

Trade Me Group (ASX:TME)
1. About
Trade Me is the leading online marketplace and classified advertising platform in New Zealand. Trade Me includes auctions and fixed-priced sales for new and used goods, with automotive, real estate and employment businesses. The Company has web businesses specialising in accommodation and online dating. Trade Me Group Limited was founded in 1999 and is headquartered in Wellington, New Zealand.
Its segments include General Items, Classifieds and Other. The General Items segment is its online marketplace business. The Classifieds segment represents advertising revenue from each of its three classified advertising sites: Motors, Property, and Jobs. Its revenue is generated from basic and premium listing fees. The Other segment reflects all other businesses, including advertising, travel, dating, life, and health insurance comparison and general insurance.
2. Business model
The Group operates the following divisions:[1]
Divisions |
Revenue ($’000) |
% of Revenue |
% of Profit (before Int, Tax, Depn & Amort) |
Profit drivers[2] |
Classifieds |
$140,968 |
56.31% |
59.44% |
|
General Items |
$71,325 |
28.49% |
30.51% |
|
Other |
$38,070 |
15.21% |
10.04% |
|
3. Strategy
Key strategies include:[3]
- More deeply ingrained in Kiwis’ lives through lovable online experiences
- Know our customers more intimately than any competitor and provide a relevant, engaging and personalised experience
- Be quick experimenters, expert in growing new things
- A brand that outshines all others in NZ as the most loved and trusted
- The workplace of choice – a magnet for top local and offshore talent
Strengthening core proposition
- The group existing customers and existing markets
Expanding offers
- Adding new products or services for its existing customers to enter adjacent markets
Growing ecosystem
- New offerings to new and existing customers to fuel long-term growth
4. Markets
The Company operates in the following markets:[4]
Industry (Australia) |
Industry Revenue (2018) |
Growth Rate (annual 13-18) |
Advertising Agencies |
$3 billion |
3.5% |
Internet Hosting Services |
$528 million |
3.1% |
Dating Services |
$112 million |
6.1% |
5. Competition
Major competitors include:[5]
- Smartpay Holdings Ltd (ASX: SMP)
- CyberAgent, Inc. (TYO: 4751)
- JcbNext Bhd (KLSE: JCBNEXT)
- Sli Systems Ltd (NZE: SLI)
6. History
1999[6]
Trade Me established by Sam Morgan
2000
Success fees introduced
2001
FindSomeone launched
2002
OldFriends launched
2003
Trade Me Motors launched
100,000 concurrent listings achieved
Staff count: 100
2004
NZ's fastest-growing company in 'Deloitte Fast 50'
2005
Trade Me Property launched
2006
Trade Me Jobs launched
#1 most viewed auction: Hurricanes handbag & cell phone
2007
Travel Bug launched
Pay Now launched
1 billion page impressions/month
2008
1 million concurrent listings achieved
2009
Acquisition of Holiday Houses
Popular auction: Roofless the Toyota Townace Interisland van
2010
Trade Me daily deals launched
Acquisition of Book It
iPhone app launched
2011
Treat Me launched
1 million members logging in each month
Staff count: 200
2012
Trade Me listed as a public company
Popular auction: Radio Network building implosion
Acquisition of Holiday Homes, AutoBase and Tradevine
Trade Me made it into the NZX 50 Index
2013
Treat Me sold
Daily deals finished
Acquisition of Life Direct and Motorweb
2015
Trade Me acquired stake in peer-to-peer lender Harmoney
2016
Old Friends closed
Book a courier launched
2017
Safetrader closed
Launched Buyer Protection
2018
Trade Me's acquisition of Motorcentral declined by Commerce Commission
7. Team
Board of Directors[7]
David Kirk – Independent, non-executive chairman
Katrina Johnson – Independent, non-executive director
Paul McCarney – Independent, non-executive director
Joanna Perry – Independent, non-executive director
Simon West – Independent Director (appointed 15 December 2016)
Management Team
Jon Macdonald – Interim Chief Executive Officer[8]
Caroline Rawlinson – Chief Financial Officer
Annie Brown – Chief People Officer
Nigel Jeffries – Head of Trade Me Property
Trent Mankelow – Chief Customer Officer
Stuart McLean – Head of Marketplace
Mark Rees – Chief Product and Technology Officer
Alan Clark – Head of Motors
Jeremy Wade – Head of Jobs
8. Financials
2018 Full Year Results Presentation
Financial Year 2017/2018 (ended 30 June):[9]
Divisions |
Revenue ($’000) |
% Change |
Profit (before Int, Tax, Depn & Amort) ($’000) |
% Change |
Classifieds |
$140,968 |
12.34% |
$97,728 |
12.60% |
General Items |
$71,325 |
1.29% |
$50,170 |
(3.71%) |
Other |
$38,070 |
(2.35%) |
$16,513 |
5.01% |
Total |
$250,363 |
6.59% |
$164,411 |
6.33% |
9. Risk
Major risks include:[10]
Privacy and data security issues
Trade Me is dependent on the technology systems, servers, networks, hardware and software, including cloud services, that it has in place. The systems could be vulnerable to unauthorised access, viruses, human error, natural disasters, communications failure, sabotage or terrorism. To defend against those risks the Group has implemented extensive security measures, disaster recovery, systems redundancy, and backup procedures.
Health and safety risk
Trade Me is a relatively low-risk, office-based business – its most common risk is trips or falls in the office or during work team sports. Lost-time injury in the business has historically been a very rare occurrence. Trade Me Group Ltd conscious thought that stress may affect some employees and its provide access to a free, entirely confidential counselling service outside Trade Me.
GHG emissions and energy consumption
The majority of the Company’s impact arises from energy consumption in its offices and data centres, and emissions from travel. As employee numbers have grown, offices have grown. More travel has been required between New Zealand and the markets where suppliers are based, between the Company’s offices in Wellington, Christchurch, and Auckland, and locally to maintain communication with key customers. The Group controls travel requests to ensure its use video conferencing effectively rather than travelling, and overseas travel is very limited. As a technology business, the Company uses very low amounts of paper and toner, and the Company has been working with its landlords and energy consultants to improve the efficiency of office power consumption, and produce very little waste.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Market risk
Interest rate risk
The Group’s primary interest rate risk arises from bank borrowings which are reset every 90 days to market rates. The Group’s treasury policy requires the use of derivative financial instruments to manage interest rate risk. In order to protect against rising interest rates the Group has entered into interest rate swap contracts under which it has a right to receive interest at floating rates and pay interest at fixed rates, where cumulative net settlement of interest is payable or receivable quarterly.
Credit risk
Exposure to credit risk arises from the potential default of the counterparty, with the maximum exposure equal to the carrying amount of the financial assets. The Group’s credit risk arises from the Group’s financial assets, which include cash and cash equivalents, loans and trade and other receivables.
Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet its obligation to repay its financial liabilities as and when they fall due.
References
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Annual Report 2018 ,P. 58
https://www.listcorp.com/asx/tme/trade-me/news/preliminary-final-report-1956162.html -
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Annual Report 2018 ,P. 23, 24
https://www.listcorp.com/asx/tme/trade-me/news/preliminary-final-report-1956162.html -
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Investor presentation 2018, P. 21, 22
https://www.listcorp.com/asx/tme/trade-me/news/investor-event-presentation-1884615.html -
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http://www.ibisworld.com.au/industry/default.aspx?indid=2337
https://www.ibisworld.com.au/industry-trends/specialised-market-research-reports/technology/internet-hosting-services.html
https://www.ibisworld.com.au/industry-trends/specialised-market-research-reports/consumer-goods-services/dating-services.html - ^ https://quotes.wsj.com/NZ/TME
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^
http://www.trademe.co.nz/about-trade-me/our-story
http://www.asx.com.au/asxpdf/20150112/pdf/42vyjckfywdsb0.pdf
https://www.listcorp.com/asx/tme/trade-me/news/trade-mes-acquisition-of-motorcentral-declined-1835702.html -
^
http://investors.trademe.co.nz/about/board-of-directors/
http://investors.trademe.co.nz/about/executive-team/ - ^ https://www.listcorp.com/asx/tme/trade-me/news/interim-ceo-arrangement-2039006.html
-
^
Annual Report 2018 ,P. 58
https://www.listcorp.com/asx/tme/trade-me/news/preliminary-final-report-1956162.html -
^
Annual Report 2018 ,P. 41, 43, 73, 74
https://www.listcorp.com/asx/tme/trade-me/news/preliminary-final-report-1956162.html