Trade Me New Zealand’s diversification into new business sectors has not paid off in its FY16 results. Its financial services, dating and travel businesses are all underperforming or incurring losses this year. As a result CEO Jon Macdonald said Trade Me would redirect investment back into its core classifieds products and away from these businesses.
By contrast, the company’s main auto, property and employment classifieds all performed well in FY16, with classifieds generating a revenue increase of 13.2 percent year-over-year to NZ$112.8 million ($82.2 million U.S.).
Trade Me reported an overall 9.2 percent revenue increase to NZ$218 million and a modest 3 percent profit increase in FY16. Net profit, at NZ$74.9 million, was down NZ$5 million on FY15 and 1 percent lower than forecast due to losses from the group’s 12.4 percent stake in peer-to-peer lending platform Harmoney.
Harmoney reported an NZ$14 million loss in FY16 leading to a NZ$1.6 million loss for Trade Me’s stake in the business, double the loss reported in FY15.
Another poor performer was Trade Me’s dating site, FindSomeone, down 13 percent in rev enue to NZ$2.3 million, resulting in a one-off goodwill impairment charge of NZ$8.1 million. The company attributed FindSomeone’s poor performance to competition from international sites like Tinder.
Revenue results for Trade Me Insurance, launched in 2015, were not provided but Macdonald admitted the business was in its infancy. He insisted the long-term opportunity in the insurance business is “attractive.”
Macdonald said the company underwent a period of reinvestment and redirection, deciding in the second half to divert investment from FindSomeone, Holiday Houses and Travelbug, which had combined revenue of NZ$6.5 million in FY16, back to its core classified businesses.
Trade Me Property performed particularly well in FY16, up 16 percent in revenue with good growth in agent listings. Trade Me Motors was up 11.2 percent due to increased dealer revenue and demand for its automotive data site MotorWeb. Trade Me Jobs revenue was up 14.6 percent.
Macdonald attributed the classified revenue growth to a sustained focus on premium products and to product enhancements. These include new property products ranging from sales and rating valuation data tools for customers to the launch of the OneHub portal for property professionals.
In the last 12 months Trade Me has also dabbled in editorial content on site, offering motoring news and reviews through the Auto Media Group. This could intimate future extension of editorial content on the company’s property and employment sites, building on the membership-only market and industry data Trade Me already provides.