REA Group Limited (REA) Earnings Call Transcript & Summary

Thank you all for standing by, and welcome to the REA Group Limited Full Year Results for 2022. [Operator Instructions] Please be advised that today's conference is being recorded. And I'd now like to hand the conference over to your first speaker, Alice Bennett, Executive Manager of Investor Relations. Thank you. Please go ahead.

Good morning, and welcome, everybody. My name is Alice Bennett, Executive Manager of Investor Relations, and I'd like to thank you for joining REA Group's 2022 Full Year Results Presentation. Before we commence, I'd like to acknowledge the traditional owners of the land on which we are hosting our meeting in Melbourne, the Wurundjeri people of the Kulin Nation, and pay our respects to their elders past, present and emerging. Today, you'll hear from REA's CEO, Owen Wilson; and Janelle Hopkins, REA's CFO. Owen will talk to our overarching financial performance and strategic highlights for the year. He'll then hand over to Janelle to talk to our financial results in more depth. Following this, then we'll be happy to take your questions. So with that, I will pass over to Owen to get us started.

Thanks, Alice. I'd like to welcome everyone this morning and also acknowledge the traditional owners of the land on which we are meeting and pay my respects to their elders past, present and emerging. REA has delivered an exceptional FY '22 performance. This very pleasing result was driven by our outstanding Australian Residential business with record uptake of our premium listing products. The strength of these products and the market's clear recognition of the value they deliver enabled us to fully capitalize on the healthy listings environment. We also delivered excellent growth in our property data, Financial Services and Indian businesses. Looking at our results from core operations. Revenue was $1.17 billion, an increase of 26%. EBITDA after share of associates was $674 million, an increase of 19%. And NPAT was $408 million, an increase of 25%. The Board has determined a record final dividend of $0.89 per share fully franked. This takes full year dividends to $1.64 per share, an increase of 25%. Along with our strong financial result, we achieved a number of key milestones, as outlined on this slide. Our personalized experiences and focus on driving membership delivered increased consumer engagement and continued substantial growth in seller leads. In March, we relaunched property.com.au with aspirations to build Australia's leading property research destination. We achieved record depth and Premiere penetration, reflecting the superior value in our customer offering. Add-on products also achieved record uptake. And key milestones were reached in our strategic investments with growth in scale and product enhancements in Financial Services, India and Southeast Asia. These highlights will be covered in more detail in the coming slides. REA's growth is underpinned by our clear strategy. Our purpose is to change the way the world experiences property. We took a deep dive into our strategy at our recent Investor Day, and you remember that we had 3 core objectives: continuing to deliver Australia's largest, most engaged consumer audience and driving the most leads and the best leads to our customers; providing our customers with superior value across property advertising, our agent marketplace and agency services; and becoming Australia's leading property data, valuations and insights provider. We are very focused on our strategic priorities, which are outlined on this slide. We have an excellent platform for growth. I'll share the highlights for the year from each of these 5 key areas in the remainder of the presentation. Turning to our audience highlights. Our audience is the air we breathe. The millions of Australians visiting realestate.com.au each month power our marketplace and drive the value we deliver to our customers. We are Australia's #1 address in property and have expanded our audience leadership position, enhancing the powerful lens we have on the property market. We had an average of 12.7 million people visit our site each month with over half of this audience using our site exclusively. Our app held its position as Australia's #1 property app with an average of 59 million launches each month, up 7% year-on-year. Moving to consumer highlights on Slide 9. realestate.com.au is the lifelong property companion for Australians, adding value and efficiency throughout their property journey. Our goal is to convert Australia's largest audience of property seekers into realestate.com.au members, and we accelerated the growth of this cohort during the year. We enhanced our membership offering with exclusive content and experiences such as our coming soon feature, while our personalized homepage delivered a 25% year-on-year increase in monthly active members. Our property owner experience leverages consumer behavior data, property supply data, content and financial calculators to assist owners in making decisions related to their property. Consumers recognize the value of our property owner dashboard with visits up almost 200% year-on-year. We know members are 3x more likely to act, resulting in the best quality and highest quantity of leads for our customers and our financial services business. In FY '22, we delivered a pleasing 54% increase in seller leads and 32% increase in finance leads. realestate.com.au is the #1 destination for renters in Australia, as outlined on Slide 10. Our strategy is centered around making renting simpler and more efficient. Rental applications play a key role in the rent journey, and we have significantly improved this experience. In June, we retired our previous application platform and replaced it with the enhanced realestate.com.au rental applications. This offers renters a simplified process, more privacy and help streamline property manager workflows. As part of the new platform -- a key part of this platform is the integrated realestate.com.au renter profiles. We know renters are facing market challenges when securing a home, and this feature enables efficient and secure applications for multiple properties. Three renter profiles are created every minute, demonstrating the high value -- high level of trust consumers have in our platform. Momentum behind our tenant verification service, Tenant Check, continued into Q4 with a 66% year-on-year increase in the number of renters purchasing this service. Tenant Check is automatically attached to rent -- realestate.com.au rental applications, which not only optimizes the process for renters, but provides property managers with efficiency gains. Our goal is to remain Australia's first choice for digital property advertising solutions while helping our customers grow their businesses. We describe our customer strategy as the AAA strategy. In March, we launched Premiere Plus, our most comprehensive advertising product package for the residential market. The customer response and uptake has been outstanding, surpassing our expectations. This package is designed to meet the needs of our customers in each phase of the property advertising process, including new premarket and postmarket features. Our Agency Marketplace connects prospective sellers and landlords to our customers. Visits to Agency Marketplace increased 13% year-on-year. And as I mentioned previously, we had impressive growth in the volume of seller leads delivered to our customers. At the heart of our agency services strategy is our customer platform, Ignite. Feature enhancements such as the inclusion of rental applications resulted in strong growth in active users. Usage of our Connect offering, which is designed to help streamline customer workflows, increased significantly in the second half of the year. Turning to data, which underpins REA's business. As we outlined at our Investor Day, we believe PropTrack can become Australia's #1 property data business, and we've made excellent progress towards this goal. Our unique data and insights drives the value in our consumer products and experiences. The size of our audience gives us the most comprehensive data-driven view of the Australian property market, and our exclusive content helps keep this audience engaged. Visits to PropTrack insights on realestate.com.au increased 210% year-on-year in Q4. We also made significant progress towards our goal to have Australia's most accurate property valuation model. In June, we released AVM 3.0, which leverages more data sources than ever before and uses machine learning technology to value more properties at a high level of accuracy. The value of our AVM has enabled us to expand relationships with major banks as we accelerate the digital transformation of the mortgage valuation process. This has resulted in strong revenue growth for our data business. Turning to Financial Services. Record results were achieved in FY '22 with submissions up 13% year-on-year and settlements up 28% year-on-year. This growth was driven by broker recruitment, productivity improvements and market conditions. 154 new brokers joined Mortgage Choice in FY '22, taking our network above 1,000 brokers for the first time. Integration is well progressed and is on track for completion in Q3 this year. An exciting milestone was the launch of our refreshed Mortgage Choice brand, supported by a national media campaign highlighting the message, you're never a loan. We also established a new direct-to-lender digital lending partnership with ubank and further leveraged Simpology capability to deliver an enhanced home loan comparison experience. Moving to our global businesses. In FY '22, REA India secured and maintained its position as the #1 property portal in the country with the flagship site Housing.com achieving record audience levels. The site achieved 14.2 million average monthly visits, an increase of 50% year-on-year, and a new record was reached in May with 16.7 million visits. The growth was driven by a strong focus on SEO, targeted marketing and an improved mobile experience. The result of Housing.com's effective marketing campaign saw Housing.com make great progress in spontaneous brand awareness. REA India also realized a number of other key highlights, including expansion into more Tier 2 cities, the launch of commercial listings and the extension of the Housing Edge platform with new product offerings. REA has a 17.5% interest in Southeast Asian-based PropertyGuru, which holds market leadership in Singapore, Vietnam, Malaysia and Thailand. As we've mentioned previously, PropertyGuru has surpassed a significant milestone to commence trading on the New York Stock Exchange in March. The business achieved 42% growth in marketplaces revenue in the March quarter, driven by improved yield and higher utilization of premium products, along with the inclusion of REA's former assets in Malaysia and Thailand. Pleasingly, PG also reaffirmed revenue growth guidance of 44% for the current calendar year. In North America, REA has a 20% interest in Move, Inc., which operates realtor.com. Move delivered solid revenue growth during the year by focusing on yield enhancement and beginning to diversify revenue streams such as seller, rentals and new homes. This result was despite very strong prior year comparables and an increasingly challenging macroeconomic environment. Alongside our growth agenda is our commitment to a sustainable future and driving positive change. REA continued to progress our environmental, social and governance goals during the year. We strengthened our commitment to environmental issues with renewed carbon neutral certification and reduced our energy consumption with the installation of solar panels at our headquarters in Richmond. The talent market remains competitive. Our focus on making REA a great and inclusive place to work resulted in our organization being named an Inclusive Employer by the Diversity Council of Australia and being certified a Great Place to Work. Before I hand over to Janelle, I'd like to make some comments on current market conditions. The Australian property market remains healthy, supported by some strong underlying fundamentals. While economic conditions have changed, some significant positives remain in place, including record low unemployment, high levels of household savings and increasing immigration. We do expect that as interest rates continue to rise, property prices will continue to moderate. But it's important to look at these price movements in the context of the very strong property price increases in recent years. If we have a 5% fall in house prices from here, it would only take us back to August last year. A 10% drop will be back to May last year. Rental vacancies are very low, and rents are increasing at double-digit levels in many markets. This will inevitably attract more investors to the market. The demand for property remains healthy. In July, we saw our highest audience levels since March this year, and we delivered almost 2 million buyer inquiries to our customers. Yes, there are a few buyers in this time last year, but it's our view that the supply-demand imbalance that existed last year needed correction. It's important to note, REA does not monetize house prices. And as I've said before, the logic of buying the full suite of our Premiere products makes greater sense in softer markets. REA is strongly positioned in this market for continued growth, backed by our unrivaled audience and a product pipeline that is going to deliver exceptional value to our customers and consumers in FY '23 and beyond. I'll now hand over to Janelle to talk through our financials in more detail.

Thanks, Owen, and good morning, everyone. REA has delivered an exceptional result for the year. From our core operations, revenue increased 26% year-on-year to $1.17 billion. Operating expenses increased 34% to $499 million. EBITDA, including the results from our associates, was $674 million, up 19%. And the group delivered NPAT from core operations of $408 million, up 25%. As we did at the half, we've provided both group core results in the ASX release for the year and growth rates excluding the REA India and Mortgage Choice acquisitions to give visibility of like-for-like performance. Excluding the impact of acquisitions, group revenue increased 18%. Costs increased 11%. And EBITDA, including associates, increased 20%. The group results from core operations differ from reported statutory results with a number of one-off items excluded. On Slide 20, we provide a summary of the reconciliation between the core and statutory results. Turning to our Australian Residential business and trends in the market. Residential revenues increased by an impressive 24% with strong year-on-year growth in buyer revenues tempered with modest growth for rent. Buyer revenue benefited from an increase in national listings, strong growth in depth, an 8% price rise and continued growth in our add-on products, particularly Audience Maximiser. In the charts on the right-hand side, we have set out the quarterly changes in new buy and rent listing volumes. National new buy listings increased 11% year-on-year in FY '22 with Sydney up 8% and Melbourne increasing 8%. It's fair to say that the 2% growth in the fourth quarter was stronger than expected, given the timing of public holidays in April and uncertainty with the federal election in May. The chart showing rent listings highlight that this market remains challenged with listings down 10% for the year. The rental market continues to be impacted by a severe shortage of stock due to a high level of investment sales over the past 2 years and escalating demand as cities rebound from COVID-19 and overseas migration returns. Rent revenue increased due to the 6% price rise and higher depth penetration. However, this was largely offset by the decline in rental listings. As we provide each reporting period, the following slide shows both the penetration and mix of depth listings in the Residential business and the success of our premium listings product. There is no scale on this graph, but the relativities between the categories are to scale. Our depth and Premiere penetration continued to improve across the year with record penetration across all states. The first half benefited from the record sign-up to the current 2-year contract, and the second half saw continued growth in depth penetration and customers upgrading to Premiere Plus, which we have started to monetize in FY '23. As we highlighted at our recent Investor Day, the group will continue to target double-digit buy yield growth throughout the cycle. And in FY '22, the combination of record depth and an 8% average price rise delivered 14% growth in buy yield. Turning to Commercial and Developer. Revenue for the year increased by 3% with strong growth in Commercial, partly offset by lower Developer revenues. Commercial revenues increased due to a 1 July price rise with strong growth in depth penetration, and we saw continued positive momentum in Commercial sales listings as well as a return of lease listing volumes in the second half. The Developer business has been challenged. As you can see on the chart, project commencements were down throughout the year. Melbourne and Sydney lockdowns impacted the first quarter. And combined with rising input costs and supply chain issues, this has resulted in developers less willing to take new projects to market. Media, Data & Other revenue grew 9%. We saw strong growth in data, which increased 28% as PropTrack benefited from new contracts and increased valuation volumes. Media revenue was up with Developer display, the largest component, flat while programmatic revenue grew. And other revenues, which is largely flatmates.com.au, declined marginally. Financial Services operating revenue increased by 12% to $79 million on a pro forma basis, assuming we own the Mortgage Choice in the prior period. Revenues have benefited from a 28% increase in settlements driven by continued growth in our broker network, increased productivity and a strong housing market. This has been partly offset by higher broker commission payments, which have increased as our brokers have written more business. As we flagged at the third quarter results, we have reviewed our trail book valuation as part of our year-end process. This has seen a reduction in the asset valuation as we updated key assumptions based on recent market activity. Key drivers for the change included higher mortgage runoff rates as more people held excess cash and offset accounts or have accelerated their mortgage repayments. In addition, broker payout rates are expected to remain high as a result of higher broker productivity and the stronger settlements in the current market. This valuation adjustment has reduced Financial Services core net revenue by $13 million to $66 million. As outlined at our recent Investor Day, our focus continues to be on scaling the broker network through continued recruitment, increasing market share through incentivizing productive brokers and building our digital mortgage offering. The FY '22 result reflects this investment as well as the integration of the Mortgage Choice and Smartline business. REA India has delivered an impressive performance for the year with pro forma revenue growth of 92% to $54 million. As the chart on the left-hand side shows, revenue was driven by growth in Housing.com's property advertising business, which benefited from strong customer growth. Revenue growth was also driven by our adjacency products on the Housing Edge platform, Rent Pay, in particular. These products come with associated COGS such as payment gateway costs, resulting them -- in them being lower margin but importantly, supporting cross-sell and customer retention. As we've flagged previously, REA India has continued to invest for future growth, which has resulted in a core EBITDA loss of $35 million for the year. Operating costs were up 56% year-on-year on a pro forma basis, which reflects higher head count to deliver strategic initiatives and remuneration uplift as India is experiencing even tougher labor market competition than Australia, increased brand spend to support audience awareness and increased COGS in line with strong growth in adjacency revenues. Throughout the year, we increased our shareholding from 60.8% to 73.3% at 30 June as we elected to fund 100% of the business investment via equity injection with News Corp holding the minority interest. Moving to our strategic investments. Total associate contributions from core operations were $3 million in FY '22, down from $9 million in the prior year. This includes our investments in Move, PropertyGuru, Simpology, realtor and CampaignAgent. Move's equity accounted contribution for the year declined by $2 million to $14 million. Move delivered 11% revenue growth driven by the traditional lead generation product and the referral model with overall lead volumes down 23%. Move saw higher employee and marketing costs as the business continued to reinvest to drive their core businesses and expand into adjacencies. For more information on Move, please refer to the News Corp results release. In Southeast Asia, PropertyGuru contributed an equity accounted loss of $6 million to core group EBITDA. As Owen mentioned, PropertyGuru listed on the New York Stock Exchange in March 2022. And as part of that process, REA Group contributed USD 52 million to the PIPE capital raising associated with the listing. As a result, our shareholding is now 17.5%. PropertyGuru is expected to report its half 1 result on the New York Stock Exchange in late August. On the next slide is our core operating jaws. Our jaws remained open for the year, excluding acquisitions. As you can see from the chart on the left-hand side, the FY '21 and FY '22 jaws were wider than the 1% to 3% range we have typically seen in the past, reflecting reduced costs in the face of COVID uncertainty. The 11% core operating cost growth, which excludes acquisitions, is reflective of a number of key factors. In the prior period, we had lower-than-typical spend, particularly in the first half as we slowed investment in new initiatives and deferred pay rises due to COVID uncertainties. In the current period, the main driver was higher employee costs, which were driven largely by increased head count to accelerate growth initiatives and upward pressure on remuneration costs. In addition, we had an increase in COGS associated with revenue growth from products such as Audience Maximiser and, to a lesser extent, Connect. While these products increase the cost base, they are high-margin products that positively contribute to our strong EBITDA. While COVID saw some distortions to year-on-year cost growth over the past 2 years, compound average cost growth from FY '20 to '22 was 7% per annum. As we've highlighted earlier, the group continued to invest to support ongoing growth with investment focus on a number of new products and experiences across multiple lines of business. During the year, we increased the pace of our investment program as market conditions continued to improve. In addition to acquisition of REA India and Mortgage Choice, which you can see in the blue section of the chart, key areas of spend included uplifting our core consumer experience to drive membership, the launch of Premiere Plus, improvements to the PropTrack data products and the relaunch of property.com.au. As a result of the continued investment, total depreciation and amortization is expected to be in the range of $86 million to $92 million in FY '23. Turning to our cash position. We ended the year with a strong closing cash balance of $248 million. The group delivered operating cash flows of $488 million, which is the addition of the first 4 bars on the graph. As you can see, the strong operating cash flows allowed us to continue to invest in the business as well as deliver strong shareholder returns in the form of dividends. During the year, we refinanced our debt facilities with a new facility of $600 million with maturity dates split over 2024 and '25. At 30 June, $414 million has been drawn, enabling headroom to finance strategic portfolio opportunities as they may arise. Finally, on current trading. July national residential new listings were up 7% year-on-year with Sydney listings increasing 18% and Melbourne up 6%. Year-on-year growth rates in the first quarter will reflect the Sydney and Melbourne lockdowns in the prior period. Growth rates beyond that will reflect the strong prior period listing volumes. Residential buy yield growth is anticipated to grow double digit in FY '23 driven by an average national 6% price rise, new product launches, including Premiere Plus, plus continued growth in depth and Premiere penetration. The group is targeting full year positive operating jaws for Australia with operating cost growth expected to be in mid- to high single digits in FY '23. This reflects the continued inflationary impact to salaries and investment to deliver on our strategic growth objectives. For REA India, we'll increase our investments to capitalize on the recent momentum and cement our #1 audience position with FY '23 EBITDA losses expected to widen. As a result, total group operating costs are expected to increase low double digits. And lastly, the group expects combined contributions from associates to decline to a single-digit loss in FY '23, reflecting continued investment across our portfolio of associates to drive long-term growth. Before we head to Q&A, I just wanted to reiterate that we're extremely pleased with our results in 2022 and approach '23 in an incredibly strong position. And as we have demonstrated over the last 2 years, we are well placed to adapt to changing market conditions. I will stop here. Operator, can we please now open the line for questions?

[Operator Instructions] Our first question comes from Kane Hannan at Goldman Sachs.

Just 3 for me, please. Firstly, just the buy yield growth into next year, that double-digit target. So do you think it's possible to reach the 14% you did this year? Or is that more a high watermark in terms of the growth aspirations? Secondly, Premiere Plus, if we would just put those Q4 attachment rates on your depth penetration chart, how would that compare to Feature, Highlight and then some of those bars? And then finally, just India, appreciate the cost commentary you've provided. Is it reasonable to annualize those second half losses into '23? Or could it potentially be even worse than that?

So I'll take the buy yield growth, Kane. Look, we are very optimistic about our yield growth for FY '23. We flagged double digit. That will be a combination of our 6% price rise plus growth from new products and increased Premiere penetration. Whether it gets to 14%, we can't necessarily specify, but we absolutely believe it will be double digit. And on India, look, the way we think about India, we said we're going to invest for growth in the India business. We're very excited about it for FY '22 on a pro forma basis. So I hope that helps from a point of view of expectation around India.

Yes. And on Premiere Plus, Kane, we won't be putting another sort of bar on the graph that we put up for penetration because it's still a Premiere listing within the Premiere Plus package. What I can say, and it kind of follows on from what Janelle said about yield, Premiere Plus is going to make a very pleasing contribution to our buy yield growth in '23.

Our next question comes from Lucy Huang at UBS.

I've got 3 as well. So firstly, just wondering if you can provide us some color around the residential rental business, so any early color in July and August on volume growth and whether that's improved. And also, your expectations for yield growth, I mean, that business moving into FY '23. And then secondly, just on cost growth. So just wondering if you can give us some color on the level of inflation that you're seeing across the business. And if the macro does soften moving into the second half of '23, what kind of levers can you pull to manage the cost base there? And then thirdly, just to follow on from Kane's question on Premiere Plus. Any color on how many listings right now where we're seeing the attachment of Premiere Plus? Any color on that would be great.

I'll take questions 1 and 3, Lucy. In terms of the rental market, residential rent market, we are seeing early signs of a recovery in listings, which is very pleasing. But as I said, rental rates are increasing at a huge rate of knots, which will have 2 impacts. One, people won't want to move from their rental properties if they don't have to. But as leases expire, those rents will increase, which will attract investors back to the market. The other impact it's having, and we're seeing that in our numbers, is that a high propensity for tenants to engage with our consumer products, particularly our Tenant Check product, to put themselves in the best possible position of being selected for a property and, in particular, our new rental application experience where you can -- it makes it a lot easier to apply for multiple properties, which so many people are doing in the market at the moment. In terms of Premiere Plus, we're not going to put our penetration rates or anything like that. It is -- for a new product launch, we've always talked about our new products or our new bundles taking a long time to mature in the market. And this product will have further maturity. But the level of sign-up is probably higher than we would have expected for a new product entering the market. It's only been in for 2 or 3 months. As I said, it is going to have a very pleasing upward influence on our buy yield next year.

And Lucy, to your question around costs, in Australia, we've guided to mid- to high single-digit cost growth. And that cost growth is primarily going to be due to higher remuneration costs that are growing and as you referred to, inflation. Pleasingly, our remuneration growth will be less than inflation. Plus, it will also reflect the impact of annualizing the ramp-up in head count that we undertook in the second half of FY '22. But importantly, we're not anticipating a substantial increase in head count overall into FY '23. And levers we've got to pull, as experienced -- we've experienced over the last few years, we can always pull levers if we need to, to slow down our cost growth. We do have a proportion of our workforce that is flexible. So we can flex that up and down quite quickly as well as we continue to have ongoing vacancy rates. So we could slow recruitment if we needed to at any point in time.

Our next question comes from Eric Choi at Barrenjoey.

I've got 3 and might ask them one by one, if that's all right. First one, just a dumb one. I'm just trying to gauge the EBITDA impact of these trail commission adjustments. So simple question is, what would that $6 million, $7 million, $4 million of EBITDA have been excluding these trailing commission impacts?

Yes. It would have been -- if you add back the $13 million impact to core revenue, that would be $13 million higher to the $674 million.

Got it. So it's 100% cut through. Got it. Second question, positive jaws comment for Australia in FY '23. Does that include the benefit of cycling off a weak finance base in FY '22? And then does that mean that your jaws could be higher than the 1% to 3% you've seen historically?

Yes. It does include cycling over the weaker finance results in FY '22. It could be higher. We have flagged that we do anticipate jaws to be open. How much will it be, depending on what happens from the point of view most likely the impact of market conditions and listings.

Awesome. And can I have another stab at Premiere Plus but maybe slightly differently? Can we talk about second order impacts? Maybe for Owen, is your depth penetration across all products even on base Premiere? Is that stronger than you usually see in July maybe because of Premiere Plus?

So as Janelle flagged, we expect total depth and total Premiere penetration, so Premiere Plus is still Premiere listing, we do expect that to increase from 1 July. And Premiere Plus will have an impact on that. We saw some customers move from no depth or up to Premiere All and from Highlight All and Feature All up to Premiere Plus because of the value of the product. So you are going to see an increase in Premiere penetration from 1 July as a result of that.

I wonder -- and I know you're not giving us penetration percentages. But maybe for Janelle, I wonder if you could comment on the sensitivity, sort of back of the envelope, every sort of 10% penetration of Premiere Plus might add, like sort of $7 million or $8 million of revenues or sort of 1 percentage point to your yield target. Do you think that's sort of sensible?

I think the other element you've got to factor in, Eric, is geo mix. So geo mix can have an impact. So this quarter, not only are we going to have a normally positive listings environment because of lockdowns last year, but that abnormal positivity is going to be in the highest yielding markets of Sydney and Melbourne. So you get a disproportionate impact on yield. And similarly, in the quarters just finished, we had higher growth in listings in the regional or nonmetro areas than the metro areas. So that kind of brings the yield down a little bit. So it's not a number that we would say if it's up 10%, it's equal this or down 10%, it equals that.

Our next question comes from Entcho Raykovski at Credit Suisse.

So my first question is also on the trail commission adjustment. In your view, is there any more trail commission to come out in FY '23? Or is this -- are you treating this essentially as a one-off and your best guess is that you're essentially done?

Yes. Look, so we update the assumptions as part of the valuation of the loan book, and we reflect our expectations of future impacts of settlement rates and runoff rates. So our expectation, based on everything we know today, we've reflected that within the valuation adjustments that we've made.

But those assumptions could change back the other way. We could be sitting here this time next year in a higher interest rate environment and have to change our assumptions for a much lower runoff. And therefore, you'd end up with a positive valuation adjustment if that happened.

And just for clarity, that would likely be taken above the line?

Yes. Yes, it would be. The way we've talked to our Financial Services business, you can see in the ASX, we've talked about our operating revenues and then our net revenue for Financial Services that it's all part of just our standard business-as-usual practices.