Earnings season
Seek's boss says LinkedIn's competition brings out its best
Tom RichardsonMarkets reporter and commentator
Aug 16, 2022 – 11.25am
Soaring demand for labour and record job ads helped jobs marketplace Seek lift its dividend 10 per cent in financial 2022 as employers battled to secure the best job candidates.
Seek posted a record 325,000 job ads on its Australia and New Zealand online platforms in March as employers paid higher base prices and more depth fees to have adverts placed prominently.
For the financial year, Seek reported a 130 per cent jump in net profit from continuing operations to $240.8 million on sales from continuing operations that were up 47 per cent to $1.16 billion.
For the 2023 fiscal year, the company said it expected net profit of between $250 million and $270 million on sales between $1.25 billion and $1.3 billion.
"Our revenue guidance for FY23 assumes a continuation of largely positive conditions. We have assumed a low risk of job market volatility from monetary policy, geopolitical change and the pandemic. If this assumption changes, revenue could fall below guidance," said chief executive Ian Narev.
"For the next 12 months, the job market is going to feel a lot like it has for the last couple of months, which is elevated but off a little bit from the highs we saw around March."
The Australian Bureau of Statistics revealed the unemployment rate fell to a 48-year low of 3.5 per cent in June as the economy added 88,000 jobs. In May, Australia had 480,000 job vacancies, which was almost equal to the 494,000 people unemployed in June 2022. June's increase in employment was the eighth consecutive monthly rise after lockdowns related to the Delta strain of COVID-19 ended in late 2021.
The Reserve Bank now expects unemployment to fall to 3.25 per cent later in 2022 before picking up gradually as output growth slows.
Seek's statutory profit fell 78 per cent to $168.8 million. Total dividends over the year climbed to 44¢, versus 40¢ in the prior year. Total Australia and New Zealand revenue soared 53 per cent, with Asia sales up 37 per cent.
Seek chief executive Ian Narev, human resources director Kathleen McCudden Group, and Australia and NZ managing director Kendra Banks. Arsineh Houspian
"There's big investment to unify the whole platform across Asia as we have these extremely exciting growth prospects," said Mr Narev. "Our general shareholder base understand our number one priority is growth and in most cases after that they can expect a reasonable dividend, but it's not a stock that attracts heavily yield focused investors and that's fine."
UBS analysts said Seek's sales results in Australia and New Zealand and Asia were better than expected with guidance for 2022-23 also ahead of expectations. The business is likely to see some profit margin compression in 2023 after accounting for investment in its platform unification program of around $65 million, according to the broker.
"The number one priority since Seek started in 1997 and my attitude and the board's attitude is on improving our offering, improving our competitiveness and being successful for the long term and whatever we reasonably need to do to make sure we remain competitive is the number one priority," said Mr Narev.
LinkedIn's competition
The former Commonwealth Bank chief executive said Seek brings many benefits to job seekers and employers that powerful rival LinkedIn cannot match. "We've got a very high degree of respect for LinkedIn as a competitor," he said.
"But we'd say a few things, number one, in every market we're in through ANZ and South East Asia we're a leading player, so we're in a very strong spot.
"Number two, we're completely jobs and employment focused that's all we do and if you're a candidate on Seek the only thing your data will ever be used for is as directed by you to help you find employment opportunities. There's no other use of your data and you're completely in control of it.
"Number three, while LinkedIn and other competitors have a high degree of global scale, we've learned that local data to enrich the product and services for candidates and hirers is critical ... on the hirer side, we've found the human service provided to our clients is important, we've got on the ground sales teams everywhere and they add lots of value to our clients."
Over financial 2022, the portfolio value of Seek's growth fund increased 36 per cent to $2.05 billion as it said the recent declines in public equity valuations had not yet fully flowed through to private markets.
"We can expect volatility in valuations to remain in the near to medium term. We are pleased with the quality of the assets and remain focused on long-term growth of the fund," said Mr Narev.
As at the period end, net debt stood at $1.03 billion, with cash on hand of $325.1 million, versus $491.8 million a year earlier.
The shares were down 6.1 per cent to $22.88 in afternoon trade.
Tom Richardson writes and comments on markets including equities, debt, crypto, software, banking, payments, and regulation. He worked in asset management at Bank of New York Mellon in London. Connect with Tom on Twitter. Email Tom at tom.richardson@afr.com
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