Transcription of Finance News Network Interview with Mitula Group Limited (ASX:MUA) Independent Non-Executive Director, Joe Hanna Carolyn Herbert: The Mitula Group
(ASX:MUA) is a leading Vertical Search website operator, with a current portfolio of more than 57 websites in more than 40 countries and in 18 languages. I’m Carolyn Herbert and joining me at the CEO Sessions in Sydney is the company’s Independent Non-Executive Director, Joe Hanna. Joe, welcome to FNN.
Joe Hanna: Thank you Carolyn, how are you?
Carolyn Herbert: Can you start by giving us an introduction to the Mitula Group?
Joe Hanna: Mitula as you mentioned is a global aggregator of jobs, cars and real estate classifieds. We operate in what’s known as the Paid Search segment of online advertising. That’s set to become a $74 billion industry by 2018, and one of the fastest growing segments of online advertising. Mitula is made up of two brands, the Mitula classifieds, which was established in 2009 and Nestoria, which was established in 2007. As of January 2016, Mitula’s group of websites amassed over 60 million visits and sent out over 90 million click-outs, to our network of partner advertisers.
Carolyn Herbert: Can you tell us a bit more about what sort of websites you have in the Group’s portfolio?
Joe Hanna: So Mitula operates jobs, cars and real estate classifieds in 44 countries around the world; 57 parent websites and in 18 different languages. Nestoria on the other hand, is a website aggregated as focus purely on the real estate segment. And it operates in 12 of those markets.
Carolyn Herbert: Can you give us an example of a website you have locally, and how you drive traffic?
Joe Hanna: Let’s take the example of the real estate segment. It’s one of our key segments and the fastest growing segment. Let’s use the example of Indonesia as a neighbouring country. So as an aggregator, our main value proposition to our consumers is to provide a one-stop shop, of all the listings that are available. So all the houses for sale, all the houses for rent.
If we take the example of Indonesia, we’ll work with the number one property portal, so the eye properties, the property gurus. But we’ll also work with a number of the small, obscure and up and coming property portals that you and I may not be aware of, or the average punter may not be aware of. But they may have some unique content, which is important for us in order to provide that one-stop shop.
By working with those companies, we’re able to get an XML feed, a structured feed of all their listings. Using our technology, we dedupe them, we optimise them and we aggregate them, providing a one-stop shop for all our advertisers, to find the most efficient way for them to find that perfect property.
Users, we use our website in natural language search. So in the same way that users will enter data into Google, we’ll allow users to enter data in a specific kind of search that they’re looking for. So an example would be in Australia, say perhaps a national rental assistance scheme in Gold Coast, for example, which is a very specific search term that Mitula will provide results for, in the most efficient way possible.
Carolyn Herbert: For those people who are unfamiliar, what is Vertical Searching and what’s unique about it?
Joe Hanna: So Vertical Search, as opposed to a classified site, is really just like Google but specifically for a given vertical. So it’s made famous by companies like Trivago, and Expedia and these types of navigators in the hotel industry. Mitula on the other hand, is an aggregator specifically for jobs, cars and houses. In that we provide a very sophisticated search, using natural language searching, within the classifieds market that we play for.
There’re some key differences between us and a real estate portal for example, so a realestate.com or domain.com. And those differences are basically this: number one is Mitula is effectively a two-page website. Users can enter our site and put in specific searches using natural language, in our case English. So I could put in a three-bedroom apartment in Surry Hills with city views and a lap pool, for example. The surf results that we then attune are tailored to that search. So we will show the most efficient and most effective searches, only for what the users search for.
As opposed to realestate.com or Domain, which effectively have three pages on their websites - search, search results and ad details. The job of Domain is to get you involved in their website, keep you on their website and show you as many properties as they can. Our job is to show you the most effective and the most efficient property, so that you find exactly what you’re looking for, in the shortest time possible.
The other key difference is we don’t store the details. So in effect when the user finds what they’re looking for, they click on a listing, they’re actually taken away from our site and onto the domain.com.au or realestate.com.au. And we call that a click-out, it’s one way that we make money.
Carolyn Herbert: Prior to listing on the ASX in July last year, Mitula acquired businesses in Spain and the UK. So are further acquisitions something you’re considering?
Joe Hanna: One of the primary reasons why we IPOd, was specifically to gain access to the funds and capital, to enable us to acquire additional businesses. In our Prospectus we included some forecasts and all that is based on organic growth. Mitula’s experiencing a very rapid organic period of organic growth. Whist that’s true, there are a number of smaller businesses, particularly larger businesses that we’ll look to acquire. We’ve had a number of discussions and some of those are progressing further. And we’re hoping to make an announcement in the next few weeks, over potential acquisition targets that we’ve been talking to for a while now. But it is absolutely core to our strategic growth.
Carolyn Herbert: Taking a look at financials now. Are you able to give us a snapshot of the company?
Joe Hanna: Mitula makes money through two business models. One is we operate what is called the freemium model, in that our advertisers are able to include their listings for free. And if they want an additional amount of traffic i.e. click-outs, then we’re able to enter into a paid negotiated contract. CPC (cost per click) campaigns account for 65 per cent of our revenue, 35 per cent of that revenue also comes from Google ads that appear on our website. We retain 51 per cent of the money that Google charges, on-charges its advertisers, for the pleasure of having their ads on our website.
In our forecast of calendar year 2015, which we release in a couple of weeks, we’re on track to deliver $22.07 million in revenue and $10.4 million in EBITDA, with an NPAT of 7.75.
Carolyn Herbert: Finally Joe. What’s your outlook for FY2016 and what are you hoping to achieve by year end?
Joe Hanna: The Board is confident in hitting our numbers as included in the Prospectus of July last year. And that has us at $26.17 million in revenue for FY16, and $10.4 million in EBITDA with an NPAT of $10.1 million. At this stage, we’re comfortable within those numbers and that’s all not including any acquisitions that may come along the way, and is purely organic growth.
Carolyn Herbert: Joe Hanna, thanks for the update on the Mitula Group.
Joe Hanna: Thank you Carolyn.
Ends
