Trade Me's financial results for the six months ended December were in line with expectations but reported profit growth was subdued due to significant growth in operating expenses, Craigs Investment Partners broker Chris Timms said yesterday.
Total revenue for the period was up 13% to $96.9 million, operating profit was up 7% to $64.6 million and the reported profit was up only 1% to $38.4 million.
Mr Timms drew attention to the weak result from general items with revenue falling 1% to $32.1 million while it was another period of strong growth for classified, excluding property, where revenue rose 24% to $47.7 million.
Expectations were subdued before the result, and revenue and the profit results looked to be tracking slightly below the rate necessary to meet Craigs' 2015 expectations.
Trade Me had lower capital expenditure and amortisation guidance.
''Our first read is we will need to make a small net downgrade to our 2015 earnings forecast to reflect these points. However, given interest rate swap losses are the largest variance, we do not, at this stage, envisage making material revisions in further years.''
Trade Me's expenses were up $7 million in the first half to $32 million and the company provided ''firm guidance'' operating expenditure would be up $7 million in the second half of the year. That would have a flow-on impact in 2016, he said.
Trade Me chief executive Jon Macdonald said the higher costs came from the company continuing to invest in people, product development and marketing, as well as increasing sales and account management capability.
''We are convinced this is the right approach and believe that investment now will result in stronger market positions and greater growth opportunities for Trade Me in the future.''
