SEEK slumps to $100m loss amid employment market deterioration

While a $141 million impairment of its investment in Chinese jobs site Zhaopin tipped SEEK into the red, the weaker result was exacerbated by a 6 per cent fall in revenue to $1.08 billion during the period, led by its operations in Australia and New Zealand which suffered an 8 per cent slide.

The company says a 20 per cent fall in volumes reflects a rise in unemployment and the slowdown in job vacancies and mobility across its operations.

However, SEEK notes that the falls in FY24 had followed record volumes in Australia and New Zealand in FY22 and FY23.

“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,” says SEEK CEO Ian Narev.

SEEK announced last month that it was writing down the value of Zhaopin amidst "no clear visibility on sustained recovery" in the Chinese economy where its target market of white-collar employment has been underperforming.

EBITDA in Australia and New Zealand fell 9 per cent to $455 million, driven by the 8 per cent fall in revenue to $840 million.

The Asia division's EBITDA slumped 51 per cent in constant-currency terms to $46 million, following a 2 per cent fall in revenue to $244 million.

Despite the weak headline earnings result, Narev say operational outcomes by the business were “pleasing”.

“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,” he says.

However, investors turned on SEEK this morning after the earnings announcement, pushing shares down $2.10, or 9.5 per cent, to $20.03 at 10.53am (AEST).

The company has forecast another year of subdued revenue with a target of between $1.02 billion and $1.14 billion in FY25.

But Narev says the company remains committed to its target of $2 billion in revenue by FY28.

“As a result of a great deal of focus over the last three years, the foundations are now in place for continued growth,” he says.

“We are already seeing clear benefits from the Platform Unification investment in customer experience (such as the significant increase in applications above what would be expected due to economic conditions), pricing and operating efficiency.

“The changes to our organisational structure that we announced near the end of the financial year will help us capture the innovation and efficiency benefits of the unified platform, through faster development and deployment of AI-enriched products, and removal of duplication and low value-add activity.”

Narev notes that SEEK has reached the point where it can continue to invest for growth while ensuring that costs increase at a slower pace than revenue each year.

“For FY25, economists are forecasting weaker macroeconomic conditions in most of our markets,” he says.

“Based on our historical experience of similar conditions, we have assumed that paid ad volumes in ANZ will continue to decline throughout FY25.

“For Asia, we have seen early signs that the slowdown is moderating and we expect a partial recovery in the second half.

“As we benefit from continued yield growth, we expect to maintain revenue at levels similar to the prior year. Against that flat revenue outlook, we will keep total expenditure for FY25 at the same level as last year, meaning that EBITDA should also be largely in line with last year.”