive the next upward EPS revision cycle.

Also maintaining the faith, Bell Potter yesterday confirmed Buy-rated Seek remains its preferred Australian classifieds exposure under coverage, after downgrading REA Group ((REA)) to Hold from Buy. Domain Holdings Australia ((DHG)) was downgraded to Hold back in March and the broker doesn’t cover Car Group ((CAR)).

This broker can see advertising volumes increasing courtesy of macroeconomic tailwinds driven by an RBA rate cutting cycle, while management should also be able to extract group yield and margin improvements through its unified platform.

The analysts were commenting after Seek’s advertising index data for May, covering trends in job advertisement volumes and market dynamics (posted on Seek’s platform only), showed further improvement and market share gains against the ABS internet job advertisement index.

For the company, actual volume growth tends to correlate with growth within this report, points out Macquarie.

Senior Economist for Seek, Dr Blair Chapman, noted that for May “Our data points to a slowdown in the decline the market has been experiencing since mid-2022”.

The May Australian job advertising volumes on the Seek platform were down -6% year-on-year and are tracking down -10% for FY25 so far.

Further, on a trend basis, Citi notes May volumes were up month-on-month, representing the second consecutive month of improvement.

Also, supportive of Citi’s assumption of 5% year-on-year price growth in FY26, advertised salary in Australia was up 3.6% year-on-year in May, in line with the rate of growth in April.

While Citi believes interest rate cuts should support job ad volumes, its analysis suggests a mixed backdrop remains, leading to a modest 1% year-on-year volume growth forecast for FY26.

The release of strong Seek index data followed an upbeat investor day, where management reaffirmed confidence in maintaining top-line growth while limiting operating cost increases to the mid- to high-single-digit range.

UBS previously noted the improved operating outlook from rate cuts and highlighted the completed unification project is enabling faster, AI-driven product rollouts, which are boosting yield and also driving growth.

Seek explained

Seek, founded in Melbourne in 1997, began as an online employment marketplace for Australia and New Zealand and has since expanded to lead platforms across eight Asia-Pacific markets, with minority stakes in China, South Korea, and Bangladesh.

Its 2021-launched Growth Fund supports early-stage ventures across HR software, online education, and contingent labour, including Online Education Services (OES), an 80%-owned joint venture with Swinburne University.

The A&NZ segment remains Seek’s core profit engine, generating about three-quarters of revenue, while Asia (21% of FY24 revenue) offers long-term upside via the unified APAC platform, which is lifting yield, scale, and placements.

Management aims to grow yield and increase placements to support operating leverage. Yield growth, measured as ad revenue per paid listing, comes from higher pricing, increased use of premium features, and AI-led product enhancements.

Freemium, particularly in Asia, is boosting job ad volumes by offering free basic listings, with revenue expected to grow as employers convert to paid features.

Investor day

The company guided for revenue, earnings, and adjusted profit to land in the upper half of prior ranges, with UBS suggesting this could lead to consensus upgrades of around 1-2%.

Management also sharpened its revenue aspiration, targeting high single-digit yield growth, with revenue expected to outpace cost growth, supporting operating leverage.

Jarden emphasises growing placement share remains critical, given the strong correlation between Seek’s share of placements and revenue performance.

According to this broker, higher placement share signals Seek is delivering more value to hirers, which should, in turn, support continued yield expansion.

Jarden also highlights core “run-the-business” costs, such as technology, sales, and corporate expenses, remain relatively stable, comprising around half of the cost base. This suggests Seek can invest aggressively in areas like marketing and AI while still generating operating leverage.

More from the investor day

At its investor day, management re-affirmed expectations for stabilising ad volumes across A&NZ, supported by a recent upgrade to ad tiers that are expected to drive low double-digit yield growth in FY25.

In Asia, revenue is forecast to remain broadly in line with the same period last year, with the freemium rollout in Singapore progressing as planned. Management also confirmed interest costs will fall below the previously guided -$75m, aided by proceeds from the Employment Hero sell-down.

Seek reported a third-quarter FY25 placement share of 34.8% in Australia, slightly down from 35.4% in the first half, and 25.6% in Asia, up from 23.5%. UBS views these outcomes as supportive of FY25 guidance and reflective of increasing momentum in product-driven monetisation.

Jarden expressed greater confidence in management’s ability to control the cost base, enabling operating leverage alongside ambitions for high single-digit yield growth and increased SME penetration across Asia.

The day broadly reinforced Bell Potter’s thesis that Seek’s unified platform is delivering backend efficiency and frontend value at scale across APAC.

Outlook

In April, Morgans highlighted management’s ability to drive medium-term growth at Seek by leveraging a new pricing structure, benefits from platform unification, and disciplined control of discretionary spending.

Following the recent investor day, Macquarie also retains a constructive view, forecasting a return to growth in FY26 supported by expected interest rate cuts in Australia and ongoing labour market tightness.

Meanwhile, Bell Potter has revised its risked forecasts for Seek upward, citing improving US trade dynamics. This marks a reversal from the broker’s earlier cautious stance, which reflected concerns around tariffs and their potential drag on global growth, business investment, and hiring trends.

There are seven daily monitored brokers in the FNArena database researching Seek, all with Buy (or equivalent) ratings. The average target price of $28.28 suggests around 17% upside to where the shares are trading today.

Jarden, which is not part of daily broker coverage, also rates the stock a Buy with a $29 target.

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