REA Group Limited

Good day and thank you for standing by. Welcome to the REA group limited half-year 2026 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 at that time, please 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. Ma'am, please go ahead.

Good morning and welcome, everyone. My name is Alice Bennett, Head of Investor Relations, and I'd like to thank you for joining our EA Group's 2026 Half-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. So today you'll hear from REA's CEO, Cam McIntyre, and Janelle Hopkins, REA's CFO. Cam will talk to our overarching financial performance and strategic highlights for the half. He will then hand over to Janelle to talk to our financial results in more depth. And then following this, we'll of course be happy to take some questions. With that, I will pass to Cam to get us started.

Thank you very much, Alice. And good morning, everyone. Look, as I usually do, as I'm stepping through the slide deck, I'll just mention each slide as I get to it, just so you can keep up. So, look, I mean, to begin with, RAS delivered a good first half result underpinned by double-digit residential yield growth. It was a half that saw new AI-led experiences for consumers, product enhancements for customers, record audiences and growth in our market leadership position. Overall, the Australian property market landscape remained healthy with strong demand across the country and improvements in Sydney and Melbourne listings in Q2. So let's start with slide four and just looking at our financial results. So for the half, and we saw revenue up 5% on PCP to $916 million. EBITDA excluding associates up 6% on PCP to $569 million. and net profit after tax up 9% to $341 million. Boards also determined to pay a fully franked interim dividend of $1.24 per share, which is a 13% increase on PCP. And in addition, we've also announced today an on-market share buyback of up to $200 million, and that reflects REA's strong balance sheet, the confidence we have in our future outlook, and the balanced approach we have to capital management, enabling us to return... surplus capital to shareholders while continuing to retain flexibility to invest in growth opportunities as they arise. So before I move into our operational highlights, I'd just like to touch on mark conditions. So looking at slide six and listing volumes in Sydney and Melbourne kept pace with very strong prior year comps while volume in our smaller capital cities softened. Nationally, we are seeing a two-speed market result in a decline in new buy listings, which were down 6% for the half. As you can see in the chart on the left-hand side, listing volumes in the December quarter strengthened against the softer comps with Melbourne and Sydney leading the charge here. And the predominantly steady interest rates environment, that helps support the buoyant levels of demand that we saw with buyer inquiries surging today. to four-year highs across the nation. So let's jump into slide eight and looking at our numerous H1 highlights and it was a transformative half. Our technology, we rapidly extended our AI capability. We delivered excellent new experiences and products which we'll talk through a little bit more as we step through the presentation. Supporting our visualization strategy, we acquired a 61% stake in Canadian-based iGUIDE in October last year. In India, we strategically refocused the business on housing.com. Our personalized and immersive experiences were key to the record audience levels that we saw and deep consumer engagement with 38% year-on-year growth in seller leads for the half. We achieved a record Premier Plus penetration in residential and record Elite Plus penetration in commercial, which was fantastic. On to slide nine, and just taking a closer look at record audience levels and high-quality engagement. As you can see here, more people than ever visited our flagship site, realestate.com.au. record average of 12.7 million people visited the platform each month, and we achieved a record 146.1 million average monthly visits. But the real value is in the very large audience that lies with our deep engagement of our consumers. And looking back over the past two years, our audiences continue to consistently extend each half, and more importantly, key engagement metrics have also strengthened as well. like our active member base, the number of properties tracked by owners and sellers, and buyer inquiry volumes as well. The strength of our brand, the quality of our experiences, and access to unique data and content ensures Australians continually return to and spend more time on realestate.com.au than any other property site in the country. Looking at slide 10, and I'm sure most of you have seen this one before, but REA's purpose is to change the way the world experiences property, and our strategy centers on engaging the largest consumer audience, delivering superior value to our customers, and leveraging unique data and insights as we expand our core business and build next-generation marketplaces. Moving on to slide 11, and you've heard us say this before as well, that REA has been investing and innovating with AI for some time. It's a clear strategic focus and a significant opportunity. It's embedded in our existing strategy as an enabler that's enhancing the execution and supporting our delivery of product. Our unparalleled audience and proprietary data provide strong foundations and unique leverage for harnessing AI as we continue to change the way people buy, sell and rent property. AI has been applied across all of our operations. We've delivered several key AI-led initiatives and partnerships in the last half, which I'll talk to you a little bit more about in a moment. So let's turn to slide 12 and just talk a little bit about consumer experience. And during the half, after a successful 12-month trial, we're progressively rolling out natural language search, which is now available to half our website visitors. This new way of search, it really offers consumers a choice between traditional search with filters, map, or natural language search. In terms of the next evolution of AI search, A conversational search trial is running on realestate.com.au and that's now live for 10% of our web audience. And for those of you that are interested in having a look at that, you can contact Alison and she can give you some directions on how to get onto that one. But this really is an intelligent search experience that's going to encourage consumers to take action, such as saving or sharing a listing online. And it also may encourage consumers to think outside their set filters. So, I mean, for example, you know, if you're looking for a property for sale in Kew with a tennis court, let's say, and there aren't any, well, you know, search results using this sort of search engine may result in you looking at large properties with big enough backyards to install one of your own and estimate the cost for an upgrade, for instance. So, Level of intent data available through conversational search will increase exponentially, and this is going to be incredibly valuable to customers. In the middle of that slide there, you can see supporting our visualization strategy to engage consumers in a new way, and we launched a great new video hub in November. And on the right-hand side of the slide there, you'll see we launched our new AR-led conversational assistant. which is a great tool designed to support owners to better understand their real estimate valuation. Now, let's also now look at slide 13 and just talking a little bit about our customers. And we saw record Premier Plus penetration support yield growth in our core residential business. During the half, we introduced the serious buyer metric exclusive to Premier Plus listings. And this metric's powered by PropTrack, And what it does is it analyzes hundreds of behavioral signals to identify consumers showing true purchase intent. And that predictive score empowers agents with data to optimize campaign strategy and enhance their vendor conversations that they have. Our audience extension offering, audience maximizer, that was invigorated in 2025 and new features, price points and additional value helped drive record penetration in the half with that product. And on the right-hand side of the slide there, you'll see we've added additional value to our high-performance listing solution, Lux, which is proving to have market appeal, which is great, and we're seeing its penetration continue to build as well. On to slide 14, and the value in our pro subscriptions is in both enhanced brand exposure and access to exclusive products and tools that help generate new business. Agency groups have recognised the value that we have in pro with a number of customer groups signing enterprise-wide pro agreements now. And in addition, Australia's largest agency group, Ray White, was the first customer to access our new market intelligence data suite in December. And that offering is enabling agencies to better benchmark with insight into market share and conversation trends or conversion trends, I should say. Underpinning value for our customers is access to Ignite, and the self-service platform we have here is designed to bring deep insights, tools, and leads together into the one place. Monthly active Ignite use increased 14% on PCP, and in the first example of generative AI in Ignite, during the half, we introduced AI Smart Summary for Leads, and what that does is it provides quick seller lead insights to help customers have more informed conversations with property owners. On to slide 15, and realcommercial.com.au delivered record audiences with 2.9 million Australians visiting the platform on average each month, which was up 90% on the prior year, and our top tier product, which is Elite Plus, achieved record penetration, and there's been strong uptake of Elite Plus Unlimited, which offers unlimited days on site. The value in Ignite continued to increase for commercial customers. We saw a 59% PCP growth in monthly active users. In November, we also acquired Navalytics, and that offers a unique view of demographics with real-time lifestyles and mobility data. Both Navalytics and Aerialytics are really good opportunities for our commercial business. Turning to slide 16 and just talking about our financial services and improved market conditions, product innovation and brand investment delivered good revenue growth. Submission volumes continue to increase and they flow through to pleasing increases in settlement numbers. Enhancements for finance experience supported a 26% increase PCP growth in realestate.com.au generated broker leads in a good demonstration of the quality of these leads. The submissions from REO leads were also up 32% on PCP. We also continued to invest in our core broking platform and in AI training and tools and they delivered ongoing value and supported productivity improvement for our brokers. and this includes access to Google Gemini, which is supporting brokers to efficiently automate their processes. From a consumer perspective, in partnership with Athena Home Loans, Mortgage Choice launched a new bridging finance solution called Freedom Move in the half, and that solution is designed to simplify the complex and costly process of buying and selling. On to slide 17, and look, AI is clearly embedded within with an REA strategy, as you're seeing through this presentation. And our team, along with our key partnerships and investments, are really, really significant enablers in continuing to integrate AI across the business. The business is evolving to an AI-primed company, or an AI-primed company in terms of thinking and adoption. We're focused on empowering our people with the right tools and skills to harness the technology and boost capability. Productivity and drive to efficiencies are also incredibly important and this focus is delivering really strong results. Across the business, around 90% of our Australian employees have completed foundational AI training and 85% of our team regularly uses AI, our internal AI assistant. We're seeing very strong AI adoption in our global tech team as well and 90% of our global tech team are leveraging AI daily. A number of recent investments provide us also with deeper AI and data capability. This includes our UK-based AI property portal JITI and the Canadian-based iGUIDE business that I just mentioned. We're also really pleased to be partnering with global leaders in AI and have them help power some of our new AI-led products and experiences. Looking at slide 18 and demonstrating our accelerated innovation. This slide really highlights recently delivered AI products, experiences and tech capability along with training support and tools for our customers and brokers. AI-led search and immersive experiences on our platforms are engaging consumers in completely new ways and these experiences not only offer property seekers more choice, flexibility and personalisation, they also unlock rich consumer and market insights underpinning customer value as well. And what's to come is really exciting. AI is going to continue to evolve and we'll be very thoughtful in how we deliver that capability over time too. In the coming months, consumers can expect to see deeper personalisation with enhancements to conversational search and exclusive content and video. Our customers can expect to see powerful AI integration into our self-service Ignite platform and and data and technology that underpin our products and experiences will strengthen and the foundation REA has to leverage in AI. So turning to our international businesses and as we flagged previously, Housing.com's REA India's strategic priority and is now solely focused there on moving forward. Our app burst strategy continues to deliver positive results with housing.com continuing to lead app downloads in India. Focused improvements on the platform have also placed more relevant properties in front of the right consumers, which supported a 20% year-on-year growth in leads delivered to customers in the second quarter. We've also evolved our depth model as well with the introduction of a new top-tier subscription product called Ultra, which provides customers with superior listing branding. Looking at slide 21, we announced the acquisition of our controlling stake in Canadian-based Planeta, which is the maker of iGUIDE in October. iGUIDE, what that does, it uses AI to identify property features and produces immersive 3D virtual tours, precise floor plans, and reliable property measurement data. It's the market leader in Canada with around 25% of all listings sold in the country in 2025 featuring an iGUIDE. Canadian revenue grew 23% in half one with strong growth in each of its four key markets which are residential, insurance, construction and commercial. And the success of the business in Canada points to the opportunity that we have here in Australia where video and interactive content will become standard in property advertising. In the Australian market, the early signs are really strong with the first sales to customers in recent weeks, and we've been receiving really great positive feedback. In the US, REA has a 20% stake in Move, operator of Realtor.com. Realtor introduced a number of innovative products and experiences in the half, including a fly-around which provides consumers with a new way to explore neighbourhoods from above. which is very cool. REA and MOVE are also collaborating on AI strategy, amongst other things, to facilitate faster delivery and reusability of AI capability across both the Australian and United States markets. Before I hand over to Janelle, I'd just like to share a quick few comments on the market as we look ahead. And I guess ongoing strength in employment levels and population growth, they really continue to drive strong demand nationally and they really contribute to the health that we have in the Australian property market. While we saw an increase in interest rates this week, the prospect of rising rates was already widely flagged and the underlying fundamentals of the market remain very strong. Supply has improved in Melbourne and Sydney with limited stock in smaller capital cities resulting in some vendors delaying their listings. Anecdotally, Across the country, our customers are telling us that they're seeing very good numbers coming through open for inspections, which aligns with that view of a buoyant level of demand that we're seeing. Into the second half, we will continue to drive innovation, and it's an exciting time with AI presenting new opportunities and our teams embracing this capability, coupled that with the ongoing health in the property market, and we're well positioned to to drive further growth for the remainder of FY26. And just before I hand over to Janelle for more detail on our results, it is her final result with the business and I'd just like to acknowledge her service and achievements as CFO and thank her for her outstanding contribution to REA over those years. So thank you Janelle and over to you.

Thanks, Pam, and good morning, everyone. REA has delivered a good result with strong buy yield growth in the residential business despite lower listings. From our core operations, revenue increased 5% to $916 million. Operating expenses increased 3% to $347 million. EBITDA, excluding the results from our associates, was $569 million, up 6%. And the group delivered MPAT of $341 million, up 9%. Our half-year result includes the consolidation of iGUIDE, the divestment of PropTIGA, and the exit of Housing Edge from the second quarter. Excluding those items, on a life-for-life basis, revenue and operating expenses increased 8% and NPAT increased 10%. The group results from core operations differ from reported statutory results, with a number of one-off items excluded. On slide 37, we provide a summary of the reconciliation between the core and statutory results. Turning to our Australian residential business, which has had another strong half, delivering 7% revenue growth despite lower listings. National buyer listings declined 6% in the half, improving from an 8% decline in Q1 to a 3% decline in Q2 as comps became easier. However, as Cam discussed earlier, we saw a two-speed market during the half, with Melbourne and Sydney both flat and up year-on-year in the second quarter, while markets like Brisbane and Perth were down 12% and 20% respectively. Buy yield was strong, up 14% for the half, driven by a 7% average Premier Plus price rise, growth in add-ons, AMAX in particular, increased subscription revenues and increased debt penetration, with a 1% positive impact from Geomix. Excluding Geomix, controllable yield growth was 13%. Our rent business saw continued growth with revenue driven by high single-digit yield growth, partly offset by a 2% decline in listings. The following slide shows both the penetration and mix of paid debt listings in the residential business. And while it's still early days for Lux, penetration doubled from FY25 to the first half 26 and is tracking in line with our expectations. We continue to see LUX take up across properties of all values, with nearly two-thirds of LUX listings on properties less than $3 million. Commercial and new homes revenue increased 10% to $121 million. Commercial revenue increased by 9%, with yield growth driven by an average 7% price rise and increased debt penetration, and listings broadly flat. And new homes revenue increased We're up 11% on the prior year, the first time in five years we've seen double-digit growth for this business. This was driven by increased project profile volume and average yield and higher display revenues. Other revenue is up 8% to $35 million, driven by growth in media display from increased spend from our direct customers and growth for campaign agent as the business continued to grow customer numbers. Please note prop tax data revenues, which used to sit in other and are largely generated from financial institutions, have now been included in financial services to align with an internal restructure. A reconciliation is provided in the appendix on slide 40. On to financial services, which had an excellent half, with revenue up 11% to $58 million and EBITDA increasing 14%. We saw double-digit growth for both our mortgage choice business and PropTrack. Mortgage choice revenues were up 12%, benefiting from a 14% increase in settlements and continued improvements in broker productivity, partially offset by higher broker payout rates. Pleasingly, submissions were up 24% in the first half, which suggests settlement growth should remain strong in the second half. In our prop track business, we grew revenue 11% through new customer data contracts. Turning to our India and North American businesses. In India, Housing.com revenues were flat at 26 million for the half, or up 3% on a constant currency basis, with customer growth and improved monetization in our tier two cities offset by continued competition in pricing and packaging, which has negatively impacted Housing.com's yields. India operating costs for Housing.com increased 3% or 6% in a constant currency, which reflects a growth in tech costs due to license price rises and increased data usage, partly offset by lower employee costs as the cost base was reviewed post the business simplification. Housing.com EBITDA loss was $19 million. Moving to North America. As Cam mentioned, we acquired iGUIDE, which was consolidated from October 25. It generated revenue of $6 million with underlying life-for-life growth and half-wine of 23% and was broadly EBITDA neutral. In the U.S., MOVE's revenue growth has accelerated up 10% year-on-year, driven by higher sales of its RealPost Select premium offering and continued revenue growth in seller, new homes and rentals. And pleasingly, lead volumes turned positive, up 5.5% and up 13% in the second quarter. MOVE's equity accounted contribution was a loss of $10 million, a $1 million improvement on the prior year. And for more information on MOVE, please refer to the News Corp results release. On the next slide is our core operating jaws. In Australia, jaws were closed by 1%, with revenue growth of 8% and core operating cost growth of 9%. Australia operating cost growth reflected a number of key factors. The largest driver was employee costs impacted by wage inflation and increased headcount driven by investment in strategic initiatives. This was followed by COGS, which increased due to more than doubling in our audience maximiser penetration. Higher marketing costs, in part due to the timing of Ready 25, which was not in the prior year, and spend on the Ashes and a new Australian open sponsorship. And technology costs, which increased due to price increases of licences and investment in AI tech. At a headline level, group draws were opened by 2%. with revenues growing by five and OPEX by three. And on an underlying basis, George was flat, with revenue and operating costs both at 8%. We've had a strong and consistent track record of continued investment in product development and platform health to drive better consumer experiences and deliver more value to our customers. You've seen this over the last five years with Australian CapEx growing 14% per annum compound. In half one, This investment included a number of new products and experiences across all lines of business with a focus on AI, video and platform health. CapExter revenue was 7% in the first half and we anticipate a rate close to the middle of our 7% to 9% target range for the full year. FY26 depreciation and amortization is expected to be in the range of $138 to $147 million, modestly lower than our previous guidance due to the exiting of Housing Edge in India. Turning to our cash position, we ended the half with a strong closing cash balance of $478 million. The group delivered operating cash flows of $373 million, which allowed us to continue to invest in the business organically through M&A and continue to deliver strong shareholder returns in the form of increased dividends. The FY26 interim dividend grew 13% to $0.124 per share, with DPS outpacing MPAC growth as we increase returns to shareholders in the form of a higher payout ratio. In addition, as Cam mentioned earlier, we have today announced an on-market share buyback of up to $200 million. Our balance sheet is incredibly healthy, and we believe we have the right balance going forward of returning capital to shareholders and flexibility for future growth ambitions should the right opportunities arise. Finally, on the FY26 outlook, While comparables will become easier as we progress through the second half, the group now expects national residential buy listing volumes to decline 1% to 3%, reflecting larger than expected due to date declines in the Perth and Brisbane markets. January listing volumes were down 8% year-on-year, with Melbourne and Sydney declining 1%. The group anticipates 12% to 14% residential buy yield growth, with the magnitude of growth potentially impacted by geomix movements across the remainder of the year. Positive group operating jaws are targeted, with Australian jaws expected to be open modestly. Expectations for mid-single digits operating expenses growth is unchanged, reflecting high single digit growth for Australia, the consolidation of iGUIDE, divestment of PropTiger and exiting Housing Edge. On an underlying basis, high single digit cost growth is expected. And India and Associates guidance is also unchanged, with India EBITDA losses expected to be in the range of 40 to 45 million, and contributions from Associates losses expected to be marginally improved in FY26 compared to FY25. In summary, we are very pleased with this result. We continue to execute our strategy, deliver on the things in our control, and invest prudently for the long term. The whole team is excited by the new opportunities we see leveraging AI to enhance our consumer, customer, and employee experiences. It's great to have Cam's feet now firmly under the desk, and I've known Andrew Kramer for over six years now, and I'm confident he'll do an excellent job. I have loved every minute of my time at REA and will really miss the incredible talent across the whole company, with a special shout-out to my finance team. I will see most of you over the next few days on the Roadshow, so look forward to catching up with you all then. I'll stop here. Operator, can we now please open the line for questions?

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We ask that you please limit yourself to two questions. One moment for our first question.

Our first question will come from the line of Lucy Hong with UBS. Your line is open. Please go ahead.

Thank you, Anza, and thank you, Janelle, and all the best for the new chapter ahead. I've got two questions. So firstly, the cost growth guidance is unchanged, but Sterling and George did narrow it in the first half, and I understand it was mainly listing-driven, but can you give us some color around terms of your confidence on the ability to manage costs moving ahead, particularly given the ongoing AI investment pressure and tech price rises and maybe flesh out some areas in the cost base which you can keep flexing to make way for AI investment. Should I ask my fitting question now or after?

Why don't I take that one first off, Lucy? Thanks for your nice comment. Look, you're right. Our guidance is unchanged. We're very confident in the fact that we have been investing in AI and continue to invest in AI within that cost guidance that we've provided. I think one of the key points and a differentiator is that we have never underinvested in the business. We've always talked about that 7% to 9% capex to revenue ratio, and our overall investment profile continues to grow as we deliver value to customers and consumers. When we think about the ability to flex costs, we've always been able to flex costs up and down should we need to. And the sort of things that we can do is, and the things we have been doing, is looking at our offshore service delivery centres in both India and Manila. We can tweak up and down should we want to the phasing of our investment. But overall, we're very confident in our ability to continue to target open Jaws. And you're right, the question around the modest, the fact that we're expecting Jaws to be open modestly is just more in the fact that we've updated our estimation around listings and that's playing through into the revenue.

No, that sounds quite clear. And then just my second question, Obviously, a lot of chat around ChatGPT traffic. So maybe if you can talk through how much traffic you're now sourcing or getting from ChatGPT or how that trajectory has changed over the last few months. And I think offshore we've seen some more deals recently from your peers partnering to be on the ChatGPT app. How are you thinking about that as a potential... next step for REA? Like, are there merits to it now? Should we be doing it now? Just keen to hear your thoughts on that also.

Yeah, thanks, Lizzie. I'll take that question. So, look, in terms of overall traffic, I mean, it's a fraction of a fraction, and that fraction has declined, not increased, more recently. So it's, you know, you're talking sub-1%. In terms of how we think about it going forward, I mean, it's another growth path for us in terms of traffic acquisition. So a lot longer term, we're encouraged by the partnership that we have with OpenAI and look forward to at some stage having their app store open up to us. So I think that's That's an ongoing opportunity, but at the moment it's a very immaterial component of our traffic. I mean, some of the other AI innovation that we've deployed that you've seen through the pack is very encouraging. You know, when it comes to things like Real Assist and so on that you saw there, very happy with how all those things are performing. But in terms of that chat GPT, it's very, very small.

Great. Thanks, Ken. Thanks, Janelle.

Thank you. And one moment for our next question. Our next question will come from the line of Eric Choi with Barb and Joey. Your line is open. Please go ahead.

Awesome. Thanks for the questions. And Janelle, I just wanted to echo Cam's thoughts as well. Thank you for your help over the last seven years and making these conference calls and the numbers a little bit more interesting and fun. But anyway, Cam and Janelle, did you want all the questions at once or one by one?

I think one by one.

Okay. So maybe just on AI, I guess there's a lot of negativity. I just wanted to go the other way and talk about potential monetization opportunities and specifically on FY27. I know you haven't announced anything around pricing yet, but on top of whatever price increases you guys eventually announce and the tailwinds from year two of your AMAC and PRO packages, I'm just wondering if you'll announce anything significant to drive depth and MUX uptake, just because I know you guys are doing a lot of things on immersive listings and AI and you've got a lot of things in your slides today. And, you know, some of your competitors might be trying to package things into their highest-tier depth packages as well. So just wondering on your potential to do the same.

Yeah, I guess holistically, Eric, as you know, the company – when it thinks about price, it prices to value. And, you know, as you can see in the deck, we've been heavily engaged around building innovative solutions throughout the organisation and, you know, unlimited to or not limited to, you know, things like even AI-based training for our customer base and delivering AI-based integrations into places like Ignite and so on, And from our perspective, that all forms part of what we call value. So that's probably the answer to that question.

Gotcha. Thanks, Sam. And sorry, just Jaws is obviously a big talking point today and costs. I guess that first half cost growth of 9% is a little bit misleading because of timing and COGS. So I just wanted to make sure you guys are still gunning for positive Australian Jaws into FY27. And beyond, and you previously said you can invest in AI within the current cost envelope. That sounds unchanged. And then I guess that AMAX cost steps away next year as well. So, yeah, can you just confirm the draw into the medium term?

Yeah, absolutely. We will continue to target open jaws for Australia and for the group. And, you know, yes, as we've already said, you know, yes, AI costs, and investment is increasing. But on the flip side, there is additional productivity that is starting to come through. We're already evidencing it and will continue to come through into the future. So, you know, that gives us the ability to increase the velocity of what we deliver and or if we wanted to, to drop it out to the bottom line. So that's why we're confident around, you know, being able to do more with AI within our cost envelope that we set.

Gotcha. Just a last one, just plainly on capital management. buyback. I suspect the share price is still too much and you guys have got $500 million of cash balances so I suspect we shouldn't read too much into whether this makes M&A any more or less likely.

No, I mean the rationale is clearly that we believe we've got surplus capital and given that we have a very strong balance sheet and cash flow which you can see and the and that the business generates. And it also, I guess, reflects the confidence that we have in the outlook of the company, while also enabling us to sort of continue to invest as opportunities arise in the future. So we think it's a good tool to add in terms of delivering good outcomes for shareholders when it comes to capital management. But from our perspective, we keep our powder dry too when it comes to thinking about opportunities to invest in other things as we go along.

Cool. Sorry for the question. Thanks, Cam. Thanks, Neil.

Thanks, Eric.

Thank you. One moment for our next question. Our next question is going to come from the line of David Fabris with Macquarie. Your line is open. Please go ahead.

Good morning, Cam and Janelle. Look, my first question, can I just ask about the AI investment a little differently? I mean, you guys have been making small acquisitions, but if acquisitions slow down or take a pause, does that mean you need to spend more to keep up and innovate so OPEX and CAPEX would theoretically increase? Can you clarify that, please?

No, thanks for the question, David. I don't think so. I mean, if you look at the M&A that we've done more recently, it's it's adding incremental capability to the organisation. It's adding nice to have capability to the organisation, particularly around data, which you can see through the likes of Aerialytics and Navalytics. So I think, you know, I don't think it changes the profile of CapEx or OpEx spend going forward. As you've seen, the transactions are small and we've been investing in AI for a very long time and you can see the capex to revenue ratio has not changed. In actual fact, it's come down the last six months. So I don't think any M&A would change that profile.

Yeah, perfect. And then just my second question. Look, there's been a lot of discussion out there in Australia at the moment about possible changes to capital gains tax on housing. Have you got any views on how this may impact listing volumes, be it positive or negative, if something does pass?

I guess we seem to go through this debate or discussion every five years or so. I guess we won't know until we see regulatory change, but I guess from an REA perspective, any change that increases listing volume is good for us. So, you know, if capital gains tax changes and has people thinking about changing houses, well, that would be a good outcome for us if that was the case.

Got it. Thank you.

No worries.

Thank you, and one moment for our next question. Our next question will come from the line of Nick Beville with CLSA. Your line is open. Please go ahead.

Morning, Cam and Janelle. Two questions from me. First one, just if I can get some comments or thoughts on how you're seeing the competition from, I guess, CoStar and Domain at the moment, what changes are they making and how you're responding? And then a second one, just on AI, I guess interested to know your thoughts on, I guess, what metrics matter in this environment and of the various sort of improvements you've seen in terms of adoption of AI across your developer base or launch of products. How do we think about REA extending the current lead you have versus the competition? Thanks.

Thank you for the questions. As a market leader, we're very focused on our strategy, our clear path, our direction, and where we're heading as a business. If I just focus on things like traffic, we've continued to build our traffic. We've continued to build engagement with our members. We've seen strong demand for in terms of things like leads on the buy side. I think we've seen the strongest buy side leads that we've seen in four years. Focused on sell side leads as well, how we bring opportunities to our agents to sell homes. And so our focus is around addressing the needs of our customers and addressing the needs of consumers and providing them with better capability to reduce friction. as time goes on, and so that's our focus as a business, and what happens in the competition space is good for us. It keeps us sharp, but we're very focused on running our race. And just in terms of AI metrics that matter, I mean, you've seen some of the metrics in the slide pack. I mean, as an organization, we've been very focused on becoming an AI prime, company, which means as individuals, as teams, AI is at the core of the things we do. And you can see that inside REA with things like AI tools like Glean and just the number of agents that are now in Glean and the usage of Glean through the technology and the usage of of many of the tools available to our tech team in the AI space and how they're being adopted and where they're being adopted. I mean, they're all prime data points for us in terms of measuring how we're evolving as a company. And I guess the other thing that I tend to focus on too is just the speed at which we're now developing new capability and With AI and the opportunity that we have with AI, what I'm seeing is that we're actually able to develop product much, much quicker than what we have historically done, and the quality of that product is very good. And a good example of that is just in terms of search. You saw in the slide pack examples of conversational search and AI. and natural language search that we now have on the platform that we're experimenting with. I mean, the time that it would have taken to build that sort of capability 10 years, it would have taken probably two years to build, and now it takes days to a month. And so what I'm seeing is acceleration of product deployment into market as being a prime metric that matters, and as we get product to market faster and address issues the needs of our customers and consumers faster. I think that sets us up for great outcomes into the future.

Yeah, thanks very much.

Very comprehensive.

Thank you. And one moment for our next question.

Our next question will come from the line of Bob Chen with J.P. Morgan. Your line is open. Please go ahead.

Morning, Cam and Janelle. Two questions for me. Just the first one, just to follow up on some of the earlier comments on AI monetization. I guess, what sort of pathways of AI monetization have you guys thought about? How will we be able to measure that in the medium term as you develop these new products and launch them into market?

Yeah, so I'll go back to my earlier response to Eric, which is when we think about monetization, we think about it in the context of value that we're adding to our packaging. And so AI forms a component, one of the components of that. And as we continue to build our AI capability through the business, we'll continue to add value for our customers in the AI space that they get to leverage from over time. But I mean, some of the other I guess, indirect monetization that we see through AI is just some of the things that happen in the back end of the business as well. And if I think about what we're doing in the space of financial services and the automation that we're seeing there, and there's some illustration on that in the slide pack. I mean, what that goes to is our ability to enhance the performance of our brokers, help them, you know, sell more finance in a more efficient and productive manner and that all goes to monetization too. So when we think about it, we think about it in the front end and we also think about it in the back end too.

Okay, great. Thanks, Ken. And then maybe just on the flexibility with the buyback and thoughts around M&A, I guess What is your current level of appetite for M&A and are you thinking sort of smaller bolt-ons like we've been seeing over the last year or could there be larger strategic M&A down the pipe?

I wouldn't make any comment on size, big or small. All I'd say is that REA remains a growth-orientated business. It's an acquisitive business and you've seen us do acquisitions in the last six months. And what it comes down to is the opportunity and what that opportunity delivers to us, but more importantly to shareholders in terms of returns to shareholders. And we're very focused on that as an organisation. And so, yeah, it will come down to opportunity. There's no one size that sort of fits all.

Great. Thanks, Kev.

Thank you. And one moment for our next question.

Our next question will come from the line of Enshul Rakofsky with E&P. Your line is open. Please go ahead.

Morning, Cam. Morning, Janelle. Janelle, thank you for all the help. Over the years, best of luck for the future. My question is, I mean, the first one is sort of an obligatory question. AI-related question, but you've obviously launched a whole bunch of new products. I'm just curious, firstly, what sort of usage you've seen of RealAssist and AI search to date since the launch? And just more broadly, in your view, is natural language search the future of search, or do you expect there to be a high level of stickiness with filter-based search given that consumer experience? So that's the first question. I've got another one, but I might wait for the answer to this one.

Okay. So, look, I mean, the answer to search, and you can see we've got two forms of search that we're experimenting with, natural language and conversational search. Now, for me, natural language search is a nice extension to traditional keyword search, but, you know, through a sentence as opposed to a keyword. But, you know, The limitation with that is it tends to be search by search whereas conversational search is quite a different experience because conversational search, it's contextual, it involves an AI agent that's responding and it generates a conversation which takes you down more interesting pathways and I think it's more engaging from a consumer perspective. But we want to trial both because search in particular is an evolution, not a revolution, and you've got to allow consumers to evolve to it over time and you don't want to rush it. If you rush it, you can come unstuck. So we're taking a very responsible approach to this to ensure that we're still engaging maintaining and building on our traffic and engagement with consumers, which is why you're seeing multiple variations that we're testing. What was the other element of your question? I can't remember, mate.

Oh, so just the comparison to filter-based search, which obviously has been used by a lot of consumers. So are you seeing a level of stickiness? Are you seeing a willingness to adopt the natural language of computational search?

Yeah, I'll just say too early to call on both. I think, yeah, when we get to the... full year, we will have much more data and insight to share with you.

Okay, great. Thank you. And then the second one, I mean, I know you've spoken about this in the past, but I'm just conscious that sort of the environment is evolving. You've got a competitor out there who is, I mean, frankly, making some noise. So I'm curious on pricing for FY27. Will it be impacted in any way by what your competitors do or do you view it as something completely independent of the competitive environment and effectively based on your product and what you see as your value proposition?

You answered the question. As market leaders, we're absolutely focused on running our race. We're focused on delivering more value to our customers. We're focused on delivering more capability to our customers. And when we think about price, we think about value. And that's what we think about entirely.

Okay, so I mean, just for the avoidance of doubt, if you don't see, hypothetically, no price increases from some of the competitors, that doesn't sound like it impacts what you do.

We think about our value.

Okay, great. Thanks, Ken.

No worries.

Thank you. One moment for our next question. Our next question will come from the line of Roger Samuel with Jefferies.

Your line is open. Please go ahead.

Well, hi, morning all. My first question is just on your yield growth. In particular, you've got it at 12 to 14%. So you already did 13% in Q1, and you reported 14% today. So you're easily at the top end of that 12% to 14% range. I'm just wondering, yeah, what are the moving parts? I mean, you mentioned about geomix before. Is there any reason to believe that geomix could be a headwind in the second half, or perhaps you need to think about your pricing in response to competition. And if I can just extend the question a little bit, are you still thinking about double-digit yield growth going forward, regardless of what the competition is doing? Thanks.

Yeah, thanks. Look, yes, we are targeting double-digit yield growth into FY27, and we talk about yield deliberately, which is price plus a number of other things. And look, on the 12% to 14% expectation, the moving part is geomix. And that's really all it is. And the challenge we're seeing is that we saw moves around. Q1, geomix was flat. Q2, it was up. We're seeing in the mix of where the overall listings are, it's very skewed. And it has been very skewed so far year to date. Melbourne and Sydney have been unbelievably strong. in Q2, whereas Perth and Brisbane have been substantially behind where we thought they were going to be. Now, at some point, that's got to start evening up. Now, whether Melbourne and Sydney come back a little bit or Perth and Brisbane come up a little bit, that will have an impact on geomics. And even within that, where the listings are in Melbourne and Sydney, are they in the high-yielding inner city or the lower-yielding further out suburbs? So we're just flagging that our expectation at the moment is it's more likely that geomix will be some form of a likely flat or drag. Very hard to predict.

Got it. Yeah, so it's just simply the geomix then. Okay. My second question is maybe a slightly different question on AI. I mean, what are you doing to improve the workflow of your customers being real estate agents? Assumably their day-to-day activities would be impacted by AI. by new AI tools as well? Perhaps they're using some AI tools to improve their own workflow, but what can you provide potentially?

Yeah, thanks, Roger. I'll do that one. So, look, I mean, our agents are at different levels of AI-based sophistication. And so you've got larger agent groups that have good technology, good thinking around AI, and then there's a long tail of smaller agents that, frankly, probably don't have the time to think about AI. And our position is, as market leaders, we need to lead and we need to help the market understand and evolve with AI. And so we see it as our job to step in and where we can educate the market around what's coming with AI, where the opportunities are for them to generate productivity improvement within their own operations. So there's that element. There's the element, as I just mentioned before, delivering AI capabilities into areas like Ignite. And you'll see in the slide pack, there's some illustration of some of the things that we've already done for agents using AI and you'll find over time that we'll just keep adding to that capability but what we want to make sure is that the network understands AI, they understand the opportunity and that we're helping them in that process of understanding it too. That's probably the last question. Thanks everyone for joining the call. and look forward to seeing you all over the course of the next couple of days. Thanks very much.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.