Mobile magic helps Trade Me beat IPO outlook

Trade Me's expansion of its mobile offering has paid dividends, with the company beating it's IPO outlook to investors.

The half-year financial results for the six months up to December 31, 2012, reported a net profit rise of $37.5m (9.43 cents per share) during the period.

Trade Me CEO Jon Macdonald said there had been varied levels of revenue strength across Trade Me’s business portfolio but “nothing out of the ordinary”.

“Our core General Items marketplace performed in line with our expectations, with a definite shift in activity towards mobile," he said.

"Throughout the year, we’ve also seen the proportion of fixed price transactions continue to grow as more buyers seek an instant eCommerce experience.”

Macdonald said Trade Me had expanded its mobile offering throughout the year, and that it would play an important part in the company's future plans.

“Mobile now accounts for more than one-third of our overall visits, a proportion that has doubled over the past year," he said.

"Android activity has grown particularly strongly and in January it delivered half the number of sessions to Trade Me as Apple's iOS devices.

“We’ve expanded our mobile team, built a suite of mobile applications and smartphone-optimised sites across Trade Me, and we released our first application for smart TVs in December 2012.”

Trade Me chairman David Kirk also praised results, adding: “We’re continuing to grow strongly with a double-digit lift in both revenue and EBITDA, and we’re proud to have delivered on the commitments we made to investors at IPO time.

“With Fairfax selling down its 51 per cent stake in Trade Me before Christmas and our inclusion in the NZX 10 Index this week, we have well and truly completed our transition to life as a public company.

"We’re looking forward to continuing to serve our shareholders as we keep working hard to grow the business.”

Revenue

Macdonald said the Classifieds businesses – Trade Me Motors, Trade Me Property, and Trade Me Jobs – delivered a strong performance during the half-year and this looked set to continue through 2013.

“There are several factors at play here, including the return of some market stability, and encouraging uptake for our new premium promotional products," he said.

In the Other segment, revenue was below forecast, with Macdonald attributing this to two main causes.

“First, our Advertising business fell short of our revenue expectations as the migration of spending toward online has been tempered by offshore publishers gaining market share," he said.

"Second, Treat Me came in below our bullish forecast. We believe group-buying still has potential, but remains a young and uncertain industry in New Zealand.

“Elsewhere in our Other segment, we recorded an excellent performance from our online dating business FindSomeone, and our trio of travel businesses performed in line with our expectations.”

Priorities

New goods also remained high priority for the company according to Macdonald, who said: “We’ve welcomed aboard well-known New Zealand retailers over recent months, and will continue to build this supply over the year.

“We’ve also progressed with our aspirations to attract international sellers, and achieved our objective of having several Australian sellers up and running via ChannelAdvisor in time for Christmas 2012.”

Acquisitions

Trade Me purchased holiday accommodation provider Holiday Homes in December 2012, with the company completing three small acquisitions over the past 12 months.

"We’ll likely augment our portfolio with judicious investments over the coming years," Macdonald said.

The Trade Me team had also grown in line with forecast according to Macdonald: “Trade Me’s overall number of staff has increased to 300 from 230 a year ago.

"We believe a key factor in our commercial success is determined by the calibre of our staff, and we continue to select smart, optimistic people who execute strongly.”

The future

Looking ahead, Macdonald said there was optimism about Trade Me’s prospects: “In the short term, we believe the New Zealand economy remains subdued but settled, and is taking some strength from the Christchurch rebuild and the Auckland property market.

“In the longer term, we’re confident about the company and its strong foundations.

"Ongoing growth in mobile, the introduction of additional products across our classifieds businesses, the migration of advertising yield online, and the long-term opportunity in eCommerce, all provide sizeable opportunities for Trade Me.

“In order to grow and fulfil our potential, we’ll keep working hard and investing sensibly to ensure we meet the needs of our members and customers.”