Q3 2023 PropertyGuru Group Ltd Earnings Call

Speaker 1: 23 earnings.

Speaker 1: Currently, all participants are in a listen-only mode. As a reminder, today's program will be recorded. If anyone objects, please dis...

Currently all participants are in a listen only mode. As a reminder, today's program will be recorded if anyone objects. You. Please disconnect now now let me introduce Nat Otis VP of Investor Relations. Mr. <unk>. Please go ahead.

Speaker 1: Now let me introduce Nat Otis, VP of Investor Relations. Mr. Otis, please...

Good morning, and good evening welcome to property Girl Group third quarter 2023 earnings conference call on.

Speaker 2: Good morning and good evening. Welcome to Property Guru Group, third quarter 2023 earnings.

Speaker 2: On the call today are Hari Krishnan, CEO and Managing Director.

On the call today are Hari Krishna CEO, and managing director and Joe Dish CFO before we get started a few reminders firstly our results are available in the earnings release. It can be found in the investors section of our website. Secondly, today's webcast is being recorded replay along with a transcript will also be available in the investors section of our website.

Speaker 2: Before we get started, a few reminders. Firstly, our results are available in the earnings release can be found in the investor section of our website.

Speaker 2: Secondly, today's webcast is being recorded. Replay along with a transcript will also be available in the investors section of our webcast.

Speaker 2: Thirdly, we'll be making forward-looking statements including, but not limited to, statements regarding our future results and expectations.

Thirdly, we will be making forward looking statements, including but not limited to statements regarding our future results and expectations for the business. These statements 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.

Speaker 2: These statements are neither promises nor guarantees and involve risk and uncertainties that may cause actual results to vary.

Speaker 2: Please refer to our earnings release and SEC filings for more information regarding risk.

Our risk factors.

Speaker 2: forward-looking statements are based on current expectations and the company is not obliged to update them except as required by

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 ifr S financial measures for a reconciliation of non ifr S financial measures to the most directly comparable ifr S metric. Please see our earnings press release.

Speaker 2: Fourthly, this call will also contain non-IFRS financial measures. For a reconciliation of non-IFRS financial measures to the most directly comparable IFRS metric, please see our earnings sheet.

Speaker 2: Lastly, all dollar references are in Singapore dollars unless otherwise stated.

Lastly, all dollar references are in Singapore dollars, unless otherwise stated with that let me turn the call over to Hari.

Speaker 3: Thank you for joining us today for our third quarter 2023 earnings conference call.

Thank you for joining us today for our third quarter 2023 earnings Conference call property Guru has demonstrated resiliency with another period of double digit revenue growth in the second consecutive quarter of robust double digit adjusted EBITDA margins.

Speaker 3: Property Guru has demonstrated resiliency with another period of double-digit revenue growth and the second consecutive quarter of robust, double-digit adjusted EBITDA margins.

Speaker 3: This growth is a testament to our focused investments and effective execution against a backdrop of weakened consumer confidence and a slow property market in Vietnam and uncertain economic conditions in Malaysia. We recognize the challenges and uncertainties in predicting market trends. Our focus, however, remains on creating value for our consumers and customers and helping them make confident property decisions.

This growth is a testament to our focused investments and effective execution against the backdrop of weakened consumer confidence and a slow property market in Vietnam and uncertain economic conditions in Malaysia.

We recognize the challenges and uncertainties in predicting market trends I'll focus however remains on creating value for our consumers and customers and helping them make confident property decisions.

Speaker 3: We will continue to execute our operating strategy, delivering results that underscore the value of our business to all stakeholders, and positioning ourselves to capitalize when markets stabilize.

We will continue to execute our operating strategy delivering results that underscore the value of our business to all stakeholders and positioning ourselves to capitalize when markets stabilize.

Let me walk you through some of the highlights from this quarter, starting with our business in Singapore.

Speaker 3: In Singapore, we are seeing steady adoption of our new products, even as the demand for property moderates due to rising interest rates and cost-of-living challenges, which are impacting the speed of decision-making for buyers.

In Singapore, we are seeing steady adoption of our new products, even as the demand for property moderates due to rising interest rates and cost of living challenges, which are impacting the speed of decision making for buyers.

Speaker 3: Our Singapore Demand Index showed a 14% decrease from the second quarter while both supply and transaction activities remained consistent with the previous quarter.

Our Singapore demand index showed a 14% decrease from the second quarter, while both supply and transaction activities remained consistent with the previous quarter.

Speaker 3: Continuing a trend observed over the past several quarters, construction and real estate services were the top-performing subsectors in the Singapore economy in the third quarter, according to preliminary GDP results released by the Ministry of Trade and Industry last month.

Continuing the trend observed over the past several quarters construction and real estate services were the top performing subsectors in the Singapore economy in the third quarter. According to preliminary GDP results released by the Ministry of trade and industry last month.

Speaker 3: The sustained level of construction activity is a positive indicator for the coming quarters.

This sustained level of construction activity is a positive indicator for the coming quarters.

Speaker 3: Finally, it is important to highlight that despite various cooling measures implemented by the government, the Singaporean property market has maintained its stability.

Finally, it is important to highlight that despite various cooling measures implemented by the government. The Singaporean property market has maintained its stability.

Speaker 3: In Malaysia, the quarter experienced a slowdown in consumer demand primarily due to higher interest rates and a lack of healthy wage inflation.

In Malaysia, the quarter experienced a slowdown in consumer demand, primarily due to higher interest rates and a lack of healthy wage inflation. The Malaysian sales demand index witnessed a 6% decline compared to the previous quarter attributed to the highest interest rates since 2020 interestingly our property.

Speaker 3: The Malaysian Sales Demand Index witnessed a 6% decline compared to the previous quarter, attributed to the highest interest rates since 2020. Interestingly, our Property Price Index still saw a 1.5% increase from the second quarter, even as more supply entered the market. These factors collectively led to a reduction in consumer buying.

The price index still saw a 1.5% increase from the second quarter, even as more supply in the market. These factors collectively led to a reduction in consumer buying.

Speaker 3: Additionally, Malaysia faced significant challenges from local currency depreciation. In response, the government is proactively exploring strategies to stimulate GDP growth to the 4% to 5% range in 2024 and mitigate further currency volatility.

Additionally, Malaysia faced significant challenges from local currency depreciation.

In response, the government is proactively exploring strategies to stimulate GDP growth to the 4% to 5% range in 2024 and mitigate further currency volatility.

Speaker 3: Despite these challenges, our optimism about Malaysia's long-term prospects remains strong due to the success of both the Property Guru and iProperty brands and the fundamental desire for housing in the country. We will continue to build out our suite of market-defining offerings and navigate near-term market issues.

Despite these challenges our optimism about Malaysia, <unk> long term prospects remained strong due to the success of both the property group and I property brands and the fundamental desire for housing in the country.

We will continue to build out our suite of market defining offerings and navigate near term market issues.

Speaker 3: In Vietnam, the near-term outlook remains unchanged, as the government's efforts to boost consumer confidence and stimulate the market are showing limited immediate impact.

In Vietnam, the near term outlook remains unchanged as the government's efforts to boost consumer confidence and stimulate the market are showing limited immediate impact.

Speaker 3: However, last week, the Vietnamese government highlighted the importance of lowering interest rates in 2024 to enhance credit accessibility for individuals and businesses alike.

However, last week, the Vietnamese government highlighted the importance of lowering interest rates in 2024 to enhance credit accessibility for individuals and businesses alike.

Speaker 3: Additionally, the government is committed to focus resources to achieve GDP growth of 6 to 6.5% in 2024 while also keeping inflation in check. Early signs are encouraging, as GDP growth did accelerate from Q2 to Q3 2023.

Additionally, the government is committed to focus resources to achieve GDP growth of 6% to 6.5% into any 24, while also keeping inflation in check early signs are encouraging as GDP growth did accelerate from Q2 to Q3 2023.

Speaker 3: At Property Guru, we are actively adapting our strategy for the Vietnam market in anticipation of these evolving conditions. Our recent initiatives include the appointment of a new country manager, restructuring the team, and implementation of a sales transformation strategy.

At property group, we are actively adapting our strategy for the Vietnam market in anticipation of these evolving conditions. Our recent initiatives include the appointment of a new country manager restructuring the team and implementation of our sales transformation strategy.

Speaker 3: This strategy is designed to enhance customer service and drive revenue growth through innovative measures like dynamic pricing and reduced product discounting.

This strategy is designed to enhance customer service and drive revenue growth through innovative measures like dynamic pricing and reduced product discounting.

Speaker 3: Lastly, it's important to recognize Vietnam's enduring long-term prospects. These include a youthful demographic, increasing urbanization, significant investments in infrastructure, and an economy poised to benefit from the country's stature as an emerging alternative base for global manufacturing output.

Lastly, it's important to recognize Vietnam's enduring long term prospects. These include a youthful demographic increasing urbanization significant investments in infrastructure and an economy poised to benefit from the country's stature as an emerging alternative base for global manufacturing output.

Speaker 3: We navigate the changing economic landscape of Southeast Asia while continuously innovating and leveraging technology. This approach is designed to create value for our stakeholders and enhance operational efficiency.

We navigate the changing economic landscape of South East Asia, while continuously innovating and leveraging technology. This approach is designed to create value for our stakeholders and enhance operational efficiency.

Speaker 3: Central to our strategy is the use of generative AI and machine learning.

Central to our strategy is the use of generative AI and machine learning.

Speaker 3: Internally, the adoption of GitHub Copilot by our engineering team has been remarkable, with over 95% of engineers at PropertyGuru actively utilizing Copilot to increase individual productivity and enhance code writing.

Internally the adoption of Github copilot by our engineering team has been remarkable with over 95% of engineers that property group actively utilizing copilot to increase individual productivity and enhanced code writing.

Speaker 3: Last quarter, we introduced GuruPix, a personalized feed of property listings that employs machine learning to constantly improve its algorithms. This quarter, we saw early benefits as consumer click-through rates significantly increased following further refinement of the algorithm relevancy.

Last quarter, we introduced <unk>, a personalized feed of property listings that employs machine learning to constantly improve its algorithms. This quarter. We saw early benefits as consumer clickthrough rates significantly increased following further refinement of the algorithm relevancy.

Speaker 3: Furthermore, Machine Learning powers PropertyGuru's Listing Description Generator, aiding agents in creating more effective property listings.

Furthermore, machine learning powers property Gurus listing description generator aiding agents and creating more effective property listings.

Speaker 3: We have also made advancements in lead management, introduced in Singapore last quarter. By the end of the third quarter, over 60% of active Singapore agents had engaged with lead management, with nearly half utilising it for direct lead contact.

We have also made advancements in lead management introduced in Singapore last quarter by the end of the third quarter over 60% of active Singapore agents had engaged with lead management with nearly half utilizing it for direct lead contact.

Moving to Fintech in July we launched our in principal approval or IPA service. We are now the first in the market to provide a solution that helps users with their digital mortgage pre approval process.

Speaker 3: Moving to FinTech, in July , we launched our In-Principle Approval, or IPA, service. We are now the first in the market to provide a solution that helps users with their digital mortgage pre-approval process.

Speaker 3: This self-serve product is bank-agnostic and enables consumers to directly select their preferred bank, fill an application form online, and upload the necessary forms and documents.

This self serve product is bank agnostic and enables consumers to directly select their preferred bank fill an application form online and upload the necessary forms and documents.

Speaker 3: Once finished, we complete a simple check before sending them to the financial institution.

Once finished we complete a simple check before sending them to the financial institution.

Speaker 3: This is the type of smart digital experience that people are asking for, and as a testament to its value, since its launch, the IPA option has been chosen by 80% of online consumers on our mortgage platform, Property Guru Finance.

This is the type of smart digital experience that people are asking for and is a testament to its value since its launch the IPA option has been chosen by 18% of online consumers on our mortgage platform property go to finance.

Speaker 3: In other exciting developments, our data and software solutions business has made significant strides.

In other exciting developments, our data and software solutions business has made significant strides in.

Speaker 3: In September , we rolled out five modules in our Agent CRM system, AgentNet, that combine transaction information and proprietary supply and demand data from data sets.

In September we rolled out five modules in our agents' CRM system agent net that combined transaction information and proprietary supply and demand data from data sets.

Speaker 3: The modules are available to all Singaporean Property Agents as a part of their subscriptions and will help strengthen our agents' market intelligence capabilities, as well as provide an additional upsell opportunity for Property Guru.

The modules are available to all Singaporean property agents as a part of their subscriptions and will help strengthen our agents market intelligence capabilities as well as provide an additional upsell opportunity for property group.

Speaker 3: Also in DataSense this quarter, we launched the Foreign Demand Analytics module. This tool provides customers with detailed insights into property demand trends by country of origin. In effect, it helps agents more efficiently and effectively service foreign buyers, while also giving our developer, institutional investor, and governmental customers a window into key marketplace trends.

Also in data center this quarter, we launched the foreign demand analytics module. This tool provides customers with detailed insights into property demand trends by country of origin in effect. It helps agents more efficiently and effectively so this foreign buyers, while also giving our developer institutional.

<unk> and governmental customers a window into key marketplace trends.

Speaker 3: This quarter marked significant progress for our group, showcasing solid strides in various business segments, product launches and adoption, along with an increase in operating leverage and solid revenue growth.

This quarter marked significant progress for our group showcasing solid strides in various business segments product launches and adoption along with an increase in operating leverage and solid revenue growth.

Speaker 3: While we face challenges in Vietnam and Malaysia, the overall performance this quarter has been encouraging, fueling our optimism for the future.

While we faced challenges in Vietnam, and Malaysia. The overall performance this quarter has been encouraging fueling our optimism for the future.

Speaker 3: Let me conclude by emphasizing our pride in resiliently navigating through variable market conditions. We are well positioned in what is expected to be one of the fastest growing regions over the next decade and beyond.

Let me conclude by emphasizing our pride in resiliency navigating through variable market conditions, we are well positioned in what is expected to be one of the fastest growing regions over the next decade and beyond.

Speaker 3: We continue to believe in the fundamental opportunities in our core markets and are committed to future growth and profitability anchored around our vision to power communities to live, work and thrive in tomorrow's cities. I will now hand the call over to Joe.

We continue to believe in the fundamental opportunities in our core markets and are committed to future growth and profitability anchored around our vision to power communities to live work and thrive in tomorrow cities.

I will now hand, the call over to Joe to walk you through our financials.

Speaker 4: Thanks, Harry. We are pleased with the results this quarter as Property Guru revenue grew 13% to $39 million despite challenging conditions in a number of our core markets.

Thanks, sorry.

Plays of the results this quarter as property grew revenue grew 13% to $39 million despite challenging conditions in a number of our core markets.

Speaker 4: In addition to double-digit revenue growth and double-digit adjusted EBITDA margin, we were net income positive in the quarter as well as net cash flow positive year-to-date.

In addition to double digit revenue growth and double digit adjusted EBITA margin, we were net income positive in the quarter.

As well as net cash flow positive year to date.

Speaker 4: excluding Vietnam, which continues to face macro and consumer confidence headwinds, revenue is up a solid 23% from the third quarter of last year.

Excluding Vietnam.

Which continues to face macro and consumer confidence headwinds revenue was up a solid 23% from the third quarter of last year.

Speaker 4: While the top line was clearly a positive for us again this quarter, our leveraging of technology and automation, as well as active cost management, continues to deliver outstanding results as we look to consistently grow Adjusted EBITDA.

While the top line that was clearly a positive for US again this quarter, our leveraging of technology and automation as well as active cost management continues to deliver outstanding results as we look to consistently grow adjusted EBITDA.

Speaker 4: Our adjusted EBITDA grew to $5 million from $2 million in the prior year quarter, with our margin more than doubling from 6% to 13%.

Our adjusted EBITDA grew to $5 million from 2 million in the prior year quarter with a margin more than doubling from 6% to 13%.

Speaker 4: We are steadfast in our approach to profitable growth while navigating market uncertainty and will focus our investments and hire selectively with an eye to both current conditions and future opportunities.

We are steadfast in our approach to profitable growth, while navigating market uncertainty and will focus our investments and high selectively with an eye to both current conditions and feature opportunity.

Speaker 4: As a result, while expenses were up only 4% in the quarter, our overall revenue grew 13%, resulting in an incremental revenue-to-adjusted EBITDA conversion rate of almost 70%.

As a result, while expenses were up only 4% in the quarter. Our opening revenue grew 13%, resulting in an incremental revenue to adjusted EBITDA conversion rate of almost 70%.

Speaker 4: I would also add that we had positive adjusted EBITDA in each one of our marketplaces this quarter, including Vietnam.

I would also add that we had positive adjusted EBITDA in each one of our marketplaces this quarter, including Vietnam.

Speaker 4: underscoring the value we see in effectively balancing costs with revenue overall and in each of our core markets.

Underscoring the value, we see in effectively balancing costs with revenue overall and in each of our core markets.

Speaker 4: In Singapore, revenue was $23 million, up 24% from the prior year quarter and our adjusted EBITDA increased to $17 million for a 77% margin.

And Singapore revenue was $23 million up 24% from the prior year quarter, and our adjusted EBITDA increase of $17 million for 77% margin.

Speaker 4: Our agent base grew again this quarter and we now have over 16,300 agents with a customer renewal rate of 85%.

Our agent base grew again this quarter and we now have over 16300 agents with a customer renewal rate of 85%.

Speaker 4: Our quarterly average revenue per agent, or ARPA, was up 23% from the prior year quarter to almost $1,300.

Our quarterly average revenue per agent or ARPA was up 23% from the prior year quarter to almost $1300.

Speaker 4: In addition, reflecting the increased value our customers place on our products and services, as well as greater adoption rates of new offerings, we had a record amount of prime credits purchased in the quarter. Prime credits are the most expensive credits we offer.

In addition, reflecting the increased value of our customers, placing our products and services as well as greater adoption rates of new offerings, we had a record amount of prime credits purchased in the quarter.

Prime credits the most expensive credits we offer.

Speaker 4: Also in the third quarter, we have the largest percentage of agents in our two highest subscription categories since our listing.

Also in the third quarter, we had the largest percentage of agents and our two higher subscription categories since our listing.

Speaker 4: The increased product adoption and good expense management helped us deliver another quarter of outstanding growth and adjusted EBITDA margin strength.

The increased product adoption and good expense management helped us deliver another quarter of outstanding growth and adjusted EBITDA margin strength.

Speaker 4: In Malaysia, revenue was $7 million, up 5% from the prior year quarter, and our adjusted EBITDA increased from $4 million to $4 million, from $3 million, despite macro headwinds and currency fluctuations.

Malaysia revenue was $7 million up 5% from the prior year quarter and our adjusted EBITDA increased from 4 million to 4 million from 3 million, despite macro headwinds and currency fluctuations.

Speaker 4: The Malaysian Ringgit depreciated 7% year on year, so on a local currency basis our revenue is actually up 11% in the quarter.

The Malaysian ringgit depreciated, 7% year on year, so on a local currency basis, our revenue was actually up 11% in the quarter.

Speaker 4: As Hari mentioned, we anticipate proactive measures by the government which will help alleviate these forex issues as we move into 2024.

As Hari mentioned, we anticipate proactive measures by the government, which will help alleviate these forex issues as we move into 2024.

Speaker 4: The adjusted EBITDA margin grew to 55% this quarter from 49% in the third quarter of 2022 as we continue to focus on improving adjusted EBITDA even as we navigate market and currency headwinds.

The adjusted EBITDA margin grew to 55% this quarter from 49% in the third quarter of 2022, as we continue to focus on improving adjusted EBITDA, even as we navigate market and currency headwinds.

Speaker 4: Consumer sentiment remains depressed in Vietnam, following government anti-corruption activity and tightened credit to combat inflation, with revenue down 33% from the third quarter of 2022.

Consumer sentiment remains depressed in Vietnam, following government anti corruption activity and tightened credit to combat inflation with revenue down 33% from the third quarter of 2022.

Speaker 4: Listing activity is the main driver, with the number of listings down 7% from the second quarter and 41% from the prior year quarter.

Listing activity is the main driver with a number of listings down 7% from the second quarter and 41% from the prior year quarter.

Speaker 4: 16% year-on-year increase in our average revenue per listing, or ARPL, helped to partially offset the reduction in listings.

A 16% year on year increase in our average revenue per listing awful helped to partially offset the reduction in listings.

Speaker 4: Adjusted EBITDA was slightly positive in the quarter giving us a 6% adjusted EBITDA margin.

Adjusted EBITDA was slightly positive in the quarter, giving us a 6% adjusted EBITDA margin.

Speaker 4: Finally, FinTech and data services combined revenue was up 23% year-on-year and adjusted EBITDA was a loss of $2 million.

Finally, fintech and data services combined revenue was up 23% year on year and adjusted EBITDA was a loss of six is loss of $2 million.

Speaker 4: These businesses are areas of sustained investment for us as we build out a suite of innovative, data-driven products to help companies and individuals alike make confident, property-related decisions while also making the mortgage application and financing process much more consumer-friendly.

These businesses are areas of sustained investment for us as we build out a suite of innovative data driven products to help companies and individuals alike make confident property related decisions, while also making the mortgage application and financing process much more consumer friendly.

Speaker 4: We continue to be at the forefront of bringing market-changing data and financial solutions to Southeast Asia and understand their future value in further transforming this region once macroeconomic headwinds subside.

We.

To be at the forefront of bringing market changing data and financial solutions to southeast Asia and understand their future value and further transforming this region once macro economic headwinds subside.

Speaker 4: On the balance sheet, we ended the quarter with £317 million in cash and a net cash flow positive for the first nine months of 2023.

On the balance sheet, we ended the quarter with $317 million in cash and a net cash flow positive for the first nine months of 2023.

Speaker 4: We are revising our full year 2023 revenue outlook to between $148 and $152 million, taking into account a slow recovery in Vietnam for the remainder of 2023 and macro uncertainty in Malaysia.

We are revising our full year 2023 revenue outlook to between 148 and $152 million taking into account a slow recovery in Vietnam for the remainder of 2023 and macro uncertainty in Malaysia.

Speaker 4: However, we are maintaining our full-year 2023 adjusted EBITDA outlook of between $11 and $15 million, as our cost control efforts continue to be very effective.

However, we are maintaining our full year 2023, adjusted EBITDA outlook of between 11 and $15 million as our cost control efforts continue to be very effective.

Speaker 4: we remain positive on our core Southeast Asian marketplaces and the prospects for near-term recovery in both Vietnam and Malaysia as well as long-term property ownership demographics in Southeast Asia.

We remain positive on our core southeast Asian marketplaces, and the prospects for near term recovery in both Vietnam, and Malaysia, as well as long term property ownership demographics in southeast Asia.

Speaker 4: In conclusion, despite challenging market conditions, we are pleased with our ability to deliver another quarter of double-digit growth and double-digit adjusted EBITDA margins.

In conclusion, despite challenging market conditions, we are pleased with our ability to deliver another quarter of double digit growth and double digit adjusted EBITDA margin.

Speaker 4: Our focused investments and targeted cost control efforts continue to yield measurable results.

Our focused investments in targeted cost control efforts continue to yield measurable results.

Speaker 4: Longer term, we understand the importance of continuing to create innovative technology for property seekers and businesses, while leveraging automation, machine learning and prudent expense management to deliver these market-changing products with consistent growth and sustained improvement in adjusted EBITDA margins.

Longer term, we understand the importance of continuing to create innovative technology for property seekers and businesses, while leveraging automation machine learning and prudent expense management to deliver these market changing products with consistent growth and sustained improvement in adjusted EBITDA margin.

Speaker 4: I would like to thank all our gurus for their hard work and commitment to Property Guru and thank our customers for their ongoing support.

I would like to thank all augurs for their hard work and commitment of property group and thank our customers for their ongoing support.

Speaker 4: I will now turn the call over for questions. Operator, we're ready for our first question.

I'll now turn the call over for questions operator, we're ready for our first question.

Okay. Thanks, Joe.

Speaker 1: Thanks, Joe. To facilitate the Q&A session, please use the Raise Hand function in Zoom, and then we'll call on each questioner and give you a chance to talk. If you can just say your name and the firm that you're with, that would be helpful. So please do that. Our first question is going to be from Nick Jones with JMP Securities. Nick, go ahead.

To facilitate the Q&A session. Please use the raise hand function in zoom and then we'll call on each questioner and give you a chance to talk if you can just say your name and the firm that you are with that would be helpful. So.

<unk> do that.

Our first question is going to be from Nick Jones with JMP Securities. Nick go ahead.

Great. Thanks for taking the questions.

Speaker 5: Um, maybe to start, you know, with the updated top line guidance, um, how should we think about the persistence of some of these, persistence of some of these industry or macro trends as we look into next year? Um, we're kind of seeing, I guess, expecting kind of a big decel in year-over-year growth. Um, I guess, how does that inform as to what the growth might look like next year? And then I have a follow-up on, uh, on cost.

Maybe to start.

Data topline guidance.

How should we think about the persistence persistent that some of these industry or macro trends as we look into next year.

We're casting I guess expecting kind of a big D cell and your growth.

I guess, how does that inform as to what the growth might look like next year and then I have a follow up on <unk>.

<unk>.

Speaker 3: Thanks, Nick. Listen, I think, you know, if I take each of our four markets in turn...

Thanks, Nick.

Listen I think even if I take each of our core markets in turn I think the Singapore market. In fact, we know the Singapore market continues to perform well more and more supply is coming online I referenced the growth in the construction and real estate services sectors. We're seeing the number of rental listings increase by as much as 11% quarter over quarter in Q3, So that's it.

Speaker 3: I think the Singapore market, in fact, we know the Singapore market continues to perform well. More and more supplies coming online. I referenced the growth in the construction and real estate services sectors.

Speaker 3: We're seeing the number of rental listings increase by as much as 11% quarter over quarter in Q3, so that's a good indication of a good amount of supply continuing to come online. Transactions have moderated, but keep in mind they've moderated from a frothy high, which was very much driven by a supply constraint, if you recall. So I'd say overall, the Singapore market continues to look healthy. Decision times for consumers are...

Good indication of the good a good amount of supply continuing to come online.

Transactions have moderated, but keep in mind, they've moderated from a frothy high which was very much demand driven by a supply constraint. If you recall, so I'd say overall.

Singapore market continues to look healthy.

Decision times for consumers.

Speaker 3: A little longer, given economic conditions, that's understandable, but that's obviously good for a marketplace as people spend more time there doing their research, agents need to compete more and such. So I think in the short term, no concerns, and actually even in the medium term, no concerns for Singapore.

A little longer given economic conditions is understandable, but that.

That's obviously good for our marketplace as people spend more time, they're doing their research agency to compete more and such so I think in the short term no concerns that I could even in the medium term no concerns for for Singapore.

Speaker 3: In Malaysia, as I mentioned, there's a bit of a disconnect happening there, where you're seeing more supply come online, but a lot of the supply that's coming online is new projects, and as a result, the asking price is said to be pretty high. So they've already booked in the cost of the land, they're trying to market up.

In Malaysia, as I mentioned, there's a bit of a disconnect happening there where youre seeing more supply come online, but a lot of the supply that's coming online in the new projects and as a result, the asking prices tend to be pretty high but they've already booked in the cost of the land it on the market up.

Speaker 3: But in reality, though, demand is dropping because affordability is challenged by the lack of wage inflation and, you know, price inflation, things like that. So I think there is a little bit of a short to medium-term challenge in Malaysia. We will continue to navigate that, and we're obviously calibrating our investments accordingly. But obviously, market share is still very strong with both property, Guru Nai property, you know, very high conviction in that market.

But in reality, though demand is dropping because of affordability is challenged by the lack of wage inflation.

This inflation thing that so I think there is a little bit of a short to medium term challenge in Malaysia, and we will.

Could you navigate that and we obviously calibrating our investments accordingly, but obviously market share is still very strong with both property grew and I property.

Very high conviction in that market.

And then Vietnam.

Speaker 3: As both Joe and I referenced, you know, it continues to be slow recovery in terms of consumer expectations. That's reflected in the outlook, and I'll let Joe sort of talk to that in a second. But I think what you are seeing is, when you look at GDP growth itself, it improved from about, you know, a little over 4 percent in Q2 to a little over 5 percent in Q3. The government's official line is somewhere between 6 to 6.5 percent growth next year. That'll make it one of the fastest-growing economies in the world. So I think, you know, that is driven by the creation of jobs, urbanization, all of that. And so, going back to the central thesis, they're going to have to fix that thing. They're talking about interest rate cuts to increase affordability and such. But it's clearly not going to happen this year, where we're projecting it's going to happen a little later into 2024.

Both Joe and I referenced it continues to be slow recovery in terms of consumer expectations. That's reflected in the outlook and I'll, let Joel talk to that in a second but I think what you are seeing is we look at GDP growth that says it improved from about a little over 4% in Q2, a little over 5% in Q3, the government's official line of somewhere between six to six.

5% growth next year that'll make it one of the fastest growing economies in the world.

So I think.

That is driven by the creation of jobs urbanization, all of all of that and so going back to the central thesis Theyre going to have to fix that thing, they're talking with interest rate cuts to two to increase affordability and such so but it's clearly not going to happen. This year, where we're projecting it's going to happen a little later into 'twenty 'twenty, four but maybe I'll kick it to Joe to see if there are certain parts of it.

Speaker 3: But maybe I'll kick it to Joe to see if there are certain parts of that question I didn't answer.

That question I didn't answer yes.

Speaker 4: Yeah, thanks, Ari. I mean, I think, you know, just to look at revenue, I think, you know, broadly, we're pretty bullish about next year. You know, I think we're going to see

Yeah. Thanks, I mean, I think just the revenue I think broadly we're pretty bullish about next year.

I think we're going to see that's how he mentioned sort of market recovery, where we've had some challenges and then continuing good performance, where we've had some some pretty solid performance. This year. So we're feeling very positive I think on the on the cost side. This this quarter and if that sort of this year. So far has seen really good conversion from incremental revenue.

Speaker 4: sorry mentioned sort of market recovery where we've had some challenges and then continuing good performance where we've had some some pretty solid performance this year so we're feeling very positive you know I think on the on the cost side you know this this quarter and in fact sort of this year so far has seen really good conversion from incremental revenue into EBITDA which I think is excellent business has reacted well so slightly more challenging environment

Into EBITDA, which I think is excellent businesses reacted wells is slightly more challenging environment.

Speaker 4: There's been focus on investment, selective hiring has been our motto and we've done a very good job and into next year we would expect to see those margins grow again overall.

There's been a focus of investment selective hirings, the spinoffs of motto and we've done a very good job and into next year, we would expect to see those margins grow again overall.

Speaker 4: However, we will continue to invest in the early stage businesses, in data, in fintech, etc. So, I think, you know, continued investment there, we'll also focus on Thailand, but overall you'll see, you know, improving leverage from the business in total and improving markets.

However, we will continue to invest in the in the early stage businesses and data and Fintech etcetera. So I think continued investment there was also a focus on Thailand, but overall, you'll see improving leverage from the business in total and improving margins.

Speaker 5: Great. And maybe to follow up on the cost side, you know, it's evidenced in the guide, you know, you've been able to kind of preserve profitability to the extent that the macro industry conditions.

Great and then maybe to follow up on the cost side ever.

Evidenced in the in the guide you've been able to kind of preserve profitability.

To the extent the macro and industry conditions, maybe worse and philosophically how are you thinking about investments maybe in generative AI and machine learning, which is a very hot topic today.

Speaker 5: maybe worsen philosophically, how are you thinking about investments, maybe in generative AI and machine learning, which is a very hot topic today, particularly kind of within the prop tech universe? You know, how are you kind of philosophically think about preserving margins and making these types of investments to build your kind of competitive moat in the markets you're in?

Particularly kind of within the project universe.

Are you kind of philosophically thinking about preserving margins in making these types of investments to build your kind of competitive moat in the markets you're in.

Speaker 3: I think it's a great question, Nick. The fact of the matter is we are going to continue investing in generative AI and machine learning. Both in consumer products, as I referenced, 95 percent of our engineers are using GitHub Copilot, using improving code quality, using improving product performance, improving engineering team productivity. So there's a financial element to it, of course, as well. But I think fundamentally, though, we are in markets which are in high growth. This is an economic cycle that we're going through. This is not the first cycle that we have gone through. This company and this business is familiar with knowing how to navigate these.

I think it's a great question, Nick I did the fact that Matt is we are going to continue investing in generative AI and machine learning the burden because your product as I referenced in a 95% of engineers are using get up copilot, using improving code quality using improving product performance improving engineering team productivity. So theres, a financial element to it of course as well.

But I think fundamentally though we are in markets, which are in high growth.

It is an economic cycle that we're going through this is not the first cycle that we have gone through some of this company and this business is familiar with knowing how to navigate. These so I think we will calibrate it based on that so to your point if it were to get significantly worse for some reason for some reason that we aren't seeing right. Now then we would calibrate the investments accordingly, but I think in those sectors.

Speaker 3: So I think we will calibrate it based on that. So to your point, if it were to get significantly worse for some reason that we aren't seeing right now, then we would calibrate investments accordingly. But I think in those sectors.

Speaker 3: Some of those investments take a longer time to see the benefit, and so we're not going to throttle investments in things like generative AI and machine learning.

Some of those investments take a longer time to see the benefit and so we're not going to throttle investments in things like generative AI and machine learning.

Thanks, Harry Thanks, Joe.

I gotcha.

Speaker 1: Okay, our next question is going to come from Nelson Chung with Citi.

Okay. Our next question is going to come from Nelson Cheung with Citi.

Nelson go ahead.

Speaker 6: Hi Harry, hi Joseph, thanks for taking my questions and congrats on a solid quarter. So my first question is regarding the industry recovery into next year. So we just discussed different industry overhangs and some signs of recovery and I just wonder when would management expect to see these signs into next year? Is it coming early in first half or it will be likely take more time for the industry to digest those sites in later part of the year? Thank you.

Hi, Harry Hi, Joe Thanks for taking my questions and congrats on the solid quarter. So my first question is regarding the industry recovery next year. So we just it's just different industry overheads and some signs of recovery and I just wonder what management expects to see into next year is it too early.

In the first half or it will be likely.

Take more time for the industry to digest.

In later part of the year. Thank you.

Speaker 3: Thanks for the question, Azhar. I think the real market that we're all looking at...

Thanks for the question is I think the the real market that we're all looking at perhaps the central one you are referencing is Vietnam and I think in Vietnam, We are talking closer to the middle of the yard and into the second half of the overall, we anticipate a full recovery in our trend line up.

And we.

We hope to see it sooner, but frankly.

What we've seen through 2023 is we do expect that it will take a little longer for that confidence to come back it's encouraging to hear the government talk about dropping interest rates further it's great to see actual GDP growth accelerate already in Q3, So that's very encouraging and it's very much a online sort of inline with what they are projecting for 2024, So that's very encouraging.

Speaker 3: the actual GDP growth accelerate already in Q3. So that's very encouraging and it's very much online, sorry, in line with what they're projecting for 2024.

I think when it comes to Malaysia.

Supply coming online is encouraging but there is a price disconnection between the asking price and the willingness to pay for consumers. So I think that needs to be bridged.

Speaker 3: And that is a little bit harder to call, to be honest. You know, it's a market that's healthy, it's not fundamentally broken, but there is a disconnection between supply and demand pricing for now. And as I referenced, Singapore continues to be very healthy going into 2024. There is a slowdown in transactions, speed as well as transaction volume, that's evident. But you are seeing more rental listings coming online, more supply, more construction. So overall, when you look at the group overall,

And that is a little harder to call to be honest.

It's a market that's healthy I thought.

Fundamentally broken, but there is a disconnection between supply and demand pricing for now and as I referenced Singapore continues to be very healthy going into 'twenty. Joining for there is a slowdown in transactions. Our speed is a restaurant that can volume is evident but you are seeing more rental listings coming online more supply more construction. So overall when you look at the group overall.

Listen it is going to be the world is going through an economic slowdown. So we are also subject to that.

We do believe southeast Asia being the younger economies one of the highest growing regions in the world It should recover faster.

We're calibrating our investments accordingly, but by having these strong controls on the cost measures. We are confident that we can increase investment as we see some of those green shoots come in so you know pretty high conviction that we can drive profitability in the short to medium term and then.

Turning to growth with profitability as the economy recovers.

Speaker 4: Sorry, just to add, I think just on the Vietnam side, obviously our business model is different there.

And sorry, just to add I think it was just on the Vietnam side, obviously your business model is different there.

Speaker 4: Historically, what we've seen is when things have bounced back, because there's no subscriptions, you do see a bounce back in activity and therefore revenue quite quickly as well. We saw that during COVID, where the number of listings between August in 2021 and December really sort of uplifted by about four times, and that obviously directly impacted revenue and we saw a big bounce back.

So historically, what we've seen is when things have bounced back you've seen sort of it because there's no subscriptions you do see a bounce back in activity and therefore revenue quite quickly as well. So we sold that during Covid, where you know the number of listings sort of between August and in 2021 and December.

Speaker 4: You've seen sort of because there's no subscriptions, you do see a bounce back in activity and therefore revenue quite quickly as well. So we saw that during COVID where, you know, the number of listings sort of between August in 2021 and December really sort of uplifted by about four times. And that obviously directly impacted revenue. We saw a big bounce back. So so I think, you know, it's always challenging in Vietnam because the business model, when there's a downturn, is impacted, unlike the other markets where there is subscriptions. But I think once that.

December really setup lifted by about four times and that obviously directly impacted revenue we saw a big bounce back. So so I think it's always challenging in Vietnam. The business model when there's a downturn is impacted unlike the other markets, where there's been a subscriptions, but I think once that Taras point once it does turn in this and we start to get some confidence back end.

Speaker 4: So I think, you know, it's always challenging in Vietnam because the business model, when there's a downturn, is impacted, unlike the other markets where there is subscriptions. But I think once that, to Hari's point, once it does turn and we start to get some confidence back in, you'll see revenue bounce back quickly also.

You'll see revenue bounce back quickly also.

Speaker 6: Thank you. That's very helpful. And then my second question is regarding the competitive landscape. I just want to, in addition to our leading market position in the Southeast Asian market, just wondering if you see any potential threats from the new market entrance, especially some new nice style platform trying to penetrate into the Southeast Asian market. So, any potential change in the competitive landscape that you are going to see into next year? Thank you.

Thank you that's very helpful. And then my second question is regarding the competitive landscape just limited.

In addition to our.

Leading market position in the southeast Asia market, just wondering if you see any like potential threats from the new market entrants, especially.

A new lifestyle.

That's what I'm trying to penetrate into the southeast Asian market.

Any potential change in the competitive landscape.

Into next year. Thank you.

Speaker 3: Listen, I think the honest truth is we've been around for about 16 years and every year there are new companies that enter the property sector and there are some unfortunately who shut down.

Yeah listen I think the honest truth is we've been around for about 16 years and every year. There are new companies that enter the property sector and there are some unfortunately, who shut down.

Speaker 3: The pace of new entrants has slowed down given economic conditions.

The pace of new entrants has slowed down given economic conditions.

Et cetera, and I think also it's harder to secure financing in the venture space. So I think there has been a little bit of a slowdown in the short term, we do anticipate that as the economy recovers more enter into a car more innovative business models. We continue to attract them to see if there are interesting opportunities. There as you might recall, we saw an interesting startup in an adjacency.

Speaker 3: financing in the venture space, so I think there has been a little bit of a slowdown in the short term. We do anticipate that as the economy recovers, more entrants will come, more innovative business models. We continue to track them to see if there's interesting opportunities there. As you might recall, we saw an interesting startup in an adjacency that was doing work in home services in SendHelper. And after partnering with them for a number of years, we obviously decided to acquire that business. So I think we continue to track some of these to see what's happening. But in terms of direct threats to our core marketplace businesses, right now we don't see anything.

There is doing a walk in home services and sand Alba and after partnering with them for a number of years, we obviously decided to acquire that business. So I think we continue to track some of these to see what's happening, but at another direct threat to our core marketplace businesses right now, we don't see anything but our strong investments in generative AI in particular and in the data business are at <unk>.

Speaker 3: threats to our core marketplace businesses. Right now, we don't see anything, but our strong investments in generative AI in particular, and in the data business are indications of us going deeper into the sector, deeper into our relationship with consumers and with customers, to ensure that as generative AI becomes sort of consistent with the experience that consumers have when it comes to discovery of everything, our property guru would have made commensurate investments and we'd be ready for that next wave of growth as well.

Occasions of us going deeper into the sector deeper into it.

In our relationship with consumers and with customers to ensure that as generative AI becomes sort of a consistent with the experience that consumers have when it comes to discovery of everything property grew at a mid commensurate investments that we'd be ready for that next wave of growth as well. So short term I'm not seeing any specific brands are names that are big threat, but.

Speaker 3: So, short term, not seeing any specific brands or names that are a big threat, but fully anticipate that they will continue to be interesting and innovative companies that enter the space.

<unk> fully anticipate that there'll be continued there will continue to be interesting and innovative companies that enter the space.

Speaker 6: Thank you. And then my last last question is regarding the cash position. So with our rich cash position and positive cash flow generating ability, can management share your view on use of cash into next year in terms of capital allocation, shareholder return, and also investment?

Thank you and then my last question is regarding the cash position so with.

Rich cash position and positive cash flow generating ability.

Can management share your view on use of cash into next year in terms of capital allocation shareholder return and also investment.

Speaker 4: Sure, thanks for the question. As you're aware, entering towards more positive cash flows, the funds we have is there for M&A, which is the store we set out when we listed the business and raised the money.

Sure Yeah. Thanks for the question.

As youre aware entering towards most most of the positive cash flows.

Funds, we have his death M&A.

Which is what we thought the store we set out when we when we listed the business and raise the money.

Speaker 4: You know, I think, you know, we've built a very strong corp dev team. We've done a lot of work looking at potential acquisitions. Our focus is kind of where we play at the moment. So data, fintech, home services are probably the three sort of focus areas. I think the challenge we found is finding sort of more, I guess, developed businesses within the core markets we operate in. Our, you know, our preference is to.

I think we've built a very strong corp. Dev team have done a lot of work looking at potential acquisitions are all focus is kind of where we play at the moment. So data Fintech home services for the three sort of focus areas I think the challenge. We've found this finding sort of more I guess.

That business has been the core markets we operate in.

Our preference is to to purchase larger businesses that are pervasive easy to transactional for greater returns and we've really found a quite challenging to find those non core markets. So we are broadening our our search is as we've said before and looking more widely across the region and in those areas and the like.

Speaker 4: purchase larger businesses that are probably easier to transact and offer greater returns. And we've really found it quite challenging to find those in our core markets. So we are broadening our search, as we've said before, and looking more widely across the region in those areas and the like. It's been interesting, and I think we've found a number of interesting opportunities, and we'll obviously report back to the market should any of those proceed. I would also add...

It's been interesting and I think we found a number of interesting opportunities and we'll obviously report back to the market should any of those proceed.

I would also add that pricing has been challenging.

Speaker 4: Pricing has been challenging, you know, people in the private markets are still sort of perhaps behind the public markets in terms of the valuation sort of changes.

People in the private markets are still sort of perhaps behind the public markets in terms of the valuation sort of changes, but that's certainly sort of moderating now and are starting to see some more alignment, which obviously makes it much easier to.

Speaker 4: But that's certainly sort of moderating now and we're starting to see some more alignment, which obviously makes it much easier to sort of perform a transaction.

To sort of perform a transaction.

Okay. Thanks, Harry Joe I'll go back in queue. Thank you.

Yes.

Speaker 1: Okay, if we have any other questions, please use the raise hand function, and we'll call on you.

Okay.

If we have any other questions. Please use the raise hand function.

And we'll call on you.

Speaker 1: There's also a Q&A box, if anyone wanted to type in any questions, we can do that.

There's also a Q&A box if anyone wanted to type in any questions. We can do that as well.

Speaker 1: Okay, seeing no more questions, we'll hand it back to Hari to finish.

Okay seeing no more questions, we'll hand, it back to Ed Hardy to finish.

Okay.

Speaker 3: I'd like to thank everyone for joining us for this conference call, and we look forward to speaking to you again soon in another quarter. Thank you so much.

This I would like to thank everyone for joining us for this conference call and we look forward to speaking to you again soon and another quarter. Thank you so much bye bye.

Yeah.