Good day, and thank you for standing by. Welcome to the REA Group Limited Full Year 2023 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alice Bennett, Head of Investor Relations. Please go ahead.
Good morning, welcome, everyone. My name's Alice Bennett, Head of Investor Relations, and I'd like to thank you for joining REA Group's 2023 full year results presentation. Before we commence, I'd like to acknowledge the traditional owners of country throughout Australia and recognize the continuing connection to lands, waters, and communities. We pay our respects to Aboriginal and Torres Strait Islander cultures and to elders, past and present. Today, you'll hear from our CEO, Owen Wilson, and Janelle Hopkins, our CFO. Owen will talk to our overarching financial performance and strategic highlights for the year. He'll then hand over to Janelle to talk to our financial results in more depth, and following this, we'll be happy to take your questions. With that, I'll pass over to Owen to get us started.
Thanks, Alice. I'd like to welcome everyone this morning and also acknowledge the traditional owners of country throughout Australia and pay my respects to elders, past and present. REA Group has delivered a resilient result in challenging market conditions, with much lower listings than the very strong listings environment of FY2022. The result demonstrates the strength of our business and the depth of our value proposition as our customers continue to prioritize our premium products. Revenue growth was underpinned by the exceptional performance of our Indian business, which extended its leadership position. Turning to the group results from core operations for the year, revenue was AUD 1.183 billion, an increase of 1%. EBITDA, excluding associates, was AUD 651 million, a decrease of 3%, and NPAT was AUD 372 million, down 9%.
The board is determined to pay a final dividend of AUD 0.83 per share, fully franked. Together with the interim dividend, this represents a total dividend of AUD 1.58 per share for the FY23 financial year. Before we move into the business highlights, I'd like to touch on the property market conditions this financial year. FY23 has been another extraordinary period for the Australian property market. Official interest rates are now the highest they've been since April 2012, following one of the largest and fastest rate increase cycles in decades. Interest rate uncertainty, reduced borrowing capacity, a lack of supply impacted seller confidence, reducing the number of listings. The chart on the right shows the listing volumes for the last two years compared to the six-year average.
You can see that October and November this financial year were well below both the six-year average and the high level of listings in FY22. In more recent months, listings are starting to track more in line with the six-year average. While supply challenges have been a feature of the market for much of the year, demand for property remains healthy. Buyer inquiry normalized during the year, following very high demand last year, when interest rates were still at emergency levels. For the first time in 16 months, buyer inquiry levels returned to year-on-year growth in May. It's clear there is not a lack of buyers in the market. The reduced supply of listings, along with strong underlying demand, has resulted in a more competitive environment for properties coming to market. Consequently, Australian house prices have steadily increased since February. Moving to new housing and the mortgage market.
While underlying market fundamentals are positive, the graph on the left shows that the new housing market continues to face challenges. Cost increases and labor shortages have contributed to a continued downward trend in new home approvals. The graph on the right shows there's been a stabilization of new mortgage lending in recent months due to recovery in house prices and sales volumes. However, it is still well down year-on-year. Refinancing activity has strengthened, with borrowers shopping for better deals as rate rises. This is expected to continue with a large volume of fixed-rate mortgages set to expire during the remainder of FY24. Moving to the group's business highlights. REA remained clearly focused on our key strategic priorities, and we achieved a number of highlights.
Our focus on delivering personalized member experiences continued to drive consumer engagement, with one in four Australian properties now tracked by their owner on realestate.com.au. Our premium products, led by Premier Plus, saw significant growth as customers recognized their superior value. Record depth penetration was also achieved in our commercial business. In line with our focus on removing friction for buyers and sellers, we moved to 100% ownership of the leader in vendor funding solutions, Campaign Agent. REA India again increased market leadership with a record number of visitors to the flagship site, housing.com. REA's purpose is to change the way the world experiences property. We do this by delivering Australia's largest and most engaged audience, providing superior customer value, and leveraging our data to extend our core and build next-generation marketplaces.
We have continued to invest in our product pipeline and pursue opportunities that will support future growth in Australia and globally. I'll now go through the highlights for the year for each of the five key priorities outlined on the right of this slide. Turning to our audience highlights. Realestate.com.au remains the number one address in property across the country, delivering unrivaled value to our customers. Our leadership position, positions REA with the most comprehensive view of the Australian property market and helps underpin the group's powerful data-led solutions, products, and experiences. An average of 12.1 million Australians visits realestate.com.au every month, with over half of these using our platform exclusively. The loyalty of our audience and the value in our personalized experiences have seen our daily audience grow at a rate of 3.6 times faster than the nearest competitor over the last three years.
Our consumer strategy is centered on converting our unparalleled audience into members. We know members are three times more likely to perform a high-value action, such as tracking a property. In FY2023, we achieved 18% growth in our active membership base. Innovative decisioning technology determines what a consumer sees on our home screen, and this personalization is further enhanced for members. Our property owner experiences help stimulate high-quality leads for our customers, and this year, we delivered a 37% increase in property owner dashboard visits. Supported by the Real Estimate marketing campaign, total property owner tracks now exceeds 3.5 million. This is an increase of 51% year on year. On Sunday, we'll launch a new multi-channel marketing campaign as we continue to stimulate the seller market and drive demand heading into spring.
As a digital business, innovative technology has always been at the heart of REA. We've been investing in artificial intelligence for a number of years, and it powers many of our products and experiences. For example, AI powers PropTrack's automated valuation models, leveraging over 1 trillion data points. This, in turn, drives the high accuracy levels of Real Estimate. In June, we launched our first generative AI initiative on realestate.com.au, enhancing our suggested properties feature. This innovation leverages the ChatGPT API to display a top feature for each listing on the suggested property carousel. It's early days, but we've seen a 7% uptick in consumers engaging with suggested properties as a result of this initiative. As AI technology advances, we see exciting opportunities ahead. Moving to customers. Customers continue to embrace our premium offering, with Premier Plus uptake underpinning residential revenue in FY2023.
New value inclusions, such as listing optimization, help drive this uptake. Listing optimization dynamically reorders photos and prioritizes the most engaging visuals, driving deeper engagement with a listing. New agency profiles were introduced during the year, and the enhanced agency search results page now includes rental performance, offering valuable insights for property owners. New reporting capabilities, more powerful insights, and new tools help drive continued growth in our self-service platform, Ignite, with monthly active users increasing 17% year-on-year. We've previously mentioned the launch of a new subscription in FY 2024, and I'm pleased to say our new Pro subscription is on track for delivery in Q2. Our sales team will be out sharing Pro with customers in a couple of weeks, and we're confident agents will embrace the new value offered. The new subscription will offer premium seller lead products, enhanced agency profiles, and search capabilities.
It will also leverage the most comprehensive supply and demand data to help build vendor confidence. I look forward to providing further updates during FY24. We are rapidly progressing our goal of creating Australia's number one property data, valuations, and insights provider. PropTrack's market position grew during the year as our ABM became Australia's number one property value estimate, reaching world benchmark standards in terms of accuracy. Leveraging REA's deep understanding of the property market, PropTrack is developing a suite of propensity models to help agents, lenders, and brokers improve how they engage with and retain customers. These models represent significant opportunities to deliver high-value leads for customers across our businesses. Turning to financial services. The results in our financial services business reflect the challenging market conditions throughout FY23.
Successive rate hikes reduced borrowing capacities by approximately 30%, the volume of transactions in the market also fell. We completed the integration of Mortgage Choice in Q3, grew our broker network, continued brand investment. In Q4, we launched an innovative new product offering in partnership with Athena Home Loans. Mortgage Choice Freedom, powered by Athena, offers fair value home loans designed to help Australians pay off their mortgages faster. In FY23, we were focused on building a strong foundation for property.com.au as we work towards becoming Australia's most comprehensive property research site. Since the platform was relaunched, we've added more than 35 new features, the site finished the year with a 72% year-on-year growth in time spent on site. In June, property.com.au launched Property Coach, a concierge service offering consumers personalized support to help guide their property journey.
Property Coach is designed to improve vendor confidence and drive more qualified leads to agents. The service also creates a natural opportunity to connect pre-qualified consumers to Mortgage Choice finance brokers. Moving to our global businesses. REA India delivered an impressive result in FY2023, with strong revenue growth driven by the core housing.com business. The business continued its audience leadership, with housing.com achieving a record 19.7 million average monthly visits, up 28% year-on-year. Growth in housing.com's broker and developer customer segments contributed to a 25% increase in customers. Customers have embraced the launch of new depth products, including Premier, for resale agents. Other new products launched include Audience Maximizer and Commercial Listings. India's economy continues to grow rapidly, and the property market is strong.
PropertyGuru delivered a 25% increase in revenue in the nine months to March, and 16% in the March quarter. Strong performances in Singapore and Malaysia helped offset challenging market conditions in Vietnam. In North America, Move revenues came under pressure in FY23, reflecting the challenging macroeconomic environment in the U.S. The drop in home sales has contributed to a decline in revenue, which was down 15% year-on-year. We achieved numerous key milestones across our Environmental, Social and Governance goals throughout the year. Strengthening our environmental commitment and building on the group's existing 2030 emission reduction targets, we are targeting net zero emissions across Scope one, two and three by 2050. We were delighted to submit the group's first Reconciliation Action Plan in June, and we look forward to continuing our RAP journey.
In Australia, REA Group was again certified as a Great Place to Work for 2023. In India, we're pleased to see REA India ranked third in the Great Place to Work 100 Best Companies in June, a significant leap from ranking 21st in 2022. Despite the weaker market conditions in FY 2023, we have continued to invest in delivering additional value in all parts of our business. This investment creates very healthy growth opportunities in FY 2024 and beyond. Specifically, we've completed our pricing conversations for FY 2024, with an average national buy price increase of 13% from 1 July. Our strong pipeline of products and value creation will continue to drive yield growth, including new products such as the launch of our Pro subscription. PropTrack is in an exciting growth phase.
In FY 2024, it will drive significant value in our core business experiences while continuing to grow revenue. Mortgage Choice, having completed integration and invested in product, brand, and network, is well positioned for growth as interest rates stabilize and the mortgage market improves. Similarly, we believe that population growth and limited supply, combined with a more stable interest rate outlook, will see the development cycle turn. Although the timing for this remains unclear, we are confident this segment will eventually become a tailwind. In India, we are focused on extending our audience leadership while enhancing premium products and developing new markets to drive continued growth. AI is already leveraged in our business, and we believe there is significant opportunity for AI capability to support new products and experiences.
While we can't predict what the market will bring this year, we feel well-placed to deliver healthy growth in FY 2024 and beyond. I'll now hand over to Janelle to take a deeper dive into our results and provide more color on current market conditions.
Thanks, Owen, and good morning, everyone. REA has delivered a resilient result for the year against the backdrop of challenging market conditions for a number of our businesses. From our core operations, revenue increased 1% year-on-year to AUD 1.183 billion. Operating expenses increased 7% to AUD 532 million. EBITDA, excluding the results from our associates, was AUD 651 million, down 3%. The group delivered NPAT from core operations of AUD 372 million, down 9%. The group results from core operations differ from reported statutory results, with a number of one-off items excluded. On Slide 26, we provide a summary of the reconciliation between the core and statutory results. Turning to the Australian residential business and trends in the market.
Residential revenues declined by just 1%, highlighting the resilience of this business, given FY2023 saw one of the largest year-on-year declines in national listings that REA has experienced. The volume of declines was consistent with what we experienced during 2020, when we had the impact of both COVID and the Financial Services Royal Commission. After a solid start to Q1, which saw national new buy listings up 5%, the full year finished 12% lower, with Sydney down 18% and Melbourne declining by 15%. Despite this, we delivered 11% growth in buy yield, which came close to offsetting the volume declines. The chart showing rent listings highlights that this market remains subdued, impacted by continuing shortage of stock due to net selling by investors over the past two years and rising immigration.
Despite a 1% decline in rent listings in FY23, we grew rent revenue due to the 5% price rise and improved depth penetration. As we provide each reporting period, the following slide shows both the penetration and mix of depth listings in the residential business and the success of our premium listings products. We have now split out Premier Plus, highlighting the very strong uptake we saw during the year, and the fact that Prem Plus is now clearly our most penetrated depth product. The achievement of the 11% increase in buy yield was driven by the very strong take up of Prem Plus, the 6% price rise, and year-on-year growth in overall depth penetration, partly offset by negative Geo mix impact, reflecting the sharper declines in Sydney and Melbourne listings. Turning to commercial and developer.
Revenue for the year increased by 4%, with strong growth in commercial, partly offset by lower developer revenues. Commercial revenues increased due to a high single digit price rise and continued growth in depth penetration. Commercial sales listings were up modestly in FY23, with growth in industrial partly offset by lower retail listings. Strong momentum for lease listing volumes continued during the year. The developer business, however, has remained challenged, with the themes we saw in the first half continuing into the second half, with higher input costs, labor shortages, and supply chain issues creating uncertainty and resulting in developers less willing to take new projects to market. Revenues were impacted by the 18% decline in project launches during the year, although this was partly offset by a double-digit price rise for project profiles that we introduced in September 2022.
Media, data, and other revenue was flat at AUD 97 million. We saw solid growth in our data business, which increased by 7%, driven by higher valuations and data and insights revenue, partially offset by lower volumes. PropTrack's valuation revenues benefited from new ABM contracts and improved ABM accuracy, which drove higher performance-based pricing for some contracts. Media revenue was down, with both developer and other media display declining. Other revenues, which is largely flatmates.com.au, improved 17% year-on-year. Turning to financial services. As Owen mentioned earlier, while we have seen some stabilization in total lending activity in recent months, levels are down significantly on that record FY22 year. This has resulted in our operating revenues declining by 13% to AUD 69 million. Settlements were down 13% year-on-year, although it's worth mentioning they were still up 10% on FY21.
While submissions were also down 13% in FY2023, the rate of decline improved from -17% in the first half to -9% in the second half, with Q4 down just 5%. Net revenue declined by 8% to AUD 61 million, negatively impacted by an AUD 8 million valuation adjustment to expected future trail commission. This was due to faster loan run-off rates than we had assumed, driven by the high volume of refinance activity and a higher discount rate. Recruitment momentum has continued, with our total network increasing 6% year-on-year to stand at 1,066 brokers. Despite a challenged market for settlements, our loan book grew during the year to AUD 88.1 billion.
Against the backdrop of this tough market, we have tightly managed costs to deliver a flat operating EBITDA margin of 28% across the full year. REA India has delivered an excellent performance during the year, with revenue growth of 46% to AUD 79 million. We continued to see strong growth from housing.com's property advertising business, driven by the launch of new depth products, a focus on upselling customers to higher-yielding premium products, expansion into three new tier two cities, and continued customer growth. We also saw strong growth continue in adjacency products, such as pay on credit on the Housing Edge platform. As we flagged previously, REA India has continued to invest for future growth, with operating costs up 33% year-on-year.
This reflects higher headcounts to deliver strategic initiatives and remuneration uplifts in a still competitive labor market, increased brand spend to consolidate our audience position, and increased COGS in line with strong growth in adjacency revenues. This has resulted in a core EBITDA loss of AUD 39 million for the year, which is consistent with the previous guidance for increasing losses in India during FY 2023, before starting to reduce from FY 2024 onwards. Throughout the year, we increased our shareholding in REA India from 73.3% to 78% at 30 June, as we continued to fund business investment via equity injection, with News Corp holding the minority interest. Moving to our strategic investments. Total associate contributions from core operations was a loss of AUD 16 million, down from a gain of AUD 3 million in the prior year.
Move's equity accounted contribution for the year declined to a loss of AUD 6 million. Revenues were down 15% year-on-year, with the market downturn resulting in a 29% reduction in overall lead volumes and lower transaction volumes. This was partly offset by lower employee and discretionary costs. For more information on Move, please refer to the News Corp results release. In Southeast Asia, PropertyGuru contributed an equity accounted loss of AUD 3 million to core group EBITDA, an improvement on the AUD 6 million loss reported in the prior period. PropertyGuru is expected to release its June quarter results on the 24th of August. Losses from the group's Australian investments increased to AUD 7 million from AUD 5 million in the prior period, reflecting accelerated investment for future growth by Realtair and Simpology. On the next slide is our core operating JAWs.
As we flagged at the Q3 result, Australia saw modestly negative JAWs for the year. In a tough market environment, we've managed our cost base very tightly, limiting core Australian operating cost growth to just 1% year-on-year. This result is reflective of a number of key factors. We were able to limit employee costs, which you can see from the chart on the right, is our biggest cost category, to growth of just 1%. During the second half, we introduced active measures to slow hiring and selectively reduce some roles, which, combined with lower incentive outcomes, largely offset the impact of locked-in salary inflation. Technology costs increased 20% due to contract inflation across a number of our suppliers and higher data usage. These costs were largely offset by an 8% reduction in marketing spend.
As we highlighted earlier, the group continued to increase investment during the year to support ongoing growth, with CapEx of AUD 118 million, increasing by 24%. Investment focused on a number of new products and experiences across multiple lines of business, including uplifting both our core consumer experience and customer value in the buy and rent space in order to continue to drive membership and leads in Australia. Continued enhancement to the PropTrack data products, including improvements to the ABM, launch a Real Estimate, and soon-to-be-launched propensity models, and improvements in REA India's consumer experience, with an aim for housing.com to have the best app and consumer proposition in market. CapEx to revenue ratio at 9.6% was elevated during the year and above our long-term target range. This reflected continued investment, but also the fact that revenue was softer than anticipated.
As a result of the investment over the last two years in both our Australian and Indian business to support future growth, we expect an increase in depreciation and amortization to within a range of AUD 106 million-AUD 114 million in FY2024, with a further increase likely in FY2025, as that investment is amortized. Looking forward to FY2024, we would anticipate CapEx to revenue to return to with our 7%-9% target range, albeit likely towards the upper end of the range. Turning to our cash position, we ended the year with strong closing cash balance of AUD 260 million. The group delivered operating cash flows of AUD 473 million, which is the addition of the first four blue bars on the graph.
As you can see, the strong operating cash flows allowed us to continue to invest in the business, pay down debt, and deliver strong shareholder returns in the form of increased dividends. During the year, we repaid AUD 95 million of our syndicated loan facility. The group's total drawn debt was AUD 319 million, with AUD 281 million of the facility undrawn. Before moving to the outlook, I wanted to give you a bit more color on the Campaign Agent acquisition that Owen talked to earlier. In July, we moved to 100% ownership, following the group's initial 27% investment in 2021. Campaign Agent will be consolidated from July 2023, with revenues to be reported within our media, data, and other revenue lines. We have included Campaign Agent's FY22 and FY23 standalone P&L on slide 42 in the appendix.
We would expect the acquisition to be broadly, EBITDA and EPS neutral to core earnings in FY2024. Including the AUD 39 million purchase price and consolidation of Campaign Agent's existing AUD 62 million of debt, we anticipate REA Group's net interest expense in FY2024 to be in the range of AUD 15 million-AUD 17 million. Finally, on current trading. July national residential new listings were down 5% year-on-year, while Sydney and Melbourne listings both increased by 9%. You might recall that Sydney and Melbourne led us into the listings downturn last year, and they may be leading us out of it. As we flagged previously, year-on-year growth rates in Q1 will reflect strong prior period listing volumes when listings were up 5%, with prior period, prior year volumes weaker in Q2, where listings were down sharply, declining by 21%.
Residential buy yield growth is anticipated to grow double-digit in FY 2024, primarily driven by an average national price rise of 13%. Full year positive operating jaws are targeted for the group in FY 2024. Excluding M&A, core operating cost growth for both Australia and India is expected to increase high single digits to low double digits, reflecting employee cost increases and technology cost inflation. The consolidation of Campaign Agent is anticipated to increase group operating cost growth to low to mid-teens. As we have flagged previously, EBITDA losses in India are anticipated to be lower in FY 2024 compared to FY 2023. The group expects losses from combined contributions from associates in FY 2024 to be modestly higher than FY 2023, reflecting continued tough market conditions for these businesses and ongoing investment for future growth.
On a final note, while there's still a level of uncertainty in the current economic climate, we're excited about FY 2024 and the many growth opportunities we have across all of our businesses. I'll stop here. Operator, can we please now open the line for questions?
Thank you. As a reminder to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question will come from Eric Choi from Barrenjoey. Your line is open.
Morning, guys, congrats on the 23 beat. I just had three, and I'll fire them all at once. The first one, just on-
..listings and costs. It feels like you've set cost guidance with flat listings as the assumption, and I know that's your standard practice, but I'm just wondering, is this a bit conservative given how strong current listings momentum is? Second question on India. That AUD -39 of EBITDA was probably a bit better than expected, so I'm just wondering if you guys have set an internal target for breakeven? You know, just doing some dirty maths, revenues are growing 25% per annum, depending on what costs do. It, it feels like a breakeven in 2025 or FY2025 could even be possible. Then just lastly, on Property Coach. I, I guess there's a lot of- there's been a lot of real estate agent chatter about Property Coach, to be honest.
There's some concern that Agent Select takes a percentage of the agent commission, and whilst you don't own, own Agent Select today, maybe this is something that you could acquire in future, like Campaign Agent. I don't know, maybe if you could talk about the property.com.au Property Coach strategy and how you sort of prioritize where, where those leads go between, you know, the red side, the green side, and, and third parties. Thanks very much.
Thanks, Eric. I'll start off talking about listings, India, and Property Coach, and the extent that my comments on listings reflect cost guidance. Janelle will jump in on that. Look, listings have started well in July, there's no doubt about that. You know, compared to June, you know, there seems to be momentum in the market. Bear in mind, you know, July, we're in the middle of winter, it's not the peak selling season. It is only one month. If you sat here this time last year, listings were looking fantastic. You know, it is a very hard thing to predict looking forward. I think the best guidance you can give, I can give on listings is that graph on slide six of our presentation.
It feels like we're now moving back more towards that kind of six-year average number. If you then rule that across last year, you'd, you'd see that, you know, we're expecting Q1 is possibly gonna be slightly negative. Q2 will be very positive, where we go back towards that six-year average, and then the rest of the year looks kind of flat, maybe up in a couple of months. Look, net, you know, we are working on a, on a flat for the year. That's our prediction. It's a good start, and what's really pleasing about that good start is Melbourne and Sydney in the positive, you know, for all sorts of reasons, because they're the high, high-yielding markets, et cetera. So we're working on flat, and that is definitely baked into the cost assumptions that, that we drive.
The extent that this momentum continues from July, then that'll be a fantastic thing, but we don't assume that, particularly given what was happening this time last year. In terms of India, absolutely, look, the result was strong and slightly better than we thought going into the year. We do have an internal target for breakeven. I can tell you it's not FY25, that would be ambitious. Because we've said consistently that our absolute priority in India is keeping that number one and growing that lead in India. So keeping that number 1 position and building out the best consumer experience. That's always gonna be our focus, our primary focus. We flag very confidently that we expect EBITDA losses to reduce next year. Breakeven in 25 would be very ambitious.
Then on Property Coach, look, yeah, I've heard the chatter. The whole idea of Property Coach, if you recall, when we've talk- talked about property.com.au, when we've looked at the market, you know, on average, there's between, you know, one and 1.2 million consumers every year who think about selling. Only about 400,000-500,000 actually go on to take action. The whole idea of Property Coach and property.com.au is just to try and solve some of the reasons why consumers who think about it don't take action. Sometimes it's lack of information, and property.com.au will help solve that by being, you know, the number one research site. Sometimes it's other reasons. So Property Coach is designed to guide a hesitant consumer through that process and try and stimulate the market. We've proven it works.
Property Coach is delivering fantastic leads. We, we gave those leads to Agent Select as a trial because they have a similar process where it's actually a person-to-person conversion. We also like Agent Select because the leads go to a principal, not the agent, and we know that principals like that. It was a trial. The trial proved that it works. We've ceased the trial. We don't have any leads going to Agent Select anymore. We don't own any of Agent Select, and we've been really, really clear with our customers that we'd never take a percentage of commission, and we don't intend to. Agent Select, that was their model, but it's not ours. These leads will now go back into our agent marketplace experience, and consumers will be directed to, to find an agent using our existing processes.
Eric, just to add some additional color from a cost guidance and JAWs perspective. As Owen flagged, yes, we have assumed flat, and, you know, we are targeting open JAWs for the group and open JAWs for Australia. We have flagged high single digits to low double-digit cost growth for both Australia and for India. Obviously, if, if, the big swing factor in how open our JAWs will be, will depend on what happens on listings and throughout the year. You know, I would also say if listings are stronger than we anticipate, we would also potentially look at our investment slate and identify what opportunities we might bring forward as well. We'll continue to manage it throughout the year, but it's very early days.
Thanks for clarifying, guys.
Thank you. Our next question will come from Lucy Huang, from UBS. One moment, please. Please stand by.
Thank you. Apologies. Our next question will come from Lucy Huang from UBS. Your line is open.
Hi, can you guys hear me now?
Yes, thanks, Lucy.
Okay, great. I've got three questions as well. Maybe if I can firstly start off with Sydney and Melbourne. Listings have recovered pretty strongly in July, up 9%. Just wondering if you can give us some color on, I guess, the depth benefit that you've seen from improving mix shift. Maybe let's just start off with that one first, please.
Sure. Yeah, look, me-- I've got to say, I was surprised by Melbourne and Sydney in July. I've actually asked a lot of customers what's going on. I-it's-- I think it is a recovery in stock levels that are giving consumers the confidence to list because they can see things to buy. I think also, unfortunately, there's a lot of invest selling at the moment. Part of that is due to interest rate rises and people deleveraging. Part of it's due to some of the new consumer laws in places like Victoria. You know, when Melbourne and Sydney are growing faster than the rest of the economy, there's obviously a, a, a benefit for us in that. You know, they're our highest-yielding markets, very high penetration of Premier Plus. You know, so the, the impact on yield in July was very pleasing.
Yeah, wonderful. Then just with the Pro subscription, just wondering if you can give us some color on the pricing structure that you're proposing to agents? Also, with seller leads, any color on how much they've grown through the course of this year? I think in the past, you used to give a growth number on that one.
We won't be announcing the price of Pro today. You know, our, our sales teams have had their training. They're ready to go to market. We'll be talking to customers before we make an announcement. We'd rather have them hear from our sales team than other sources. I can tell you we're pricing it at a point where, you know, we believe the value that the product delivers far exceeds the price of buying it, so, we think it's a great proposition. In terms of our seller leads, we've seen a really healthy increase. The way we're tracking seller leads at the moment is as a proportion of buyer listings, because typically, you know, they, they two, those two move in, move in tandem.
We've seen our seller leads as a proportion of buyer listings increase year-on-year, which is very pleasing. We know they are good leads that convert to listings. They're still converting, you know, in the 30s. High quality leads that are, you know, represent real value to our customers.
Wonderful. Just last one on Elara. I think, the visitor share, or visitor lead share, in February was about 1.6 times. It's come down a touch to 1.3. Just wondering if you can provide some color on the momentum there, and anything we need to be, I guess, worried about right now or all on track?
Yeah, no, it look, it bounces around a bit. You know, and so we're pretty happy with where we're at. We did see a couple of the competitors do some significant levels of spending to buy audience. A couple of them have March year ends, and so we saw a big spike in spend and a big spike in their audience in March, and then that subsequently fell away as they stopped spending. We're more focused on or, you know, organic audience growth, so we're spending a lot of time on SEO to make sure we win there, and that's free audience. We're also, you would have seen in the presentation the, the fantastic increase in our apps, and apps is, you know, organic traffic. You know, with that and our consumer experience, they, they've been the main focuses.
Having said that, we're not gonna hang back on marketing. We're gonna continue to invest in marketing, but we think we've got that at the right levels at the moment.
Wonderful. Thanks, Owen. Thanks, Janelle.
Thank you. Our next question will come from Kane Hannan, from Goldman Sachs. Your line is open.
Morning, guys. Maybe just developer, just given that deterioration in project launches and then that chart in the pack, I mean, how do I think about the impact that might have on 2024? You know, whether the scope to accelerate revenue growth in your commercial and developer next year, or is it more of a, you know, more of the same, what we've seen this year in terms of the growth rates?
Yeah, look, Kane, developer is absolutely in a challenged environment. I think you can see the impact of those developments being down 18% year-on-year. You know, we, we think that it will turn, we just don't know when. It will be a drag on our revenue into FY 2024. We put the price rise through in September 2022, which was the first price rise we put through in developer for the past six years, which gave us some protection, and that will annualize through a little bit into FY 2024.
Developer will be challenged. Commercial, you know, we're pretty pleased with commercial. We'll have another price rise that's gone through from 1 July, and we're seeing listings hold and our penetration increase. I think it will be a mixed story between commercial and developer for next year.
Yeah, perfect. The step up in associate losses next year, I mean, I would have thought you'd have some benefit from, you know, acquiring Campaign Agent. Just a sense of what's driving that step up and whether we can think about 2024 as sort of peak losses?
We have flagged that associate losses will increase modestly in FY24. It'll be a combination of things. Campaign Agent was a very small negative drag on EBITDA or share of NPAT on those losses in FY23. It's continued investment in growth in our Australian businesses, which is small, plus also challenges in the market, particularly in the U.S., where when you heard if you were on the News Corp call, that market is still absolutely challenged in FY24, and they will continue to invest in marketing and some of the adjacencies. They have also flagged they will try and take some additional discretionary cost savings as well. Those are the reasons for the modest increase we're expecting.
Yeah, perfect. Lastly, just Campaign Agent being broadly P&L neutral. I mean, are they implying a material improvement in its NPAT next year, or is it more just relativity to the group's sort of overall impact?
Relativity to the group or overall impact.
Perfect. Thanks very much, guys.
Thank you. Our next question will come from Darren Leung from Macquarie. Your line is open.
Good morning, guys. thanks for the opportunity. Set two for me, please. maybe just the first one on that 11% yield growth in FY2023. I'd just like to unpack that a little bit. obviously, there's 6% benefit from the price increase, but I wanted to, to sort of break out the, contribution from Premier Plus, please. and just looking at the, the slide afterwards, on slide 28, it looks like that benefit should have been close to the 7%-8%. I'm just trying to get a feel for how much was Premier Plus versus the geographic headwind, please.
Look, we're not disclosing the exact impact of the upside from Premier Plus, but it's, it's fair to say it was a, a substantial benefit. We, when we normally talk to the relativities of what the drove the buy, we start with the biggest one first, and I flagged that the increase to Prem Plus was higher than our 6% price rise. It did give a, a substantial uplift for us in FY2023, and that has been and then also then was the 6% price rise plus the small increase in overall depth as well. That has been offset by the substantial negative Geo mix in FY2023. It's probably fair to say it's around about 5%, the impact of Geo mix in, in FY2023.
We were very healthy underlying yield growth for the business, so we're very pleased with that. You can see in that chart absolutely now, Prem Plus is our most penetrated product, and pleasingly, as we've gone through the pricing round, we've had additional sign-ups to, to Prem Plus in FY 2024. It won't be as big an impact because we obviously are already highly penetrated, but it will be a nice further uplift for us.
Well, that, that makes sense, and that's probably a segue into my second question, on FY 2024, and I know we've had the double digits of yield increase previously, but when we think about guidance for yield in FY 2024, you know, all the comments you're providing around additional Premier Plus adoption, obviously there'll be the benefit of Premier Pro to, to some extent as well. And, you know, to your point on geographic mix and where the market's going, sounds like there'll be a tailwind there as well. Is it fair to say that you're being a little bit conservative, and we should be thinking closer toward that mid-teens for yield growth in 2024?
Well, 13%, you know, is, is the average for, for all the products. You will get a, a small uptick for the additional Premier Plus, as Janelle said. You know, if you look at that graph, given the penetration, it's way less than this year, but, you know, you've got to add on some for that. In terms of geo mix, we're not assuming any benefit. You know, the negative that Janelle spoke about was really against the very hot, strong Melbourne markets in FY 2022. Effectively, what's happened is 2023 has come back to more normalized levels, and that's that negative year-on-year from 2022 to 2023. We think it's kind of back to where it normally is, and, and that, that's what we're assuming going into FY 2024. We're not assuming any geo mix.
Now, obviously, if Melbourne and Sydney spend 1 whole year ahead of the rest of the country, that will have a tailwind. We're not assuming that.
Our Pro will be in the subscription, which will be part of, of yield. However, we're not anticipating that to be a substantial revenue generator in FY 2024.
Got it. Thanks. Thanks, guys.
Thank you.
Thank you. Our next question will come from Entcho Raykovski from E&P. Your line is open.
Morning, Owen. Morning, Janelle. My first question is, but it is also on listing volumes. I'm quite interested in how you've seen listing volumes respond to any pauses in, in rate increases. I mean, I'm conscious we go back to April. It was a weak month despite the pause at the time, but obviously volumes in Sydney and Melbourne look a lot better in July. Just trying to establish, is there a risk that another rate increase just holds back any recovery? Some of that elasticity commentary would be helpful.
I think the prevailing view is that we can see the end, the end of the cycle is, is probably underpinning some of the positivity that you're seeing. As I said, some of it is that there's More listings drives more listings. You know, we had so many customers in kind of April and May saying that they had vendors sitting on their hands because they couldn't find something to buy. So as more stock gets into the market, those, those people who then find something to buy will, will come to market. You know, whether we have no rate rises, one or two, I, I think most consumers have factored that in. So another rate rise between now and Christmas, another two even, you know, I don't think that's gonna shock this market.
The fact that we're as healthy as we are after 13 rate rises is, would, would indicate, you know, the health of the market. I still think demand is gonna stay strong. You know, immigration is increasing. You know, we can see that in our buyer inquiries. They're, they're still growing year-on-year, and they're still ahead of pre-COVID levels. All of that points to a, a strong market, and, and whether we get another, another rate rise, I don't think that's gonna impact it.
Okay, great. Then, in India, there has been some slowdown in the revenue growth rate in Q4. I think you, you had 45% growth in the second half versus 63% in Q3. I, I guess, my question is, was this a result of some pull forward of revenues into Q3? Were there any other factors impacting the business? Is there any sort of cause for concern as a result of that slowdown?
No, it's, it's essentially seasonality. You know, you remember in Q3, we had the Happy Home event, as we call it over there, you know, which is a, a, a bit of a boom for the business. It's, it's, it's the most successful event we do every year. We get a lot of revenue out of that. That was in that number in Q3, and I think we flagged at the time that was, you know, abnormally high. Then, as you head into monsoon, the market definitely slows down. You know, it's a very seasonal business on a quarter-by-quarter basis in India.
Okay, great. I, I wanted to ask a question about AI, given that you've spoken about your AI investment. It's a fairly sort of open-ended question, but how, how do you think about AI as either a threat or an opportunity? I mean, is it something that you almost need to continue to invest in just, just because there, there may be some threats out there? Do you see an opportunity in terms of lower development costs as well down the track? If you can talk about that would be great.
I see AI as a massive opportunity for our business. You don't need much imagination to think about how you can change the way you present properties to consumers using AI and personalization. It's a combination of consumers telling us what they're looking for and us knowing about our consumers, and then using AI to serve up better experiences for them. The opportunities seem endless at the moment, and it's about, you know, which ones do you focus on first. You know, if you go out five years from now, the way we present properties to consumers, I think will be incredibly different as a result of AI and ML. If you think about the way we do our business in here, again, AI presents an enormous opportunity.
We're already experimenting in here, using AI to code, and we're doing that in conjunction with our coders. We code in pairs at REA. It, it produces the highest quality tech you can get, but it, it's not hard, again, to imagine a world where you've got, you know, a pair of coders, one of them's AI, and one of them's a human. That will create, I think, enormous efficiencies, and we can either use that to lower our cost base or to, to accelerate our product development.
Okay, great. Thanks, Owen. Thanks, Janelle.
Thank you. Our next question will come from Roger Samuel, from Jefferies, Australia. Your line is open.
Well, hi, good morning, all. I've got three questions. First one, Owen, you mentioned that more listings drive more listings before, and we're just trying to work out the sustainability of the recovery in listings. Can you tell us about the appraisal volume that you're seeing? You know, people using PropTrack or the AVM tool to gauge how much their property is worth. Yeah, what's the, what's the volume looking like? Is it up quite a lot year-over-year? Second question is on the restructuring cost of the business. How much do you expect to incur in FY24? Can you tell us about some of the, yeah, the non-core costs with the associates in FY23 and the nature of them?
Lastly, just want to clarify... My third question is just wanted to clarify the your guidance around the interest cost of AUD 15 million-AUD 17 million. Is that a net number or is it a gross number? Thank you.
Thanks, Roger. look, in terms of the recovery of listings, it, it's a, it's a mixed bag across the country. What you're seeing in that July number, for example, is we're down 5%, but Melbourne and Sydney, the two biggest markets, are up 9%. I think what we're seeing here, as Janelle said, Melbourne and Sydney led us in to the decline. I was over in Perth and Adelaide, recently, and, and they're a bit pessimistic because they are only just catching up with what's happened in Melbourne and, and Sydney, but they'll follow. When I think about the sustainability, yes, the activity on our site would indicate there's a lot of people probably thinking of, of taking action, but we also get a, a great guide from our customers.
If you look around the country, I would say Melbourne and Sydney, customers are quite buoyant about the outlook for spring. If you go over to Perth, they're quite pessimistic, albeit it is a very small market for us. Then it's mixed between kind of, you know, Adelaide, Brisbane, et cetera. I, I think this recovery is real. As I said, I think we'll go back towards a more normalized trend of that six-year average, you know, we're in for a good Q2, because Q2 was pretty bad last year. Then, you know, who knows what happens in the second half? I'll let Janelle take the restructuring and interest question.
Yep. On interest, we'll cover interest first. The AUD 15 million-AUD 17 million, that's a net number, and it's really the annualization of the increased interest rates that we've seen flowing through into our existing Australian subordinate debt, plus the consolidation of our Campaign Agent debt, which we flagged with AUD 62 million. The two of those combined, that's part of that AUD 15 million-AUD 17 million. Restructuring, yes, we have booked a restructuring cost for-- in non-core for Australia, and also in relation to associates. That was restructuring costs in relation to Move, where they looked at their headcount and took a substantial cut some of their headcount in the U.S.
In Australia, that's really a combination of back at the end of FY22, we did a, an organizational restructure, and we removed some roles in Q1 FY23. As we flagged, with what was going on in the market, we did look across the whole organization, particularly in the second half FY23, and identify roles that we deemed not mission critical, and we have removed those. It was a small number overall, but we think it would set us up to reduce costs where we needed to. I would say we are still hiring roles, particularly in areas that we need to set us up for the future. Things like in AI, cyber, those type of areas. That's what those costs are.
Any, any guidance, for the restructuring cost in FY2024?
For restructuring in particular, or just general?
Yes. just restructuring.
Restructuring. No, they're not expecting-
Yep
... any major restructuring costs in FY 2024.
Okay, thank you.
Thank you. Our last question will come from Siraj Ahmed from Citigroup. Your line is now open.
Thanks. Just three questions. The first one is a two-part one, just on yield, right? In terms of FY24, over and generally, give pretty good color on Premier Plus uptake, but you should be having a pretty good understanding of where depth should land for next year. I know there's exceptions and other things, but any anything you can give us on that, understand it shouldn't be as high as FY23, but should we be thinking low single digits to mid-single digits? Second part on that, interesting commentary on yield into 25, just confirming that, you know, I, I think you double digit 25, and is that, is that price, is that mainly going because of, because of new products from, from this Pro, et cetera?
Secondly, in terms of India, HR mentioned, 25% growth, sort of 25% growth in full Q. Understand that seasonality, but is that, is that the rate we should be expecting in 2024, or is there potential to step up because of new markets or adjacencies? Lastly, in terms of the CapEx, just wondering, that step up in this year, was that, was that, you know, in addition to capitalizing more, so, you know, the underlying OpEx was actually a bit higher? Just keen to understand how you thought about that. Thanks.
Okay, let-- I'll make sure we can try and get across all of those questions. Firstly, for depth for FY2024 and our expectations around yield. We've flagged we're expecting double-digit yield growth into FY2024. The makeup of that obviously will be the, the 13% average price. We will get some uplift from, the mix benefit from the higher takeup of Premier Plus. I would say overall depth is likely to be a very small contributor, to FY2024 yield, and then the big swing factor will be what happens around Geo mix. That, that's probably what I would flag around our expectations around, buy yield for FY2024. On CapEx, your question on CapEx. Look, we did have an increase in the absolute, dollars of CapEx in FY2024, which was up, 24%.
The reason for that, there's a couple of things. Overall, we have not changed our CapEx to OpEx, per project between this year and last year. Those ratios have not changed. When you look at, there's really two key factors. When you look at what goes into those capitalized costs, it's predominantly Australian technology labor. When we look at our overall salary growth in FY 23, we did skew the size of the increases towards our Australian technology developers. Those are higher proportions of those higher salaries are then flowing through into CapEx. The other thing is really in India, where we have substantially increased our investment in India to support future growth. That's why we did see CapEx being higher.
We did flag that we do anticipate going forward into FY 2024, our overall CapEx investment will increase, but it's likely to be more back in line with the target, which is our 7%-9% CapEx to revenue ratio, although at the high end, as I flagged.
I'll take the, the last couple of parts. In India, you know, 25% in Q4, I think I spoke to that. The reality is that the percentage number will reflect a base each year. As the base goes up, you, you will see that percentage start to come down a little bit, but we're very, you know, the actual rate of growth is still very, very healthy. If you look into FY25, I mean, we've flagged double-digit yield growth, and that through the cycle, we've already got starting to work on our planning for FY25. We can't give any color on that. You know, it'll be a combination. We've always said the, the yield growth can come from a few areas. One is just, you know, price increases of like-for-like products, always with value.
We, we always believe, you know, you should price to increase value, or it might come from new products, you know? This year is a great example of that, where if you look at our yield growth, you know, more of it came from a new product and, and customers choosing to yield up themselves effectively than price. That mix, and the way we deliver that, you know, will vary year-on-year, and, and, you know, at this stage, we've, we've guided for double digits through the cycle. You know, you should expect that in FY 2025.
Thanks, Owen. Thanks, Janelle.
Thank you. I am showing no further questions from our phone lines. I'd now like to turn the conference back over to Owen Wilson for any closing remarks.
Well, thanks everyone for joining us today. Marathon session, we've gone over time, so thanks for sticking with us, and I look forward to seeing you, many of you in the coming days ahead. Thanks.
Thank you.
This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a great day.