The Domain Holdings Australia Ltd (ASX: DHG) share price is up 2.2% in early morning trade following the release of its full year FY 2020 results.
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A challenging year for Domain
Domain recorded total underlying revenues of $261.6 million in FY 2020. This was a sharp 9.1% fall on a like-for-like base, taking into account various adjustments. The real estate media and technology services provider found the second half of the financial year particularly challenging due to the coronavirus pandemic.
Full year earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 17.4% to $84.4 million, while EBIT declined more significantly by 32.7% to $43.3 million.
Domain did, however, manage to reduce its like-for-like annual expenses by 5%. This achievement was partly due to a strategy to reduce overall costs that has been in place for several years now.
By the end of June 2020, Domain also managed to achieve a net debt of $105.8 million. This was a significant reduction from Domain's net debt of $147.9 million last year.
Decline in core digital revenues
Core digital revenues declined by 6.4% during FY 2020 for Domain, while core digital EBITDA fell 6.6%.
Within this division, residential revenues declined by 6.7% during FY 2020 and 4% on a like-for-like basis. Meanwhile, residential subscription revenue dropped 15% compared to FY 2019.
However, the residential division achieved solid annual growth across a range of metrics. This includes a 14% increase in unique digital audience, as well as a strong 43% increase in app launches during the first six months of 2020.
Domain CEO Jason Pellegrino said: "In our residential business, the number of paid depth contracts increased in all states, underpinning record depth penetration. The introduction of our flexible pricing model and continued implementation of targeted market-by-market strategies, supported a 6% increase in controllable yield, with further gains from favourable market mix."
The media, developers and commercial division saw a sharp 8.6% decline in revenues during FY 2020.
Mr Pellegrino said: "Media continued to see the impact of its new operating model during the first quarter. Broad weakness in the advertising market was exacerbated by COVID-19 in H2, with reduced spending in key advertising categories. Despite lower revenue, the new operating model is delivering an improved margin."
However, it was the print division that took the biggest hit for Domain. Print revenues declined by 41% and print EBITDA was down a massive 56%.
Market outlook for the Domain share price
On a positive note, Domain noted that during the month of July it had witnessed strong year-on-year growth in both Sydney and Melbourne. However, the outlook for the full year FY 2021 remains uncertain. Melbourne's stage 4 lockdown in particular is likely to have a negative impact on full year results.
Domain did not declare a dividend in light of market uncertainty in FY 2021.
