Q4 2022 PropertyGuru Group Ltd Earnings Call
Currently we will be making forward looking statements, including but not limited to statements regarding our future results and expectations for the business.
These results are neither promises nor guarantees and involve risks and uncertainties that may cause actual results to vary materially.
Please refer to our earnings release and SEC filings for more information regarding risk factors forward looking statements are based on current expectations and the company is not obliged to update them, except as required by law Fourthly. This call will also contain non <unk> financial measures for a reconciliation of non <unk> financial measures.
To the most directly comparable Ifr's metrics. Please see our earnings press release Lastly, all dollar references are in Singapore dollars, unless otherwise stated with that let me turn the call over to heart.
Thank you everyone for joining us today for our fourth quarter 2022 earnings Conference call.
2022 was an exciting and historic year for property group as we listed on the New York Stock Exchange in March grew revenues by a robust 35% for the full year and were adjusted EBITDA positive odd.
Hard work by all of our groups as well as an increased product adoption improved pricing and the continued integration of the eye property acquisition, all helped to offset challenging market conditions that said macro and fiscal policy uncertainty continues to test our customers.
Given this reality property group will be there to help them navigate the current market as well as set them up to take advantage when landscapes shifts and pent up demand begins to flow.
We believe that the headwinds are core markets now face are largely temporary and longer term runway and underlying prospects for economic outperformance in southeast Asia have not changed and the international Monetary funds January 2023 World economic outlook Southeast Asian markets are anticipated to grow at four three.
In 2023, even as global growth is projected to decelerate to two 9%.
For Vietnam, the IMF has an even healthier outlook with six 2% growth projected in 2023.
While property market activity was uneven in the fourth quarter property grew still delivered strong results across its markets basis segment.
Led by Singapore's outperformance, where increased adoption of premium products and market pricing spent more than offset higher borrowing costs for property seekers and government implemented cooling measures.
In Malaysia, while higher borrowing costs and uncertainty around the national elections in November impacted sales activity, just like in Singapore property pricing remained resilient.
In addition property group experienced strong operating leverage from the eye property integration.
In Vietnam Q4 saw the continued team of government tightening credit to manage debt levels and the resulting drop in property listings.
Overall, the fourth quarter was a busy one for us as we continue to rollout solutions that make it easier for our customers to help people search find buy and rent properties.
In December we launched property group, a business, giving our enterprise customers a single trusted source for accessing the critical data and tools needed to maximize the significant opportunities presented by the southeast Asia property markets.
Property group of businesses unified offering <unk> customers, our data sense value add foskey and marketing as a service offerings, allowing for a more cohesive customer experience.
Our market intelligence platform data is now available in all of our markets previously it had only been available in Malaysia.
We had many exciting product that launched on a market basis with solid both for paying customers and to drive greater transparency and trust in our high demand, but low trust markets.
Let me start by talking about <unk>, one of our hot new discretionary AD products Turbo allows agents to differentiate themselves and increase the exposure of their listings on top of their basic subscription.
We launched a year ago in late 2021 in Singapore in early 2022 in Malaysia, and we are pleased with agent adoption rate so far with half of all active agents in Singapore and a third of all active agents in Malaysia, having used it.
Thanks for turbo and other new discretionary products like boost and feature agent property Gurus average revenue per agent continues to grow.
In the fourth quarter, we launched promoted listings in Singapore with releases in more markets expected in early 2023 promoted listing is a new performance based dynamic AD product that helps agents signed property seekers, who are looking for similar but not exactly matching properties a win win technology that has both the agent.
And the consumer.
In Malaysia, we reached a milestone in our integration of <unk> property and property normal Asia agents are now able to cross both their listings on either platform using one software interface. So an agent who subscribes to both platforms can now close the listing on one or both platforms seamlessly.
In Vietnam, and Thailand, we launched two new premium products verified listings and verified agents verified listings helped give customers greater confidence in the market and combat the general challenge of surplus sticks.
Clarified agents is a start of us trying to help professionalize the agent market in Thailand and to help property seacoast by agent partners. They can trust.
In Q4, we also inaugurated our first office space in India, India is our technology Center of excellence that supports our product technology capabilities group wide.
Lastly, as we discussed on our prior on installed we're excited about our October acquisition of <unk> and its ability to connect homeowners and tenants with verified home services provide us bringing added value to the current property group customer base.
We see this acquisition is consistent with our new vision statement, which is to help our communities to live work and thrive in Tomorrow's cities.
To wrap things up Singapore continues to be a strong pro forma and in our other markets. We resiliency operated through temporary macro headwinds to deliver growth, while exercising prudent expense management.
We are pleased with this quarter's results and with 2022 overall.
We are well positioned to continue to be the go to technology provider for southeast Asia, and agents developers and property seekers in 2023 and beyond let.
Let me now turn the call over to Joe to review our financial performance.
Thanks, Larry.
Properly curated capsule 2022 with another solid quarter results revenues in the fourth quarter were $40 million up 17% from the same period of 2021.
Adjusted EBITDA in the quarter of $5 million was up <unk> 9 million from the same period in 2021, as we combined revenue growth with appropriate cost management.
For the full year 2022 revenues were $136 million up from $101 million in 2021, and adjusted EBITDA was $14 million of Melas of $10 million in the previous year.
I would point out due to the margin of 11% in 2022, the incremental new revenue or a 2021 and it almost 70% drop through to adjusted EBITDA illustrating the operating leverage we have in our business.
Turning to the quarter in more detail marketplaces revenues as such $8 million in Q4 up 50% year on year, and our adjusted EBITDA margin jumped to 48%, 19% in the fourth quarter of 2021.
In Singapore, our pool of agents grew again this quarter with over 15500 in the fourth quarter, our customer new rate was 79% and our average revenue per agent or ARPA was up 20% from last year.
As a result of both offer an increase in agents, Singapore revenues were up 15% to $19 million in the quarter and adjusted EBITDA was $11 million for 61% margin.
Turning to Malaysia revenues were $8 million up 28% from the prior year quarter and our adjusted EBITDA increased to a positive $3 million from a negative $2 million over that same period.
This illustrates the tremendous leverage from our company integration as a revenue increase in the quarter by the 2 million produced in almost $5 5 million increase in adjusted EBITDA.
Turning to Vietnam revenues were down 7% for the fourth quarter 2021, as the government's efforts to limit the availability of credit and to a 20% drop in the number of listings.
While our business continues to be impacted by government that tends to slow inflation. We are encouraged by increased premium product penetration and listing duration, which both help the average revenue per listing for LPL increase 22%.
In addition to improved operating leverage our adjusted EBITDA margin expanded 190 basis points to 12, 3% from $10 four even as revenues dropped 7%.
Finally, fintech and data services combined revenue was up 70% year on year adjusted EBITDA was a loss of $2 million.
We are excited about the long term opportunity in both businesses.
Moving to the balance sheet, we ended the quarter with $309 million in cash down from last quarter, primarily due to forex changes to our U S dollar deposits.
This level of deployable capital gives us comfort and flexibility to take advantage of acquisition opportunities as they arise.
As we mentioned in our press release, the result of economic uncertainty, especially related to Vietnam, and Malaysia is to take a more cautious view of the market in the near term.
Because of this we are introducing 2023 outlets with a revenue range between 160 and $170 million and an adjusted EBITDA range of 11% to $15 million.
A couple of important data points with respect to adjusted EBITDA.
Firstly, while we are very pleased with the long term opportunity we see in the <unk> acquisition in 2023 integration and scaling efforts will weigh on adjusted EBITDA by $3 million to $4 million.
Secondly, going forward beyond the ongoing cost of being a listed entity will no longer be removed from our calculation of adjusted EBITDA and are anticipated to be between 11 and $12 million in 2023.
Let me finish by underscoring our confidence in our core operations and the opportunities we see both now and challenging on certain conditions and in the future when markets revert to more positive growth trends.
We are excited by our ability to add additional resources through strategic M&A.
Develop new market defining technologies and maximize efficiency through greater internal automation and prudent cost management.
On a personal note I want to thank our customers for their ongoing support and our gurus the huge effort over the past year.
Not just managing through complex changeable market conditions to deliver tremendous results, but doing so with the added level oversight and complexity that comes with being a publicly traded company.
Now I'll turn the call over for questions.
Operator, we're ready for our first question.
Alright, Thank you Joe.
So we're going to take questions now please use the raised hand punched in if you wanted to ask a question and to facilitate the Q&A I will invite you to ask a question on <unk> at that point. Please state your name and your firm name before asking the question. So let's take a second here for them to come we're going to start with.
Fine John .
Okay.
Brian Your line.
Thanks for taking my question, Hey, Joe Hey, Harry and first congrats on a very strong quarter.
And also very healthy Sonic I think Tony 'twenty three outlook.
You mentioned actually here.
Opening remark you know there's some.
Moving parse in regard some of the region.
Right now I'm just wondering what's the current situation you have observed and of course, it's probably hard to predict but how do you expect the margin will most likely shaping up for the rest of the year and also in regards to your guidance what are the puts and takes and you could I think you don't give additional color.
Which nice surprise on the upside or downside.
Thanks for your question, Brian I think let me get started I'll ask Joe to sort of chime in after.
So answering the first part of your question I think our markets are at different stages of openness with regard to the property sector. I think I mentioned that the simple has done very well window.
Transaction volumes are down we see property prices holding very well.
Appreciated significantly through 2022 and even in the end.
<unk> to 'twenty three we are projecting that they will at least hold up pretty well.
We are seeing more and more supply come online. So if you think about it in terms of the dynamics of demand and supply you are seeing extremely high demand and that helps drive that price.
Stability, if you like and even though supply coming online we're still predicting prices holding so that gives you a sense of the size of the demand in Singapore, So I think Singapore, it still looks like a good space, we have a lot of it into the marketplace ARPA average revenue per agent grew very well, so I think that looks very healthy.
When you look at some of the other markets in particular Vietnam.
Policy decision from the government to make sure that the country does not have any of the challenges that other markets.
Like in particular, China have had and so they have they've been very vocal and open about the talk about the fact, they want to make sure developers don't have any defaults.
And that driven consumer household indebtedness levels don't get out of control having.
Having said all of that.
We do remain optimistic that they're beginning some indications at some point.
In each one they will start opening up a little bit.
It is a material driver of the GDP. So we do believe it's more about making sure that the demand and supply are managed rather than try to kill the sector.
Malaysia, we have just finished the Chinese new year, but the market is good our market position, obviously is very strong the election.
And sort of has been put to bed in Q4. So we're looking forward to business, starting up and do really well this year.
And maybe Joe.
Great.
Thanks, Alright, that's very helpful.
Second question is actually regarding your acquisition.
Helper seems like very.
Incremental.
<unk> single Propitious just winter.
You know where the business is right now in terms of financial impact to your top line bottom line for 2023, and where do you expect this potential synergies down the road what does on the revenue side or potentially on the cost side and do you expect any breakeven profitability time line for that business going forward.
Thanks for your question.
In terms of the financials, we've disclosed here.
So that the impact on our adjusted EBITDA for next year for this year.
Just as a point of reference it's rolled up into our.
DSS.
And fintech segments of the web, especially that individually were giving any individual guidance.
What I will say is it is.
As a small startup.
Definitely in investment phase.
Since there are some specific losses as we as we start to integrate that as we start to scale the business.
We're really very excited.
And before we came across the business because they were advertising on our site. So obviously, there's some good sort of high intent traffic that we have converted well for them.
So I think one of the things we're doing is how do we cross with.
The audience that we have to.
To send help up that.
Ultimately, obviously lower cost of marketing and make the business more successful, but also vice versa. It's very useful once somebody has completed a purchase or rental they would often drifted white marsh from a site of any to use. It every day and then engage incent help out and we can refer that traffic back to us, which again also adds to the <unk>.
So there's definitely some very good sort of linkages between those two businesses and we're very excited about the opportunity in future.
And Joe just a follow up there any M&A.
The plan's target.
You guys have in mind for Tony Kenney suite.
Yes, there's nothing to disclose at this moment.
I think one of the good things about getting to the listing prices was that sort of a steady generous if I'm on potential for ourselves and we've definitely been a focus of businesses in the region that are open to a transaction that have approached us.
We've also been proud we've been really investing in M&A team.
And also an integration team as well and that is now fully set up so we've got the right bandwidth internally.
To be able to affect transactions, but one thing we've learned is that.
Chemical draining on an organization too.
To do this kind of M&A work and also to integrate so now we've got these two separate teams, we should be able to <unk>.
Make the transactions and integrate them and keep the core business running well and efficiently. So we were well placed we remain really astute fintech and data in home services, where obviously, we made the <unk> acquisition and developed for operating systems saw our interests areas remain the same.
And we've definitely got a few exciting things that we're looking at of the months.
Understood. Thanks, so much and congrats again I'll go back to queue. Thank you.
Great. Thanks, one.
The next question is going to be Nelson Cheung.
Yeah.
Hi management, Thanks for taking my question and congrats on the very solid quarterly result.
My first question is a follow up question regarding your revenue guidance I, just wonder how management prioritizing strategic resource allocation any different power Gen markets internationally.
Given the ongoing headwinds of Whitman, how should we manage our investment in this market and this year. Thank you.
So maybe I'll get started and again, if I Miss something.
<unk>.
Joe can jump in so I think with regard to our priority market that remains very much a Singapore, Malaysia, Vietnam with regards to our market business segments as I mentioned in my remarks, our Singapore still very strong services investing I mentioned some of the new products we've launched.
Some of them are in only one market and not do a lot across the board.
Since export the listings etcetera. So I think there is going to continue to be.
Good investment of product and technology and monetizing Singapore.
As of Malaysia as well.
Field level, particularly property critical business and some of our enterprise products do very well in Malaysia, and so we're looking for that as that market opens up.
Specific to Vietnam.
We're very bullish on what are the prospects there.
Our agent partners and therefore, the demand on <unk> Dot Caribbean remains very high. So I think that is still very much people doing research getting ready trying to make sure. They understand this the key thing, though is obviously our clarity from the government on the policies around indebtedness we.
We don't expect that appear to know.
In Q1, but we are optimistic.
Hopefully I should say that we've got clarity in Q2 and get started building that out. So I think for Vietnam is going to be a slower it wrong, if I'm being honest.
Youre assessing both looking very strong and our emerging businesses like Fintech data services also coming off a low base, but.
Continue to be bullish.
Okay.
Thank you and the second question is regarding your fin Tech and data San Francisco business seems to be still a very strong growth in fourth quarter can management elaborate more about gross driver on it.
What should we think about monetization prospects going into 2022.
Yes, so I think with Fintech and data services definitely these are younger businesses. We've got a lot of experiments are both of the business model as well as.
When it comes to acquiring customers trying different things and so I wouldn't read too much into quarter over quarter variances.
Definitely some of the.
Slowdowns.
In Q4.
For data centers in particular, Malaysia.
So down significantly because we had a national elections in November .
The entire sector most of the economy actually wasn't really.
Swing and so that isn't entirely surprising data services a lot of the revenue comes from the from that country.
With regards to Fintech.
Again, as I mentioned in our opening remarks.
Rather than the Q&A, the transaction volumes and Singapore are dropped off a little bit or quite a bit through the year.
Interest rates rose and such and so as transaction volumes drop you will see a little bit of a slowdown there, but I think obviously, because we are gaining market share.
They are still.
<unk>.
We took a little growth, perhaps not as fast as we would've liked.
But I would really stress.
<unk> for those two markets. They are we don't have the.
Entire product suite rolled out our Neal, it's not quite mid market business in Singapore, Malaysia and Vietnam.
Our product market fit is extremely good.
The markets other businesses sizes Adjacencies are still innovating and you can expect a little bit of variance.
I see thank you and my last question is regarding.
Cost control and just wonder if management issue.
To elaborate more on your cost optimization strategy this year, which.
Rich.
Cost component.
With greater optimization.
And this year.
Yes. Thank you look I mean, we are we have.
Growth company, and we're still focused on investing in our business.
So I think it's really sort of focus is the most important thing for us.
We've actually been through a process.
Through our planning.
So cycle this year, where we've really sort of optimized our spend when we've looked at where we want to invest hottest we've definitely made some decisions.
Products like that haven't necessarily been the right way forward. So we're really focused ourselves and thats really the key.
So we continue to.
To invest in the business and new products and services things don't stand still.
<unk>.
We intend to service our customers.
And as effectively as we possibly can with those new products and services.
The marketing side.
We definitely look to optimize that strips shops strong.
Such Sci.
Seo positions.
We don't need to spend quite as much in Sweden on SDN as such we've been optimizing on that front and I think more generally on the peoples side, we've been very selective in terms of.
Wave of hiring.
Order to sort of to set us up with the needs of the business.
Looking backwards until at the end of last year I'm really proud of the way the business responded to some of the sort of the.
The revenue challenges that we had you can see from the strong EBITDA results.
So if we can optimize spend really activate efficiently and the back end of the year, which we were very.
Very pleased about and we'll continue that selected process through 2023.
Thank you that's very helpful. Thanks, Henry So I will go back to you. Thank you.
Uh huh.
Okay.
If we have any other questions. Please click the raise and.
Okay. Our next question areas Maximilian go.
Go ahead.
Okay. Thank.
Hi, Joe Hi, how are you.
Congrats on a strong quarter, yes, and just one short question as a follow up where appropriate group or business. So just wanted to ask you.
Do you see any meaningful impact.
Thanks, a segregated business from consumer side as far as some business.
In other words side do you see any meaningful.
Impact from.
Separating the services from our property group from from your main probably grew excitement.
Is there any.
But expectations for you moving forward regarding regarding that site.
<unk>.
No. Thank you for that question when you look at property group a business. It's an overarching brand umbrella that covers a variety of solutions, which I mentioned in opening remarks, so you've got everything from data centers and <unk>, which are all part of our data services unit, but he also have marketing as a service, which is really offered by a market. This isn't it.
The Pie chart is more that we're able to give a call a coherent and a cohesive solution.
Solution to our enterprise clients. So if you are a developer or a bank or an urban Atlanta et cetera, you are able to sort of look at all our solutions in a coherent manner understand what's rightfully all problems have been solid Florida real estate is very powerful because if you look at some of the more developed a real estate markets around the world access to high quality.
Real estate data and the power of our dashboard is sort of predict critical as well as workflow automation software.
<unk> core for the efficiency of areas of value adds to our real estate developers when it comes to how they go about conducting the business. We continue to show a very good.
<unk> from our customers and I think.
We don't see any dissonance and the fact that we have a consumer oriented.
Our marketplace, which is really I don't have been people find their home and gift giving.
Even in a market basis, obviously, we expanded our offerings to also through Fintech allow things like.
Having to finance their own but now increasingly we are helping people also manage the care homes, but other things extend alba, but coming to data services I, probably go for business, it's really around water infrastructure with.
With which our enterprise clients are interacting with the world out there and how can we impact that and I haven't been in the market about 15 16 year, we're pretty confident that we have a good sense of what are the problems faced by some of these enterprise clients.
And we're getting started there, but I think theres no disconnect in terms of the pursuit of divisions between the groups.
Hopefully that answer the question.
Yes, it does.
That's very helpful. Thank you.
Okay.
Any other questions. Please.
The reason.
We'll give it a second to see if there is any others.
Yeah.
Okay, we don't see any other questions. So we'll wrap up the Q&A I'll turn the call back to Hari for any closing remarks.
Thank you all for joining us today.
I'd like to reiterate how pleased we are with our performance in 2022 and look forward to speaking to you again next quarter. Thanks, so much.
Okay.
Alright. Thank you everyone you can all disconnect.