REA Group shares rally on strong Q1 revenue

Rea Group (ASX:REA) shares rose sharply on Thursday after the Australian advertising firm clocked strong revenue growth in its fiscal first quarter. 

REA jumped as much as 10.7% to an over two-month high of A$179.220, tracking a broader, near 2% rally in the ASX 200 index. 

The gain represents the digital advertising company’s largest single-day percentage increase since March 30, 2020.

REA reported  revenue of A450 million(315.4 million) in the three months to September 30, an 11% increase from the same period last year.

The company’s operating EBITDA, excluding share of profit or loss from associates, reached A$294 million for the quarter, up 12% year over year.

The strong print was fueled chiefly by REA’s core residential business, as Australia’s property market remained resilient in pricing and demand. 

But some cracks were starting to show, especially as the Australian economy grapples with the one-two punch of rising interest rates and steep inflation. Buy listing volumes fell 2% in the quarter, with major markets Melbourne and Sydney clocking a 16% decline, REA said. 

REA maintained its fiscal 2027 outlook, forecasting new national Buy listing to fall in low single-digits. It continued to forecast operational margin expansion, higher operating costs, and an improvement in contributions from combined associates’ losses.