Rent.com.au Limited (RNT.AX) Earnings Call Transcript & Summary

Good afternoon, and welcome, everybody. Look, I'm going to run through a few slides. And as Garry mentioned, happy to take questions at the end. And I think we already have a couple. Look, it's been a strong year for the group, continued growth across Rent, across rent paid, and that's despite, I mean, some pretty horrible market conditions in terms of the renting market and then also advertising as well. And as always, this really comes down to the passion and drive of our staff that make up our company. Our sales capability continues to improve our brand, general awareness of who we are is getting stronger. And over the last 12 months, we've seen a number of new partners and products added to our solutions. Look, I really like this graphic, and I just want to spend a bit of time on it. It's going to be included on our website. It's a really easy to understand guide of the renting life cycle, how we assist at every step. It's renting on a page for whatever a better term. So we've -- one of the things I want to call out is that we have created many unique features that directly help renters navigate what can be stressful, intimidating, et cetera. So just starting on the left there. So walkability, lifestyle gauges, these cover every property in Australia, and it's a layer of information that assist people to make the right decision. Renter Resume, nearly, just under 2 million. So I mean that's a huge lift on something that we created. It helps people enter their information once, personalize their application, all designed to help you get in that property. RentBond, biggest in the market now, and our 21-day fee-free period is unique, and it really helps those people transition between properties. Paylab, a great partnership there. If we look at the average everyday spending contributes to your Rent, and for the average couple, that can mean $50 a week back into your RentPay wallet. Then, of course, RentPay, $20 million a month now, growing, pay when you want, how you want, grow your credit, build a buffer and all at the lowest rates in market with credit cards starting at 0.99%. So look, I appreciate that's a lot of words. But the point is, we've built something unique, something that people like and something is making a difference in the market. As I mentioned before, both Rent and especially RentPay service platforms, that is, we've created an ecosystem that is applicable to the 1/3 of the country that rents and one that we can layer in product, partners, new services. It's crucial that we keep these platforms relevant and fresh and allow them to grow. And the last point is really important because the growth not only obviously drives our financials, but it unlocks new opportunities as we move forward. I'm going to hand over to Jan now and just take us through a few slides on what we're thinking of next.

Thanks, Greg. First, just starting with our search quarter. You'll see that we've touched on it within the life cycle that there are lots of different data points and products for customers to interact with. The point of this is that we've got a lot of unique and useful data related to the rental property market. So in addition to our walkability and rental history information on over 2 million properties, we've had 0.5 million people review their suburb. So just about every suburb in Australia has been covered multiple times with review. So we get a real good feeling for what are the key things in a suburb. And that information is very useful to various people. So while we will always staunchly defend the privacy of our customers, and we've invested in improving the security of our systems, we know that we can better utilize our nonpersonal information and new AI technologies to build better ways for renters to find their next home, to better serve real estate agents and also property investors. Using our data sets, we can also help our advertisers better target their advertising spend at a relevant level of granularity, so that they can maximize their returns and keep spending with us. Other parties also found this data useful. Already, we've had some of our data acquired for urban planning purposes, and we see this as a real win because it feeds back into improving services for our renters as well as helping us monetize our site. In terms of the products that we have, there's 2 key areas, where we believe that there are significant opportunities for us. Firstly, with RentBond, we've seen significant growth in demand. Over the last 18 to 24 months, the number of applications for our bond finance has doubled. Partly, this is because we've opened it up to referral partners, but also it indicates underlying demand, and we've not been able to fully capitalize on this through our current partnerships. We've also seen demand for new lending products from other industry participants. For example, landlords looking to smooth their cash flows by financing repair costs or lumpy one-off spends, like, for example, in Victoria recently, they have introduced changes to the land taxes, which caused a lot of lumpiness, whereas our finance products could help landlords smooth out. These are significant opportunities, and we're working through this with -- both internally and with our partner to make sure that we capture all the benefits from them. RentConnect is another area that we've got a huge opportunity to unlock. We have recently partnered with a large specialist connections provider in connectnow to replace the exclusive partnership we previously had with Origin Energy. In addition to significant advertising revenue that this partnership brings us, we also have an opportunity for our customers to choose from a wider range of utilities, a wider range of utility providers when they're booking their connections. And they still get the same $100 gift card from us as we share the benefits of that product. The service with connectnow has only been live for a couple of weeks, and we expect it to be fully optimized by the time we hit the moving peak in the March quarter. With RentPay, we're still laser-focused in terms of growing our active RentPay customers. The key levers we've got are both industry partnerships and our usual sales and marketing activity. Consumer marketing is mainly organic and continues to generate a steady stream of users, but the agent channel is our fastest lever to scale. This requires consistent sales effort presenting at industry conferences and events and sales call after sales call after sales call. So that consistent effort is rewarded with lumpy customer wins, which can be frustrating at time, but such as the recent record quarterly growth that we had in September, it does pay off. Industry partnerships are also key. The one we have with MRI software is starting to bear fruit. With joint marketing initiatives and better engagement, we're intending to expand that. We've also got additional capacity now with Sam, our incoming Executive Chairman, better able to utilize industry networks to help us generate growth. The other side of customer numbers is our ARPU. We regularly talk about the provision of a wide range of payment choices as being a key benefit to our customers, and they are. Most of our direct consumer customers use cards or other nontraditional payment methods. And payment choice is one of the key reasons our agent customers see a 50% lower arrears rate for customers using RentPay than they would in the industry. The benefit to our business is that many of these payment methods are also allow us to generate a margin. We will always offer free ways for interest to pay their rent. That is a given. But by introducing new transaction pricing model for agents that is dependent on the customer being able to choose the payment method, we expect to be able to improve our margins going forward. New products or revamping existing products, there's also an opportunity for us to grow our margins. We've touched on the improvements that we aim to achieve with RentBond. And similarly, the credit products that are offered within RentPay via our ScoreBuilder or the SafetyNet loan product are right for renewal. We've also got demand for personal loans and other products through RentPay, and we will aim to work with our credit partner and our internal capabilities to make sure that we deliver on that. We've already started taking some of the core functions, like receiving payments, et cetera, into that road map, which leverages the key capabilities we have. Just hand back to you, Greg.

Right. Last slide, I promise. So just looking at the top line there, you get a sense of how material we are in the market, right? I know I mentioned it earlier, but we're only 25 staff . We build all our own bits in-house. We run a customer service team where you can actually speak to a human, and I really do believe that we're making a positive impact on renting in Australia and that seriously just comes down to the quality and the passion of our staff. So huge thank you to them. You have seen the leadership announcements from last week. For us, this is simply a case of making sure we have the best people in the right roles to drive a future that our business deserves. So for the last time, handing back to Jan to bring us home.

Thanks, Greg. Just before we dive into Q&A, I think the opportunities for growth and scale are clear to us. Significant opportunity lies in better converting the huge demand we have for our RentPay product, and the RentPay model is really demonstrating its value. While customer growth can be a little bit lumpy, depending on how quickly we are on board agencies, there has been consistent compounding revenue growth over the years as that annuity revenue stream comes to play. 25% of our group revenue now comes from the stable annuity-style revenue, and we will keep growing that.

We'll throw it open to questions and answers. [Operator Instructions] While you get started, we might deal with some of the ones that have been e-mailed through to us previously. The first question, and I'll throw this open to Sam. You've recently announced Sam McDonagh as Executive Chairman. What has changed and what has brought about this change?

Thank you for that, Jan. Well, as some of you may know, I've been involved with Rent for many years. I have been a strong supporter. And certainly, during that time, the team and leadership has accomplished much, what has changed for me is that I now have the capacity, given the management of some of my other nonexecutive commitments, to lean into Rent with a specific focus on the sales and marketing side and certainly the ongoing improvement of the RentPay product. Secondly, I made reference to the time I spent in Airbnb. When I joined Airbnb to lead that business in 2014, less than 1% of Australians knew what Airbnb was. 5 years after that, nearly 1/3 of Australians or 1/3 of the adult population in Australia had used Airbnb or had an Airbnb account. I see many similarities with where Rent is today and the platform that the team has established for us to take the opportunity with the good tech that's available to us, with products such as RentPay and the demand that has been referred to relative to RentBond, to really progress this business over the next 5 years into something that will become a household name in Australia and part of the popular culture conversation. So I look forward to the opportunity that's been provided to me in this capacity and see a very bright future of Rent ahead.

Thanks, Sam. Another e-mail question is, you keep talking about a pipeline of 4,000-plus tenants waiting to onboard to RentPay. How real is that number?

Look, good question. That number is based on the Rent roll of the agencies that have actually signed an agreement with us. We don't count them until the agency is actually signed on. And even then we discount that number where the agency only offers RentPay as part of the overall solution, not their entire solution. The time delay we have is in getting the tenants to complete the onboarding, and that's why we see such lumpiness, so we might have a quiet quarter, and then we have a record quarter like we did in the September '24 quarter.

Just while we wait for some more questions. The last one that was e-mailed through was, in your 4Cs, you have software development costs. What is this for?

So those costs, as you would expect with any tech business, there's always going to be software development costs. Primarily what those costs are is -- it covers new products and features. So all the new payment methods that we launched if we add new functionality or new partnerships to RentPay to build out and work on improving our ARPU or the attractiveness to customers, those development costs are incurred, and that's what that line is all about. It's important to note that just over half of that, we get back in R&D grants anyway. In fact, we're expecting just over $600,000 to be received during this current quarter to offset some of that cost.

We have no other open questions. Might just give you a minute or so to ask any other questions. If you don't want to ask during the actual meeting, you can feel free to always e-mail, [email protected]. We're always available to answer any questions through that. Garry, there's no open questions. So I might hand back to you to close the meeting.

Sure. Thanks, Jan. And as has been alluded to, this is my last meeting as Chairman. It's been a great privilege, and I'm looking forward greatly to Sam's contribution over the next few years. And I think it also would be remiss to not use this opportunity to thank Greg Bader for his tireless insightful work at Rent as the CEO as he transitions to a well-earned next phase of his life over the next 3 to 6 months. So thank you very much, Greg, for all of your hard work in transforming Rent from where we started to where it is today, which I think we all agree is a great opportunity for the future. So thank you. And with that note, I'll close the meeting formally. Thank you. Thank you, everyone.

Thank you, everyone. And just a reminder, if you've ever got any questions, [email protected]. And thank you for your attendance today.