Australia | Nov 11 2025
REA Group’s September quarter results broadly met expectations, though investors continue to question management over competition and AI-related risks.
- REA Group’s September quarter meets expectations
- Unchanged yield guidance allays market concerns
- Analysts use conference call to ask questions about artificial intelligence and competition risks
- Morgans maintains REA is one of the highest-quality franchises under its ASX coverage
By Mark Woodruff
Connecting millions of prospective buyers and renters with realtors and property listings, REA Group ((REA)) operates Australia’s dominant online property portals, including realestate.com.au for residential listings and realcommercial.com.au for commercial property.
The group’s core revenue is derived from advertising and listing fees paid by real estate agents, property developers, and advertisers for enhanced listings and display advertisements across its platforms.
September quarter results proved largely in line with analysts' forecasts, as higher losses in India have been largely offset by stronger yield growth in Australia.
There was no change to FY26 guidance of flat listings year-on-year, while mid-single-digit growth in core operating expenses is expected, partly due to costs from a recent acquisition.
While management targets continued double-digit yield growth in Australia and positive operating jaws, investors remain focused on potential for intensifying domestic competition after CoStar’s acquisition of Domain, as well as the potential challenges posed by artificial intelligence.
Yield, in the case of REA Group, refers to revenue earned per listing each time an agent or vendor advertises a property for sale on the platform.
A higher yield means more monetisation per listing, achieved either by agents upgrading to premium advertising tiers (Premiere, Highlight, Feature); higher pricing across products; or greater adoption of add-ons such as Luxe or Audience Maximiser (AMax). The latter helps boost the visibility and reach of property listings by syndicating ads to high-traffic external sites and providing automated campaign features.
Following price increase, AMax was the largest contributor to yield growth during the quarter, followed by Subscriptions and the premium listing product Luxe, Citi highlights.
AMax penetration has more than doubled and management is seeing very strong take-up of Pro subscriptions, which provides advanced branding, prospecting, and reporting tools for real estate agencies. Pro subscribers receive 31% more seller leads compared to non-Pro subscribers.
Listings measure the total number of properties advertised on REA’s platform during a period, reflecting housing market activity.
October volumes revealed an improved listing trajectory, now down around -3% on the prior year, compared to the -8% fall at the end of the September quarter.
Jarden points out the key unknown leading into the Q1 result was residential yield. At 13% this was broadly in line with the broker’s estimate and is thought to provide a solid platform for FY26.
Premiere Plus price represented 7% of the 13%, with add-ons (e.g. AMax and Luxe) the key driver of the remainder, followed by subscription growth and depth, the analysts explain.
Jarden sees modest upside to FY26 yield if management can expand Pro subscriptions and increase penetration of add-ons.
On the other hand, it’s thought yield momentum could be tempered in the second half should listing volumes in Sydney and Melbourne normalise toward historical levels.
Morgan Stanley believes the market undervalues the compounding effect of REA’s sustained price and yield growth, which this broker views as the key driver of long-term shareholder value.
Morgan Stankey estimates REA’s core Australian residential business has delivered price and yield growth at an around 20% compound annual growth rate (CAGR) over the past 15 years.
Looking ahead, this broker assumes 10–11% annual increases over the next three years, which it believes may prove conservative.
AI and competition risks
Several questions during management’s conference call with analysts (following first quarter results) focused on potential AI-related risks.
AI platforms increasingly view property portals as strategic partners, highlights RBC Capital, underscored by the recent collaboration between Zillow and OpenAI. Zillow, a leading US-based online real estate marketplace, helps consumers buy, sell, rent, and finance homes.
REA magement emphasised any AI partnerships will be approached with “thoughtfulness and consideration”, highlighting the importance of Australia's leading portals safeguarding their intellectual property and preserving the value of unique data and insights.
While Macquarie believes it is too early to determine whether Domain and AI pose a disruptive threat to REA, this broker now applies a -15% discount to its valuation to account for this uncertainty.
Management remains confident in the strength and progress of its own product pipeline.
Macquarie observes management appears comfortable with the current pace of product investment and sees no reason for concern as CoStar integrates new capabilities such as 3D mapping into the Domain platform.
CoStar has rapidly enhanced its mobile app and launched a marketing campaign that has sharply lifted downloads. Macquarie, however, regards downloads as a weaker indicator of competitive strength, arguing monthly active users remain the more reliable engagement metric, which has been stable.
Jarden believes REA’s scale, audience reach, and listing depth provide a strong competitive moat, viewing AI as a potential long-term risk but not an immediate threat.
Macquarie highlights REA’s use of AI is already driving productivity gains, particularly in software development, while also enhancing its offerings through automated listing summaries and a forthcoming conversational search feature.
More result details and business developments
RBC Capital observes listing volumes in Sydney and Melbourne rose 6% and 2% year-on-year, respectively, providing depth revenue tailwinds should these key markets continue to outperform other capitals.
REA Group’s first-quarter revenue rose around 4% year-on-year to $429m, supported by a similar uplift in residential revenue.
The Australian business reported 6% revenue growth, with 13% Buy yield in the Residential segment and an -8% drop in national listing volumes.
Earnings (EBITDA) increased 5% to $254m, reflecting solid uptake of premium advertising products across key markets.
REA Group continues to dominate its category, averaging 12.6m monthly visitors and 6.7m exclusive users, extending its lead over its nearest competitor (Domain).
During the first quarter, Commercial and New Home (previously Developer) revenue increased, with New Homes outperforming Commercial.
Commercial growth was supported by a 7% price rise and greater depth penetration, explains Morgans, while New Home revenue was underpinned by a 7% lift in project profile volumes, higher yield, and stronger display advertising revenue.
REA has broadened its services into adjacent areas such as property data analytics (through its PropTrack business) and mortgage broking via its Mortgage Choice franchise.
Media, Data and Other rose in the September quarter, while Financial Services delivered strong growth, supported by a 16% rise in settlements partly offset by higher broker payout rates.
Aligning with the strategy to provide more advanced digital tools to real estate professionals, REA fully acquired Realtair in mid-2024, an end-to-end digital platform for real estate transactions, after initially investing in 2020.
Realtair’s software allows agents to create digital listing presentations, instantly execute agency agreements, and manage sales workflows, enhancing REA’s ability to help customers manage their workflow, increase efficiencies, and grow their business.
International expansion includes a controlling interest in REA India (which operates Housing.com and PropTiger.com) and minority stakes in other property portals, including a share of Move, Inc. the operator of Realtor.com in the US.
In India, revenue declined -20% in the September quarter as modest growth in Housing Core was outweighed by weaker results in Housing Edge and PropTiger, explains Jarden.
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