REA Group delivered a robust third quarter result that demonstrates significant operational leverage, with EBITDA excluding associates climbing 16% year-on-year (excluding M&A activity) despite revenue growing 11%, a gap that reveals improving cost discipline across the business. The company’s $398 million quarterly revenue reflects strong momentum in its core Australian markets, while management’s decision to lower cost guidance for the full year signals confidence in its operational efficiency initiatives moving forward.
The residential segment, which represents the bulk of REA’s earnings, posted revenue growth of 12% with particularly impressive strength in the Buy yield segment, which expanded 14% year-on-year. National Buy listing volumes returned to growth after earlier softness, rising 1% with notable acceleration in Sydney and Melbourne, Australia’s largest real estate markets. This performance came despite broader economic headwinds from rising interest rates and mixed consumer sentiment, suggesting REA’s platform benefits from structural advantages in how property transactions flow through the Australian market.
The margin expansion story deserves close attention. Operating expenses increased just 5% excluding M&A activity against 11% revenue growth, demonstrating that REA is converting incremental revenue into profit more efficiently. Management’s guidance that group operating costs will increase by low to mid single-digits for the full year, with Australian costs rising by mid to high single-digits, positions the company well for sustained profitability improvement even if revenue growth moderates. This cost discipline is particularly important given the company’s track record of investment in technology and product enhancements.
REA’s engagement metrics reached new highs with 12.9 million average monthly visitors, 150 million monthly visits, and 2.6 million buyer enquiries. Active member numbers surged 19%, while properties tracked by owners reached 5 million, up 16%, and seller leads jumped 28%. These metrics suggest the platform is becoming more central to the property transaction process, enhancing network effects and customer stickiness. The expansion of AI-powered conversational search capabilities and the March launch of iGUIDE Australia, bringing professional photography services to the platform, indicate management is actively investing in product differentiation in an increasingly competitive market.
Investors should monitor how the balance between market growth and yield improvement evolves in coming quarters. With listing volumes stabilizing and buyer demand normalizing, REA’s ability to grow through price growth and higher engagement conversion becomes crucial. The success of iGUIDE Australia’s expansion and the ROI on AI investments will also be key drivers of future margin progression. This announcement is flagged as price sensitive and material by the ASX.
View the full ASX announcement (PDF)
About REA Group Limited (ASX: REA)
REA Group operates realestate.com.au, Australia’s leading property platform, connecting buyers, sellers, and renters. It also has property portal operations in India and other markets.
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