REA Group Limited

Good day and thank you for standing by. Welcome to the REA Group Limited Third Quarter Financial 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 during this session, please press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 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. Please go ahead, ma'am.

Good morning and welcome, everyone. My name is Alice Bennett, Head of Investor Relations, and I'd like to thank you for joining us to discuss REA Group's results for the third quarter, end of 31st of March, 2026. Before we commence, I'd like to acknowledge the traditional owners of countries throughout Australia. and recognise the continuing connection to lands, waters and communities. We pay our respect to Aboriginal and Torres Strait Islander cultures and to Elders past, present and emerging. This morning you'll firstly hear from our CEO, Cam McIntyre, who will provide a brief business update. Then Andrew Cramer, REA CFO, will talk to the financial highlights for the quarter. And following this, we'll be happy to take your questions. And just as a reminder before we get started, our quarterly numbers are top-line results only, so we'll be restricted in the amount of details we can provide. With that, I will pass it to Karen to get us started.

Thanks, Alice, and welcome, everyone. REA has delivered an excellent third quarter result underpinned by double-digit revenue growth across our Australian business and strong double-digit yield growth in our core residential business. Looking at our results from core operations, for the quarter, excluding M&A, which, as a reminder, it strips out the impact of sale of PropTiger, the shutdown of Housing Edge and the acquisition of iGUIDE. Revenue was $398 million, an increase of 11%, and EBITDA, excluding Associates, was $220 million, an increase of 16%. Strong underlying fundamentals continue to support the property market and supply kept pace with buyer demand. While global events and interest rate increases impacted broader economic sentiment, listing activity in Sydney and Melbourne was strong and nationally listings were slightly up on the prior year. In this balanced market, more Australians visited our platform than ever before and our customers continued to turn to our market-leading products and services to ensure best results for their vendors. In relation to our audience, We reached a new quarterly record in Q3 of 12.9 million visitors on average each month. Just under half these visitors used our platform exclusively. This means access to a large number of potential buyers, sellers and renters is exclusive to REA customers. Our immersive experiences ensure Australians continually return to our platform and we achieved a new quarterly record of 150 million average monthly visits. The value of our audience extends beyond scale, though, and it ties into the deep engagement of our consumers. In Q3, properties tracked by their owners reached a milestone of 5 million, an increase of 16% on prior year. Seller leads increased 28% year-on-year, and we delivered an average of 2.6 million buyer inquiries to our customers each month. Our consumer strategy is centred on delivering a personalised and immersive membership experience. Members are much more likely to perform a high-value action, which amplifies the value delivered to our customers. Our active membership base continues to grow, increasing 19% on the prior year. In the quarter, we launched our new evolution of AI property search, Our new conversational search experience is now live to 50% of our web audience and 10% of our iOS app members. This intelligent search experience encourages consumers to take high-value actions, such as sharing a listing or submitting an inquiry. Conversational search is going to continue evolving as we expand the number of topics covered, and that in turn will support a more detailed, curated, AI-powered companion experience for our consumers. It's also going to uncover valuable intent data for our customers. Property buyers are increasingly seeking more immersive and informative search experiences and we officially launched iGUIDE in Australia in March here. iGUIDE 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, and we're pleased with the early uptake in Australia. We're working closely with the industry on this, and several large photography networks have signed up already. There are now more than 100 iGUIDE specialty cameras in market, which is ahead of our own expectations, and we're seeing the strong momentum continue. Supporting our visualisation strategy is the social media-style feed in our Video Discovery Hub on the app home screen, is deeply engaging our consumers. The new hub achieved a 22% growth in average monthly video viewers in Q3. In relation to our customers and some highlights here, we saw record Premier Plus penetration, which underpinned double-digit yield growth in our residential business. We also achieved record audience maximiser penetration. We continue to roll out the next generation of AI-powered tools and services for our customers as well as offering education, support and training. As part of our broader Advantage AI program, we're also pleased to announce a customer hack day initiative that will take place in September. These hack days are core to our innovative culture that we have as a business and for the first time, customers will submit ideas and work alongside our tech team with the aim of turning customer and industry-focused ideas into prototypes and working solutions in a matter of days. During the quarter, we also launched a new AI-powered vendor campaign summary in our self-serve platform, Ignite, generating key campaign insights into our vendor-ready narrative within Ignite's vendor report. This is supporting agents in the clear communication of their campaign performance while reducing the manual reporting effort that's required. We recently also started a pilot rollout in a new chat capability in Ignite called Campaign Assist, and this is exclusive to Premier Plus feature, and it combines consumer intent and automated evaluation model data. to provide customers with strategic recommendations to boost the performance of a listing. In recent weeks, we launched the AI-powered PropTrack Buyer Impact Model, which provides our customers with clear evidence of a direct link between a property sale and an realestate.com.au campaign. The new probability-based model assessed more than 1.3 million Australian properties sold over a 22-month period and analysed more than 10 billion consumer data points. The data highlights that realestate.com.au attracts and engages the buyer for 9 in 10 homes listed on the platform that go on to sell. The combination of data scale, depth of audience, engagement and the new AI capability underpin the model, and it was independently reviewed and validated by Deloitte. Delivering on our commitment to more choice, flexibility and value for our customers, we've introduced new packaged options and a suite of features as part of the FY27 contract rollout. From July, the Video Discovery Hub will be increasingly valuable for customers of Premier Plus property walkthrough videos set to feature on the prominent carousel. Highlighting the value in video, we know that serious buyers are almost nine times more likely to watch video content than other users, and listings with vertical video generating more views and more inquiries. Our commercial and new home businesses achieved double-digit revenue growth with record penetration of Elite Plus for our commercial customers and a pleasing improvement in the new homes market. Looking at financial services and momentum continues here. Business saw exceptional growth in submission volumes, a strong increase in settlements and an increase in the loan book. showing the strength in the market and the value in our investment in mortgage choice, innovation and brand average submissions per day in February were the highest mortgage choice has ever seen. As we've flagged previously, Housing.com is REA India's strategic priority. The app-first strategy continues to support Housing.com's leadership in app downloads in India, with more than 50% of downloads sitting online. with our platform. As I wrap up, I'd like to share a few comments on market conditions as we look ahead. After an extended period where demand exceeded supply, the Australian property markets become more balanced and we're moving into a period of more normalised levels of buyer demand. The rebalance in the market likely reflects some uncertainty around global events, expected further interest rate rises and potential government tax policy changes. The momentum behind price growth is anticipated to moderate and we may see the time to sell lengthens a little as vendors readjust price expectations to meet buyers. As a business, we're incredibly well positioned in this more balanced market with agents and their vendors seeking to reach the largest and most engaged audience of property seekers and to differentiate their listings. We're focused on continuing to drive innovation, and our teams are embracing the capability and exciting opportunities presented by AI. Coupled with healthy underlying fundamentals supporting the market and strengthening our market position, we're well-placed to deliver further growth for the remainder of FY26. And with that, I'd like to welcome you, Andrew, and hand over to you. Thank you, Cam.

And good morning, everyone. can I first say thank you to you all for the warm welcome you've given me. I'm less than three months into this role, but I can genuinely say I'm excited by the growth pipeline in front of us and by the quality of the team around me. REA has delivered an excellent Q3, driven by double-digit revenue growth across the residential, commercial, new homes and financial services businesses. Excluding the impact of M&A, group revenues for the third quarter increased 11%, to $398 million. Operating expenses increased 5% to $178 million and group EBITDA increased 16% to $220 million. Including the impact of M&A, revenue and EBITDA increased 6% and 11% respectively. Let me now take you through how each of our businesses performed for the quarter, starting with residential. Our residential business delivered its strongest quarter of the fiscal year, with revenue growth of 12%, driven by double-digit yield growth and modest growth in listings. National new buy listings were up 1% for the quarter, with the recent outperformance of Sydney up 4% and Melbourne up 7% continuing. Pleasingly, Q3 buy yield was up 14%. Buy yield was driven by a 7% average Premier Plus price rise, a strong contribution from add-ons mainly from audience maximiser, but also from Lux. An increase in subscription revenues, growth in overall debt and Premier Plus penetration, and finally, geographical mix, which boosted yield by 1% in the quarter. This reflects the comparative strength of the Sydney and Melbourne listings markets. The strong performance in the month of March also resulted in a 2% deferral of revenue to Q4, reflecting higher listings in the latter part of March compared to last year. Our rent business saw continued revenue growth driven by a 6% average price rise and increased debt penetration, which was partly offset by 2% decline in listings. Encouragingly, we also saw double-digit revenue growth for our commercial and new homes businesses. Commercial revenue benefited from an average 7% price rise, increased debt penetration and higher listings. while new homes revenue benefited from a 6% increase in project profile volumes, high yield and high growth in display revenues. Financial services momentum continued during the quarter with double digit revenue growth. Revenue from the mortgages business benefited from settlements growth of 21% and increased productivity across our broker network. Revenue from the prop track data business was driven by growth in customer data contracts, including the agreement we have with key customer Ray White. Moving now to our international businesses. In the US, Move delivered its sixth consecutive quarter of revenue growth, up 10% in Q3. Revenue at Move was driven by higher sales of the premium Real Pro Select offering and revenue growth in new homes, seller and rentals. Staying in North America, iGUIDE, which we consolidated on the 1st of October 2025, generated revenue of $5 million during the quarter. iGUIDE's local currency revenue increased 26% in Q3. Meanwhile, REA India's housing.com saw local currency revenue decline by 3% in the quarter, reflecting continued yield pressure in a competitive market. Turning now to operating expenses. Group call costs increased 1% or by 5% if you strip out the impact of M&A. In Australia, operating expense growth was 9%. COGS were a material driver of this growth, reflecting audience maximiser more than doubling in penetration versus the prior corresponding quarter. Excluding COGS, Australian operating expense growth was 6%. Marketing was the largest driver of cost growth in the quarter. As is often the case, the phasing of our marketing campaigns can result in lumpiness from quarter to quarter. Growth in Q3 fiscal 26 reflected the new Australian open sponsorship and consumer brand campaign, which was not in the prior corresponding period. Favorability in workforce costs offset the investment in technology driven by data, AI and video. Housing.com's operating costs were down 1% on a constant currency basis, reflecting the strategic reset and the simplified structure of that business. Before I turn to the outlook, I just wanted to touch on RA's on-market share buyback program. The program was launched in February, reflecting the confidence we have in the long-term outlook for our business, the strong balance sheet position of the company and our disciplined approach to capital management. So far, we've brought back a little under $76 million of the planned $200 million buyback, at average prices below $160 per share. While we've been in blackout since the 1st of April, we look forward to being back in the market from next week.

Moving now to our fiscal 26 guidance.

We expect buy yield to grow 13% for the full year. Our expectations for listings are unchanged. We're predicting a 1% to 3% decline for fiscal 26. April listings loans were up 19% year-on-year, with Melbourne increasing 20% and Sydney up 25%. This strong April performance partly reflects the easier comps that we will be cycling as we move through Q4 and into Q1 of next year. The Group expects positive operating jaws in fiscal 26 for both Australia and the Group. Our expectations for operating cost growth have improved. with low to mid single digit growth now anticipated for the group down from mid single digits previously. And for Australia, we expect mid to high single digit cost growth down from high single digits previously. Our guidance for India is unchanged and associate contributions are expected to marginally improve from fiscal 25 levels. We are incredibly pleased with performance we've delivered this quarter. and we're excited about the future of our business. As I touched upon at the top of the call, it has been a privilege to join a company in such a strong position with such a high-quality team. As a team, we remain focused on driving consumer engagement, driving increased value to our customers, and driving growth across our portfolio of assets. As CFO, I will ensure we continue to invest to drive that future growth while managing costs and capital prudently. Thank you, operator. We will now take any 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 try your question, please press star 11 again. We ask that you please limit yourselves to two questions. One moment for our first question.

Our first question is going to come from the line of Eric Choi with

Marvin, Joey, your line is open. Please go ahead.

Good morning, everyone. And my pick on you today, Andrew, if that's all right, just for a couple of numerical questions. Just on the first one, I was wondering if we could talk about the FY27 yield and specifically if you could confirm the quantum of the price increase. And also, I'm interested, given Sydney and Melbourne are quite elevated right now, If those geographies were to normalise back to historic levels, theoretically what that geomix drag would be, ultimately I'm just trying to put all those pieces together and I'll make my own guesses on LUX and everything else to try and figure out if you guys can deliver double-digit yield in 27, even if there was a geomix drag.

Thanks, Eric. Thanks for picking on me first. To answer your question on price, our fiscal 27 price increase is approximately 8%, so at that lower end of the 8% to 10% range you've noted in an earlier note. Germ mix is a really tough one, you know as well as me, it's a really tough one to predict. In the last couple of years, we've been a beneficiary of it. It's been plus one this year, about the same last year. Back in fiscal 23, it was negative 5%. And it has been elevated as a result of higher listings in Melbourne and Sydney. We won't get into whether it's going to be a drag on fiscal 27 at this stage because the elevation of Melbourne and Sydney continues as you saw in the annual numbers.

Good one. That's helpful. Just one more convoluted one for you. Sorry, Andrew. If I just take a step back and look at this result, Australia was really good, probably, and obviously your cost carbon is really good, and then India, top line, maybe a little bit softer versus what we were expecting. So we're just trying to piece together the fourth quarter outlook versus third quarter. I think it's still really good for Australia, maybe just dragged down by India. So just on the math, can I just check I'm not missing any of the key swing factors, 4Q versus 3Q? And then there's probably three, so listings growth, I think you're guiding for that to improve from 1% to, say, 3% to 4% based on the midpoint of your guidance. I don't know if you mentioned deferrals, but maybe deferrals were a drag in 3Q, maybe a couple hundred basis points, so that could be an improvement as well. And then maybe the offset is that buy yield stepping down 1% to 2% each point in the fourth quarter. But, like, if you add up those three things, it still suggests residential revenue growth is potentially 4% better in the fourth quarter versus third quarter, and maybe your group revenue growth could be 3 percentage points or more better. But I'm just wondering if I'm missing any key pieces there.

Thanks, Eric. You're really missing anything, and your math is pretty good. If I go backwards up your list, on buy yield, it does step down in the fourth quarter, and that's just a result of us lapping a really successful value and packaging rollout this time last year. So for the benefit of those who don't know, we're in market from about six weeks ago and to the extent people take up the offers at that time, you know, the clock starts ticking earlier than 1 July and we had the benefit last year of audience maximiser which doubled in penetration. We had Lux and we had subscription price increases. So that means it's just a comp issue with that stepping down in the fourth quarter. Deferrals, you're correct on that. It was 2% in the third quarter. That was really driven by, like, a big uptick in listings in the latter part of March. I think probably because of the timing of Easter that brought campaigns forward. We've seen a strong April, and so we'd expect that deferral to be there again in April. And when we think about listings guidance for May or June, it's uncertain. And so I think your math is not... but at the same time, you know, what we're seeing in May is slower than what we saw in April. There's uncertainty around policy changes at a federal government level. There's interest rate uncertainty. And so at this stage, you know, May and June are relatively less certain than obviously what we've delivered to date.

It's helpful. I'll circle back. Thanks very much, Andrew. Thank you. Thanks, Eric.

Thank you. One moment for our next question. And our next question will come from the line of Andrew Rakowski with E&P. Your line is open. Please go ahead.

Morning, Cam. Morning, Andrew.

My first question, I was hoping to drill into the lowered OPEX guidance. Are you able to talk about what the key drivers have been behind that that lower OPEX guidance? I mean, is it efficiencies as a result of the rollout of AI tools internally? I'm very conscious that that's something that a lot of people are focused on right now. And how does that lower OPEX guidance feed into your expectations for OPEX into FY27? And in particular, do you see scope to deliver wider operating draws? And I might wait for the second one after you answer this one.

That's another one for me, Encho. Thank you, mate. As we entered the second half, we felt the market was a little bit more volatile and so we really wanted to control the controllables and the thing that we can control most at that point in the fiscal year is cost and so we just characterized it as a general timing across the business, the sort of things that you can do without much time to go in the fiscal year. I mean, AI is something that we're adopting across, you know, the whole business. The uptake has been really very positive. We are seeing efficiencies, you know, in pockets and, you know, as a collective, we're the beneficiaries of those efficiencies. I mean, the question for us and something as a leadership team Cam and I are thinking about, you know, with our broader ELT is, you know, That benefit gives us flexibility. Do we go faster? Do we drop to the bottom line? At this stage, we're prioritising going faster, putting more product to market and moving more quickly. As that relates to Jaws, it certainly gives us optionality as we go forward. we have to remind ourselves is that there's an investment required to go faster. There's a technology investment. There's a token cost, which, you know, at this stage, we probably don't think we're probably at a run rate cost of tokens. I think they're probably being subsidised. And so we're just careful not to become, you know, too aggressive in chasing efficiency at this point in show.

OK, cool. Thanks, Andrew. And also I've got a yield question on 27. So in addition to that 8% price increase or circa 8% price increase you've just spoken about, what are the key new features that you expect to add to yield growth? I mean, is it primarily the Lux Bundle? You've obviously got some additional video features as well. And what sort of take-up do you need of, let's say, the Lux Bundle? What sort of take-up do you need for it to make a meaningful difference?

Your mail's pretty good, Enjo, so the LUX is really the major thing that will be additive in fiscal 27. I mean, this year we had the beneficiary... We were the beneficiaries of a subscription price increase, and so that's not repeating into fiscal 27. I mean, AMAX will continue to increase in penetration, but, you know, this year we had the benefit... We benefited from it almost doubling or thereabouts. and that's not going to repeat into the next fiscal year.

OK, sorry, maybe if I can follow up with the very last one related to that.

Can you give us any sense for where Lux Penetration is sitting now and where it could get to? I mean, you probably can't provide the specifics, but any sort of very broad figures?

I mean, what I would say, Ian, show is The rollout has gone, you know, very well through the last six or eight weeks. The team, you know, is on track for the task that we set them, which is really pleasing. We've got a really fantastic sales team and they've done a great job in market, you know, educating customers as to the benefits of luck. So we feel good about where it sits, but we're not going to get into, you know, the exact penetration or what our expectation of that penetration is either.

Okay, got it. Thank you. Thank you.

Thank you. And one moment for our next question. Our next question will come from the line of Shihar Singh with Bank of America. Your line is open. Please go ahead.

Hey, Dan. Hey, Andrew. Hi. Sorry. We just lost you there, Suraj. Yeah.

Hey, sorry for that. Apologies. A couple of questions from my side, probably a little bit more strategic and long-term. One, there is a little bit of investor concerns around the rise of portal transactions, given the rise of seller lens. And my question to you is, Are you seeing any unusual increase in off-portal transactions in recent months and how do you think about monetizing more of those in the future? Any plans around that or any commentary would be super useful. Second question is around India given and would love your first thoughts on that business. In a sense that obviously there is a significant value creation opportunity in the long run if the business succeeds. And in that context, in that long-term context, are you okay with the current level of losses around $35, $40 million to achieve that long-term optionality or do you plan for a quicker break even of that business? Thank you.

Thanks, Raj. I'll take both of those if I'm around. So I'll start with the second one first. So I guess with India, we all understand the size of the market and the potential of the TAM that exists in India. I think we're probably not happy with where the business is at in terms of profitability. But it's gone through a hell of a lot of change in the last 12 months or so with new management team, with the exit of PropTiger and Housing Edge. And so there's been quite a bit of a reset inside the business as well. So, look, I mean... The team is doing a good job in terms of thinking about bringing new product to market, whether that be through AI-based conversational search and so on like we have. But this all takes time. So in terms of acceleration of the EBITDA losses and trying to reach profitability quicker, clearly that would be something we'd like to see. But but it's a question of the market's ability for us to move that quickly. And so I think as a business, we're moving as quickly as we possibly can, but it's not always going to go the way we want it to in the timeframe that we want it to go in. The other part of your question was just in relation to what we're seeing with pre-market type activity. And I'd say to you that We're not seeing any activity that's outside of historical norms. And we all know that in markets where there's tighter supply, you tend to see a little bit more activity. And then in markets where there's more supply, you tend to see a little bit less activity. So we're still seeing behaviours within those normal ranges. I guess as far as we go as a business, We're always looking at innovation and ways in which we can meet the expectations of vendors and deliver them the biggest possible audience and generate them the maximum possible outcome along with our customers. So I wouldn't say that we're not thinking about things, but at the moment, behaviours seem to be within the normal realms of activity.

Thank you. That's super clear.

Thank you, and one moment for our next question.

Our next question will come from the line of Siraj Ahmed with Citigroup. Your line is open. Please go ahead.

Morning, Cam. Morning, Andrew. Cam, maybe one for you to start off with. Just in terms of that rollout of conversational search, I would thought it's a bit slower than expected, only 50% of web audience and 10% of iOS. Anything holding you back there? And more importantly, are you seeing different user behaviors? I mean, maybe more research being done through the ARIA portal to see if there's any change in behavior. And then I have a second question, but I'll ask that after. Thanks.

Yeah, no worries. Thanks for the question. Look, we're really happy with the way conversational search is rolling out. we're doing it in a thoughtful manner to ensure that we're maximising the experience of our consumers. I'd say the way we sort of think about search is we're trying to move from utility-based search to more of a companion-based search experience for our consumers and I think what we're seeing as we continue to roll this out and you've got to think we're trying to evolve 30 years of learned search behaviour and this sort of stuff takes time but what we're doing is as we roll out we're looking at the insights and the data that we're generating and clearly we can see better perspectives around intent there's greater connectivity to our financial services products and so on and I guess the insights that we're able to pass on to our customers is enhanced as well through the whole process. So we're doing all of that. At the same time, we're looking at the data that's inside the conversational search and continue to build on that. And what that does ultimately, I think, is it creates different opportunities for us as a business as we go on. So I think, yeah, I'm really excited about it. Are we Are we moving quickly enough? I think we're moving quickly. And certainly, as you can see from our audience and engagement stats, everything's heading very, very nicely in the right direction. But we want to do it, as I said, in a thoughtful way.

So, Cam, just following up. So that's interesting. So you're saying you're actually seeing greater sort of lead potential into mortgages and stuff like that based on the conversation search. Okay, interesting. Second one, just maybe for Andrew, just on Just in terms of the negative one to negative three listing volume for the full year, and you said May has been a bit weaker. I mean, given April is up 19%, I think the negative midpoint, I think May and June must be flat. So, what are you seeing in May that you're a bit concerned about in terms of outlook?

Thanks. I wouldn't characterize it as concern, Siraj. What we saw in March was a pull forward of listings due to Easter. We kind of think April probably benefited from a pull forward of listings due to the broader market volatility. Often uncertainty leads vendors to bring their campaigns forward and get into market sooner due to the uncertainty in the future. What we're seeing in May is it's not at the pace of April. That's for sure. And I think as... As we roll into the back end of May, we'll have a better sense of May. And obviously, you know, June 2, but at this stage, it's sort of too early to be more definitive in our guidance for May and June.

But just think, I mean, it's not down year on year. It's just not as strong as April.

That's exactly right. Oh, well, sorry. And also, we're a week or two... Yeah, I know. We get these details every day, and I love... because I get the new listing numbers, but what I've learned in the short three months I've been here is things do swing very, very quickly. So that's where May sits a week in, but, you know, we'll see where it ends up.

Okay. Thanks.

Thank you. And one moment for our next question. Our next question is going to come from the line of Lucy Hong with UBS. Your line is open. Please go ahead.

Thanks, Karen and Andrew. I've also got two questions. So just to follow up on the conversational search, like, are you able to quantify so far, you know, what is the impact that you're seeing on leads? Like, are you seeing, like, a multiplier effect that you're being able to deliver to vendors at this point or any kind of qualitative assessment on the quality of the leads? And I guess over time, talk about opportunities with conversational search, like, you know, any thoughts on whether monetisation models could change or could be additive over time. And then just my second question is on AI costs. I'm just wondering if you can give us a bit of colour as to what proportion of the cost base is currently constituting. And I think the expectation is that LOM token costs will increase over time. So any thoughts or strategies you're implementing right now to overtake people on that cost pressure? Thank you.

Yeah, thanks. I'm happy to take all three. So, look, in terms of tech costs, I'll start at the bottom. Clearly, there's a reshaping of our cost base over time and tech does become a slightly bigger part of our cost base over time. With tokens, Andrew mentioned tokens being subsidised. I wouldn't say tokens are a material part of our cost base at the moment, but you know, we will manage our token costs over time. So I'm not expecting to see any significant change in the immediate short term there, but it'll just be managed as we continue to become more an AI-prime business and as we continue to change the way in which we're bringing product to market through AI. Around that conversational search, you asked about that and just in terms of monetisation, can we monetise in different ways using conversational search? I think there's early days on that. Ultimately, our ambition as a business is to try and help vendors get the outcomes that they're trying to get and our customers' agents clearly try to get properties to market faster for them and If our search experience through conversational search can help facilitate that, then that's obviously a good thing for REA. And so there's somewhat of a focus around that. In terms of quality of leads, I would say our lead quality is exceptional in any case, and you can see by the numbers in the deck or in the release in the ASX, just the sort of numbers that we're generating. Clearly, though, over time, what we'd love to see is more insight, more intent data that we're getting from search that helps qualify where potential seller leads and buyer leads are in their journey and then that obviously gives us the opportunity to help them with their experience but also support our agents. So I think lead quality is good today. It will get better with conversational search cost around tech, that will continue to reshape and evolve along with the rest of our cost base and so I think we're probably answerable for it.

Can I just have one follow-up on the quality of leads? Do you think agents are sophisticated enough on the buyer lead side to know whether REAs are living improving quality? Because I get feedback we get is agents just want all leads even if they're not high intent, but do you think they're sophisticated enough to understand the difference and then therefore this presents further monetisation opportunities down the track for REA?

Yeah, I don't see leads as a source of monetisation, but in terms of the agent experience and how do we get... better quality leads to agents. I think in terms of the technology that we're looking at at the moment and what's available with artificial intelligence, the ability that we have to pre-qualify buyers using technology before they reach the agent and to provide agents with some insight before they pick up the phone to talk to the potential buyer, I think all those insights are highly valuable and what they do is they mean that the agents can work on other parts of their day that are gonna deliver them consequential benefit. So I think for us, quality of lead is probably in those realms as well, would be how we think about it.

Right, thank you.

Thank you, and one moment for our next question. Our next question is going to come from the line of Bob Chin with JP Morgan. Your line is open. Please go ahead.

Hey, good morning, guys. A couple of questions for me. Just one, you sort of referenced it a little bit earlier. We've got a little bit of uncertainty with the federal budget coming through next week with potential CGT and negative gearing changes. Have you guys modeled anything internally to look at how this might impact listings both on maybe a year-term basis where you see a bit of a pull forward versus maybe a more medium-term basis where you could see maybe a reduction in volumes?

Thanks for the question, Bob. Great question. I think if we knew exactly what the federal government was going to do with both CGT and negative gearing, what was being grandfathered, what wasn't being grandfathered, I think it would give us a better idea. At the moment, I think... It's too early to tell and we just need to see the detail of the federal budget to come down before we can sort of start to show what that looks like post that. But ultimately for us, any change that brings volume forward is not a bad thing, it's a good thing for us but also we're conscious of anything that negatively or positively impacts new supply of property as well. So I think, yeah, like I said, too early to tell but we'll know pretty soon.

Yeah, okay, perfect. And then I think earlier in the call you sort of mentioned pretty good adoption rates of iGUIDE. So can you give us a little bit more in terms of early adoption stats of iGUIDE across Australia and what the opportunity might look like longer term for that business?

Yeah, sure. So, look, as we said, we're very happy with how iGUIDE's going. It's only been in market since March. There's over 100 iGUIDEs that are now in market, working hard and delivering great outcomes to agents and vendors. In terms of the product itself, we're very happy with how the product's performing. The scope of market opportunity is large. There's probably between 1,000 and 2,000 photographers for us to be working with and there's a lot of scope for further growth. I guess it will take some time. We've got a team focused on it. We're doing a lot in terms of client education. and bringing them up to speed. We know that property buyers, as you saw in the release, they love this sort of content and will engage heavily with it. So the more we can get into market and the sooner we can get into market, I think, the better.

Thank you. Anyone for our next question?

Our next question is going to come from the line of Tom Beetlewood-Jardin. Your line is open. Please go ahead.

Thank you, guys. Thanks for the opportunity. Just a couple of questions on yield. The first one is just a quick clarification on the yield to Q4. I mean, obviously, this stepped down, given that TAFA comps well understood, but are you assuming any reversal of the revenue deferrals in your guidance?

Firstly, just a quick one. No, no. Hey, Tom, how are you? Nice to be connected again. No, no, our forecast doesn't forecast any deferral into the fourth quarter. So you will have noticed in your note that's come across the desk, there was a 2% deferral in Q3 that will land into Q4. We're not currently forecasting a further deferral from Q4 into the following fiscal year. Gotcha.

And then just on the next year's yield, probably a follow-up on Eric's question in a way, but can you just give us a feel for what you're seeing from agents on their contracts for next year? Are you seeing any changes in the mix of tiers or add-ons that they're signing up for that can help give us a feel for, I guess, what those factors can add to your yield?

Yeah, it's a fair question. Great question, Tom. At the same time, it's pretty early in the rollout. So we're sort of six or seven weeks into the rollout. We've seen good uptake. We've seen increased penetration of Premier Plus. Lux has done well and so has Audience Maximizer. I think that our customers are really interested and like the video add-ons that have been rolled out at the moment and will kick in from the 1st of July. but it's probably too early to give you much more guidance around, you know, the breakup of the year for fiscal 27. Okay, great.

Thank you very much. Thanks, Tom.

Thank you. And one moment for our next question. And our next question is going to come from the line of Roger Samuel with Jefferies Australia. Your line is open. Please go ahead.

I've got two questions as well. First one, just on your free cash flow, it's only up 2% versus EBITDA, which is up 12%. Is there anything in the quarter that we should be aware of? Maybe some sort of lumpy capex or someone else's tax payments?

Great question, Roger, and I'd like you to pick that up. There's nothing lumpy, nothing to do with CapEx specifically. It's just the timing of working capital movements. So you will have seen that free cash flow has been outpacing EBITDA. It didn't in Q3 due to that working capital movement, but it should well do so for the full year.

Okay, got it. Thanks. Second question, just on iGUIDE, you mentioned that one of the key features in FF27 is video. Just wondering how different is iGUIDE from your competitor products such as Matterport and we understand that you outsource the photographers and will that impact your margin as well going forward?

No, so in terms of function, I mean, they're pretty similar. Technology is probably slightly different, but in terms of function, they're pretty similar. In terms of time to deliver an iGUIDE, from what I hear, is a little bit quicker, but fairly similar. In terms of I mean, clearly our approach to this is to partner with the entire industry and to work with the industry and we know that agents and photographers have a very strong and often long-term partnership and so we want to get the product that I've got into the hands of those that are working for our agents. The way we're approaching it, it's an incremental source of revenue for us. So it's based on a per iGUIDE execution. So therefore, margin impact. It will have a margin impact. It has a labour cost associated with it as well, but it's all upsides.

Got it. Thank you.

Thank you. And one moment for our next question. Our next question comes from the line of Fraser McLeish with MST Marku. Your line is open. Please go ahead.

Great. Thanks. Just a quick one, Cam. I'm slightly related to the last question, I guess. But just is there any sort of substantial changes that you're seeing on the ground from, you know, Domain, CoStar that are worth mentioning? I'm thinking things like big step up in marketing or sales investment or anything like that that's maybe changing the landscape a little bit. Thanks.

No, thanks, Rose. Great question. Look, I mean, the short answer is no. I mean, if you look at our audience engagement data, you can see we're going from record to record. So very happy in terms of our own performance. Marketing-wise, we're continuing to invest heavily in marketing and seeing great outcomes for our investment that we're making there. But overall, I would say haven't seen or noticed any material change in competitive landscape.

Great. Thanks.

Thank you, and one moment for our next question.

And our last question is going to come from the line of Eric Chow with Barn Joey. Your line is open. Please go ahead.

Oh, hey, thanks. Just a quick follow-up, just because people were just asking about the cost. So I was wondering if I could have a second stab at it, and... like you've obviously opened up the Australian jaws to low single digit to mid-single digit now, maybe, in FY26 on kind of mid-single digit to high single digit Aussie cost growth. And then just thinking about that going into next year, like the AU revenue growth is probably unlikely to accelerate just because you're doing 13, 14 by year this year. So to the extent that you kind of want to maintain that level of jaws or even slightly under AU, It sort of suggests mid-single-digit to high-single-digit AU cost growth is a kind of baseline cost growth for FY27. I wonder if that logic is okay.

Eric, I appreciate the question, and thank you. It's probably just a little bit early for us to be guiding on cost growth for fiscal year. What we would say is we feel, you know, very comfortable with the levers we have that, you know, give us flexibility in our cost base, whether that be, you know, our ability to use our offshore centres in Manila and Cyber City, you know, the benefits of AI. That gives us flexibility to manage cost. And there has been a lot of focus on cost on this call, and I guess you would expect that given we lowered cost guidance. But what we want to make sure everyone is really clear on that we'll continue to invest in the business to drive the top block because that's really the most important thing that we can do. And, of course, we'll continue to manage, you know, Jaws in a prudent way.

Sorry to bat you, Andrew. Very helpful.

Thank you. No, no, no. I appreciate it.

And for everyone's benefit, Eric Choi as well because I think you were misintroduced there, mate. Thank you.

Thank you. I would like to now hand the conference back over to Cam McIntyre for closing remarks.

Thank you very much. Thanks, everyone, for joining the call this morning and look forward to catching up with you over the coming days' weeks. Thank you very much.

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