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Domain Makes A Tech Acquisition – Stock Price On The Move?

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Domain Holdings (ASX: DHG) – predominantly known as a leading property and service business where individuals list homes for sale – announced an acquisition of Real Time Agent operator Bidtracker Holdings. Following the announcement of this deal, Domain saw a 14c share price appreciation, representing a 4.5% increase over the day. This is fairly positive signs for a firm that’s traded fairly flat over the last six months, particularly with the property market beginning to pick up. But is this really going to help drive growth for the company?

domain holdings

Importantly, Bidtracker Holdings has 3 main products:

  1. Real Time Authority – which provides execution of the agreement between real estate agents and vendors
  2. Bid tracker – allowing individuals to record individual bids and auction results.
  3. Real Time Contracts – a digital sale contract process regarding settlement dates and deposits.

We know that domain derives approximately 75% of its revenue – and around 80% of its EBITDA – from its core digital operational line, which is what Bid Tracker holdings most accurately aligns with. The main benefit of the deal will be “delivering technology that streamlines the online and offline property process”. In this case, the majority of benefits look like they will be derived from cost efficiencies due to reducing admin work. In a fairly weak property market – with national new listings down 14% from 2019-20 - it certainty feels that cost efficiencies will be the way to go for Domain to continue to create shareholder value, especially when the already have 90% market penetration.

However, the results of this acquisition are very much to be seen. Even with Domain’s main rival, REA group, reporting a 14% drop in earnings on Friday due to market conditions, REA remains a market leader and is still growing at scale. While this acquisition is likely to have positive cost efficiencies, this doesn’t appear to have any tangible impact, perhaps besides consumer stickiness, on Domain’s ability to combat REA’s dominance in the market.

With REA’s EBITDA growing 8% from FY18-19 compared to Domain’s 15% drop, it could be argued that this acquisition won’t help Domain’s long-term goal of growing revenue and market share in the property listing industry.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.


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