REA Group (ASX:REA): Here’s why it succeeded over Domain Group at home, but hasn’t done that well abroad

REA Group (ASX:REA) is best known in Australia as the owner of realestate.com.au. For so long, the company (which is majority owned by News Corp) was the dominant market player over Domain Group and Domain’s takeover has (so far) done little to dent its market share. But REA has bigger ambitions than Australia.

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Overview of REA Group (ASX:REA)

REA Group was founded in 1995 in Melbourne. Again, it is best known for it flagship website, but it also has other property technology services as well as a presence in India that we will get to shortly.

Things have not always been smooth for REA Group, but the last few years have seen more good than bad, particularly because of the property market. Yes, some of REA’s performance and dominance in the market was due to the struggles of Domain Group, but the company grew its revenue by 15% and its core profit by $564m. It averaged 12.1m monthly unique visitors. Growth has continued in FY26 so far with revenue up 4% year on year and free cash flow up 16%.

But most importantly, even though listing volumes fell, yield growth was 13%. This is a company that knows it is better to make more money from less people than less money from more people. You see, the company is seeing more customers buy into premium listing products (i.e. Premier+ and featured listings) to differentiate properties, which supports higher yield.

In its latest results, the company highlighted new product launches that shows it is legitimately embracing AI including AI Property Highlights and Property Walkthrough Videos. And lower interest rates could support buyer demand and vendor confidence.

The master of its Domain

REA’s key competitor is Domain which was also ASX listed until earlier this year when it was taken over by Nasdaq-listed CoStar Group (NDQ:CSGP). At the time, Rea investors sent shares down 10% in a day and we said investors were overreacting. There was and is hope that CoStar’s position could help Domain improve its monetisation per listing and potentially launch more premium and higher-yield products.

Obviously just having competition will represent a challenge for REA Group because (with all due respect) it has not really. But at the end of the day REA’s large audience and long-standing relationships with agents are deeply entrenched; even with CoStar backing, Domain has to rebuild some of that trust and reach. REA’s “take rate” power (i.e., ability to charge per listing or premium) is partly a result of its scale; Domain will need to scale fast or risk being just a secondary portal.

Other challenges include regulatory scrutiny from the ACCC and the transition from 6 years of Cameron Wilson as CEO to former CEO of CAR Group Cameron McIntyre. This is arguably why shares are down 20% in 3 months. But these are arguably secondary to the problems the company is facing abroad.

Not doing as well in India

REA Group has not been an Australian only company. It has had investments in Asia, and its key investment is a majority stake in REA India which owns multiple real estate websites including Housing.com; Makaan.com and PropTiger. It also built “adjacency” services via Housing Edge, offering related services like movers & packers, insurance, possibly credit-led offerings.

Recent months have seen a retreat including a divestment of PropTiger and the Housing Edge offering being discontinued. Instead, the company will focus on Housing.com. In FY25, the company recorded A$129m revenue, up 25%, although it made an A$28.4m EBITDA loss and even though this was reduced, the company expects FY26 to be a worse year due to the decline in Edge volumes.

The blow out in expenses is key although regulatry changes are difficult too (making Housing Edge unviable). And also, unlike Australia, there is legitimate competition, not just from other classified portals, but also from full-stack brokerages, local players, and more “adjacency” competitors.

Long time CEO Dhruv Agarwala stepped down earlier this year and was replaced by Praveen Sharma. Sharma is emphasising a ‘technology first’ consumer experience, quality listings and connecting better with home seekers. REA is persisting as it thinks it is a huge market that is still in the early steps of digital penetration and that it can take advantage. Time will tell if it can.

A buy the dip opportunity?

As we mentioned, REA shares are down over 20% since its FY25 results. An alysts believe this is a buy the dip opportunity, with a mean target price of A$246.02 per share, up from $195.01. It is true that there are 16 analysts and they have a wide range of opinions ranging from $137 per share on one extreme and $290 on the other.

Consensus estimates call for $1.8bn revenyue in FY26, then $2bn in FY27 (up 9% and 11% respectively). As for the bottom line, analysts call for $653.4m in FY26 and $760.3m in FY27, both up 16% from the year before. However, REA’s P/E is 39.4x and its PEG 3x. These are not the cheapest multiples, but are not the highest either.

We think REA could be one to buy once it has bottomed out and momentum changes. Investors should look for the RSI to turn around before buying back in.