INVESTOR BRIEFING ON DOMAIN GROUP SYDNEY, 31 March 2015: Fairfax Media Limited [ASX:FXJ] Chief Executive Officer Greg Hywood is hosting an investor briefing focused on the Domain Group from 2:30pm 5:00pm (AEDT) today. The briefing is being held due to increasing interest in the Domain business and a high level of investor requests to meet with management. The briefing features presentations from Domain CEO Antony Catalano and his senior management team to provide an update to the market on the progress of Domain as a leading real estate, media and services business. The briefing will be live webcast and available for replay afterwards at: http://webcasting.brrmedia.com/broadcast/136154 Presentation slides are attached. The presentation contains updated FY15 H2 revenue trends for the Domain Group for the period of 1 January 2015 to 22 March 2015 (versus same period in the prior year): 56% increase in Domain Group revenue for continuing operations, including the effect of consolidating the MMP acquisition; 34% increase in digital revenue for continuing operations; and 26% increase in Domain.com.au revenue. ENDS Contact: Brad Hatch Director of Communications +61 2 9282 2168 Fairfax Media Limited A.B.N. 15 008 663 161 1 Darling Island Road, Pyrmont, NSW, 2009 www.fairfaxmedia.com.au
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Acquisition Investment $150m+ Employee Numbers +216% Agent Subscriber Growth +33% Mobile App Downloads +97% Total Audience 4 million Digital Revenue Growth +77% 2 2
2.30pm Welcome Greg Hywood Group Overview & Agent Ownership Model Agents & Listings Product Development Antony Catalano Tony Blamey Damon Pezaro Short Break 3.45pm Content & Audience Melina Cruickshank Media & Developers Commercial Real Estate Q&A Simon Kent Paul Kitchin Greg Hywood 5.00pm Close 3 3
Greg Hywood Chief Executive and Managing Director, Fairfax Media Antony Catalano Chief Executive Officer, Domain Group Tony Blamey Chief Commercial Officer, Domain Group Damon Pezaro Chief Product Officer, Domain Group Melina Cruickshank Group Director, Content & Audience Domain Group Simon Kent Group Director, Domain Media Domain Group Paul Kitchin General Manager, Commercial Real Estate Domain Group 4 4
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Group Overview & Agent Ownership Model // Antony Catalano, CEO, Domain Group 6 6
Significant progress in the past year Operational Investment Substantial investment more than 100 new people hired Strengthened management team Established dedicated operational and support functions Key Business Drivers 20% increase in agent subscribers, to more than 10,000 15% increase in listings 32% increase in mobile app downloads, to 3.5 million 32% increase in average daily UBs Corporate Development Agent Ownership Model Integration of Property Data Solutions (PDS) Acquired Allhomes Purchased remaining 50% of MMP Holdings Progressing national roll-out, now in final stages Note: Agents, listings and mobile app downloads data is March 2015 versus March 2014. Growth in average daily UBs for February 2015 versus prior year, from Nielsen Online Market Intelligence. 7 7
Strong earnings trajectory, with further upside through national expansion Domain Group Financials ($m) FY13 H1 EBITDA of $23.7m. FY15 H1 EBITDA of $40.2m (excluding one-off costs of $2.4m) Majority of revenue comes from Sydney, Melbourne and Canberra significant upside in other cities and all regional areas Allhomes and MMP acquisitions to have full-year impact in FY16 Domain Group FY15 H2 trading to 22 March 2015 (versus same period in the prior year): 56% increase in Group revenue for continuing operations, including the effect of the MMP acquisition 34% increase in digital revenue for continuing operations 26% increase in Domain.com.au revenue 8 8 Note: Reported financials, including the effect of acquisitions. FY13 H1 has been restated to include Commercial Real Estate digital, Commercial Real Estate print commission and Regional (digital).
Domain Group is a real estate media and services business Digital & Print Media Property Data CRM Truly multiplatform media business Strong and trusted brands Broad market reach with quality audience High-growth digital businesses Trusted data source Increasing breadth & depth of data Data increasingly important to the consumer offering Clear market leader (three times the size of its nearest competitor) Strategically valuable asset point of data entry for thousands of agents 9 9
Our purpose and values is the real estate network that connects people and property, empowering them with the most trusted source of information and tools 10 10
Our priorities Build platform to compete nationally Acquire all agents and listings Differentiate and monetise Differentiate our consumer and agent experience Grow audience & leads Disrupt the market Roll out the agent ownership model nationally Grow new revenues Grow Media & Developers revenues Transform our Commercial Real Estate business 11 11
Metro Media Publishing agent ownership model April 2010: MMP founded with four leading real estate groups in Melbourne Weekly Review glossy lifestyle magazine with local content and real estate advertising (9 titles now published) July 2012: merger with Fairfax Community Newspapers in Victoria (FCN Vic) to create 50:50 JV November 2012: digital agent ownership model launched through Review Property January 2015: Fairfax acquired remaining 50% of MMP Foundation agent shareholders retain economic interests in magazine subsidiary businesses and Review Property Review Property now owned 50% by Domain Group and 50% by ~400 Victorian real estate agencies 12 12
MMP earnings have scaled significantly MMP Revenue ($m) MMP EBITDA ($m) MMP profitable from day one due to disruptive business model and commitment of founding agents Merger with FCN Vic in FY13 H1. Stepchange in earnings once synergies realised Merger with the Star News Group in western Melbourne in FY14 H2 Recent revenue growth driven by Review Property around 25% of FY15 earnings expected to come from digital Note: Reported financials, including the effect of acquisitions. MMP earnings consolidated from 22 January 2015. 13 13
National roll-out of digital agent ownership model pioneered by Review Property Domain Group retains 100% ownership of the existing Domain.com.au business New State-based entities owned 50% by Domain Group and 50% by participating agencies Shares allocated to agencies over 3 years, based on their relative spend on Premium Plus listings Expressions of interest by more than 2,200 agencies Current status: NSW, QLD, SA, VIC and WA live NT goes live 1 July Market consultation in the ACT and TAS Domain Group 50% Ownership Structure of new State Co s ACT NT Review Property (VIC) TAS Agents NSW QLD SA WA 50% 14 14
Economics of the agent ownership model Premium Plus revenues (with allocated costs) Subscriptions and other depth product revenues The agent ownership model relates only to the Premium Plus depth product 50% 50% 100% Domain effectively retains 75% of Premium Plus revenues All other existing Domain revenues unaffected New State Co s State Co s allocated costs on a share of revenue basis - no dilution of Domain margin 50% 50% In Melbourne the agent ownership model has grown the market and allowed Domain to take revenue market share Agents Domain 15 15
Agent ownership model brings benefits to all stakeholders Property vendors Agents Increased competition among property portals Product innovation resulting from collaboration between Domain and the real estate industry Greater input into development of consumer and agent products Protects their business by reducing the threat of a monopoly provider Identical Premium Plus rates for all agencies in the same area Allows agents to share in the value they create in the real estate marketing process Deepens our partnership with real estate agents Accelerates revenue growth in depth listings, providing additional funds for investment in product development and marketing Makes Domain the logical industry partner 16 16
Agents & Listings // Tony Blamey, Chief Commercial Officer, Domain Group 17
Investment in sales has grown agent subscribers to more than 10,000 Domain.com.au subscribers Accelerated growth driven by: Investment in additional sales resources nationally Exited reseller agreement in QLD and other markets, with improved performance from direct sales Agent subscribers up 20% in March 2015, to 92% market penetration Full market penetration in the ACT, NSW and TAS Small number of agents to acquire in NT, SA and WA Main gaps in regional QLD and regional VIC, with sales campaigns underway Note: for the ACT this is Allhomes subscribers 18 18
Agent growth provides strategically important listings growth Total listings (sales and rentals, thousands) Expanded subscriber base provides more listings Total listings up 15% year-on-year in March 2015 Listings strategically important Key to consumer experience Support growth of consumer audience and increase search engine optimisation opportunities More listings increase opportunity for upsell to depth products Note: for the ACT this is Allhomes listings Source: Domain.com.au, Allhomes, APM PriceFinder 19 19
Domain s depth product hierarchy encourages upsell to premium listings Depth product portfolio services wide range of customer needs Premium Plus, Domain s flagship listing product, recently redesigned High impact hero images on desktop Optimised for mobile devices Depth products priced to value using a zoned approach based on geography, e.g. NSW from $200 to $1,400 on Premium Plus VIC from $200 to $1,250 on Premium Plus Top Spot Premium Plus Elite Priority Placement Standard Priority Placement Elite Subscription Standard Subscription 20 20
Premium Plus provides five times more leads per listing Top Spot Premium Plus Elite Priority Placement Standard Priority Placement Elite Subscription Standard Subscription Leads per listing Premium Plus + ebrochure vs Standard and Elite listing 4x NSW 5x National 8x Victoria 21 21 Source: Domain Database. Data refers to all residential properties listed in those States on domain.com.au for auction and private sale. Listings have an advertising start date in 2014 and end date not ongoing as at 31/12/14.
Depth products underpinning revenue growth Domain.com.au monthly revenues ($) 46% increase in depth product revenues Growth in agents leading to increased depth sales Agent ownership model encourages greater uptake of depth products Premium Plus revenue up 90% yearon-year in Victoria, versus 55% nationally Significant growth from regional areas Sustainable dual pricing model subscriptions and depth products Subscriptions reduce volatility and allow for bundling of other products and services 9% increase in subscription revenues due to growth in customer base and upsell to Elite packages 68:32 split between depth and subscriber revenue Note: Split between depth and subscriber revenue for FY15 to end February 2015. Growth rates for FY15 to end February 2015 versus prior year. 22 22
Allhomes acquisition provided market leadership in the ACT Allhomes the clear market leader in the ACT Reaches 100% of ACT buyers Nine out of 10 buyers in the ACT first see the property they buy on Allhomes Canberra Times print section rebranded to Allhomes Dual brand strategy implemented Allhomes & Domain sold as a combined digital listing bundle in the ACT Reciprocal listings between Allhomes and Domain expands market reach Opportunities for revenue growth Residential depth products Media & Developers Commercial 23 23
Print remains a valuable part of the marketing mix Property Sale Success Rate by Campaign Type (%) Sydney Melbourne Brisbane Adelaide Perth Print has a key role alongside digital Combined print & digital campaigns have a greater likelihood of sale, sell faster and achieve higher sale prices than digital only Print reinforces marketing activities and promotes agent brand Community newspapers more resilient, particularly under agent ownership model Ongoing scope for innovation with print Pop-up print products in new markets to promote the Domain brand Ongoing efficiencies in production and distribution Uplift in sale price achieved 5.1% 3.1% 5.8% 5.7% 8.7% Source: Research by CoreLogic Media Maximiser January 2015, based on 850,000 properties listed for sale over last two years to November 2014. 24 24
Product Development // Damon Pezaro, Chief Product Officer, Domain Group 25 25
Investing to transform Domain s digital products Investment in Core Product Further Development of Leading Mobile Apps Leveraging Data in New Products 26 26
Investment in core product Investment in Core Product Substantial investment in Product & Technology capabilities and core products Creation of best-in-class user experience across all platforms Relentless focus on product innovation and bringing new releases to market as quickly as possible 3 Product updates daily Further Development of Leading Mobile Apps Leveraging Data in New Products 27 27
Further development of leading mobile apps Investment in Core Product Further Development of Leading Mobile Apps Continued investment and development of mobile apps Strongly positioned to capitalise on migration of audiences to native apps Leadership position through superior user experience and first-to-market innovation #1 rated apps with 25,000+ reviews Leveraging Data in New Products 28 28
Leveraging data in new products Investment in Core Product Further Development of Leading Mobile Apps Leveraging Data in New Products Focus on differentiation of consumer experience Leveraging the data assets across Domain Group as part of our consumer offering Strengthening Domain s position in the market and accelerating audience growth Major new launch 29 29
Old homepage 30 30
New homepage 31 31
Old shortlist 32 32
New shortlist 1,210,792 properties shortlisted across mobile and tablet products in February 2015 33 33
Evolving into a high-value service across mobile platforms Constant innovation with mobile technology to meet consumer needs Push notifications to ios and Android platforms for property alerts, price and status changes Domain first to market Another Australian 1 st 34 34
Improved registration and personalisation for consumers 40% growth in membership registrations in the past year 35 35
School catchment zones an Australian first Another Australian 1 st 50% of iphone users and 33% of Android users already engage with school data since launch in December 2014 36 36
New depth product portfolio launched in January 2015 Larger hero images to capture consumers attention Improved agency and agent branding Optimised to provide greater differentiation across desktop and mobile platforms In-page carousel for quicker access to photos Driving greater consumer engagement and leads 37 37
Enhanced property profiles Another Australian 1 st 38 38
Personalised and branded agent profiles Pre-populated profile with agent information Includes current listings and past sales Offers scope to add customer testimonials, agent biography, video profile and social media links More than 42,000 active profiles 39 39
Targeting more buyers with new Premium ebrochures Targets potential buyers actively seeking property in the selected area Optimised for mobile, improving the user experience and driving more enquiries Strong branding to promote agency 40 40
Old developers product 41 41
New developers product 4x more projects listed per month 42 42
New mobile site Visits up 65% year-on-year in February 2015 Enquiries up 126% from mobile site yearon-year Source: Visits and enquiries data from Google Analytics 43 43
Apps constantly improved to remain best-in-class Highest rated ios app for property category New ipad and iphone app to be launched next month to strengthen our mobile leadership position Completely redeveloped Android App More than 85 releases to the app over the past year Highest rated property app with 4+ star rating 44 44
Leading the way with app innovation Finger-search Push-notifications Geo-location services Property alerts Travel times and nearby places Integration with wearable technology Android Wear Apple Watch App to be released next month App Indexing by Google Allows Google to Index Domain s Android App property pages just as it does for a website School Data 45 45
Incredibly loyal and engaged audience on mobile apps 3.5 million app downloads 90% of active users launch the Domain app more than 4x per week ~20% of active users use the app continuously every week for a period of 12 weeks 8 visits per user per week for the Android app 7 visits per user per week for the iphone app 46 46
Announcing the launch of Domain HomePriceGuide Quickly search 13 million+ properties in Australia for: Estimated property value Full property history (past sales & listing history) Similar surrounding properties Introduce Claim my Home Monitor your home s value over time Connect with a local agent Update your data to improve accuracy of property valuation Track surrounding sales and listings 47 47
Empowering consumers with quality data and insights We have a deep understanding of our customers and the market Two very clear trends emerging: Transparency: The Democratisation of Data Immediacy: Consumers expect access to information when and where needed and for free This offering will supercharge Australia s best property app through the integration of APM PriceFinder data into Domain 48 48
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Content & Audience // Melina Cruickshank, Group Director, Content & Audience, Domain Group 50 50
Growing quality audience is fundamental to our strategy Provides more value to agents and developers listing on our site Drives listings revenue growth Creates scope to monetise consumers through media & lead generation services Offers greater insight into consumer needs to support product development 51 51
Content & Audience vision Reinvigorate the Domain brand Transform the Domain newsroom Feed national ongoing demand for property and lifestyle content 52 52
Our journalism differentiates Domain in the marketplace Independent journalism combined with broad and deep relationships with agents and industry experts Fulfilling consumer demand by providing market insights and leading debate in the market Tapping into the large-scale Fairfax audiences 53 53
Domain reaches 4 million people each month 2.7m total net Digital Audience 1.9m in Print Note: Total audience of 4 million is unique people across all platforms each month. Source: emmatm conducted by Ipsos MediaCT for the 12 months ending November 2014, people 14+ only. 54 54
Two strong value propositions to grow audience Mobile Journalism Tapping into the global trend for mobile consumption as a utility and allowing instant access to audiences at scale Digital-first professional newsroom with the most connected property journalists in Australia 55 55
Mobile is changing audience behaviour, interaction models and the way content is discovered 56 56
Domain reaches a large and growing digital audience Domain average daily Unique Browsers ( 000) Average daily UBs of 383k in February 2015, up 32% year on year Source: Nielsen Online Market Intelligence (Home & Fashion suite). Unique browsers for desktop and mobile site only (excludes mobile apps) 57 57
Mobile app downloads have reached 3.5 million Mobile app downloads (m) Marketing activities focused on acquiring new mobile app users 3.5m mobile app downloads at end March, up 32% year on year Note: Total app downloads for Domain, Allhomes and Review Property combined. 58 58
New strategy is driving growth in visits across mobile and desktop Average monthly site visits by platform (m) Visits to mobile sites and apps in the six months to February 2015 up 42% versus prior year Mobile now accounts for 55% of visits Mobile app users start more sessions, have higher engagement and make more enquiries than the average for our total digital audience 59 59 Source: Average monthly visits for domain.com.au, allhomes.com.au and commercialrealestate.com.au combined. Data for Main Sites from Nielsen Online Market Intelligence Home & Fashion Suite (including international traffic to sites). Mobile Sites and Apps visits combined. Mobile Sites data from Nielsen Online Market Intelligence Domestic Report Suite (September 2013 to February 2014) and Home and Fashion Suite (September 2014 to February 2015). Mobile Apps data from Google Analytics (including international traffic to Apps)
Mobile is connecting consumers and agents Proportion of leads delivered via mobile (%) 63% of leads came via mobile in February 2015 60 60
New initiatives to grow audience further in 2015 We are investing further to grow Domain s audience through: Social media Advertising and sponsorship Brand promotion linked to agent ownership model roll-out 61 61
Reaching a new generation via social and video 62 62
Engaging the sharing generation to grow global reach 63 63
Video is key to our proposition to consumers and agents 64 64
Meeting overseas demand Video about an overseas buyer who purchased a Hawthorn property in Melbourne via Skype was viewed more than 36,000 times 65 65
Brand marketing via outdoor 66 66
Official Property Partner for The Block 67 67
Expanding our brand footprint to support the agent ownership model rollout in South Australia Major Sponsor of The Adelaide Crows Multi-year platinum sponsorship 70,000 Crows members in Adelaide 600,000 followers New CEO, coach and captain for 2015 Significant hospitality arrangement for Domain to host agents 68 68
and Domain Stadium in Western Australia Western Australia Naming Rights Sponsorship Domain Stadium 45,000 capacity Complete rebrand of signage throughout stadium Stadium also hosts concerts and events Significant hospitality arrangement for Domain 69 69
Media & Developers // Simon Kent, Group Director, Domain Media, Domain Group 70 70
Overview of Domain Media & Developers Media Advertising solutions for media agencies and brands +23% YoY revenue growth Developers Advertising solutions for builders, developers and project marketers +83% YoY revenue growth Lead Generation Providing high quality leads to home loan providers +81% YoY revenue growth 71 71 Note: Growth figures are year-on-year revenue growth for FY15 to end February 2015. Media includes lead generation services booked through agencies. Developers is digital revenues only
Investing to capitalise on significant opportunity in Media NAB content partnership Commonwealth Bank Mortgage Calculator Westpac Neighbourhoods partnership Setting the platform for further growth Established dedicated sales function within Domain Invested in agency team and digital specialists Improved inventory management to deliver strong yield growth Core focus areas Finance sector contributes the majority of advertising revenues as a result of continued investment in relationships New opportunities in other property-related categories (e.g. home improvement, telecoms) 72 72 Growth +23% YoY revenue growth Note: Growth figure is year-on-year revenue growth for FY15 to end February 2015. Media includes lead generation services booked through agencies
Premium Projects driving Developers digital revenue growth Premium Projects Setting the platform for further growth Investment in sales team nationally New Premium Projects product underpinning digital growth Realising opportunities in a growing market 200,000 residential dwellings approved in 2014, driven by investor demand Increasing international buyer activities as well as a shift in investor activity towards high-rise lifestyle developments 73 73 Growth +83% YoY revenue growth Note: Growth figure is year-on-year revenue growth for FY15 to end February 2015. Developers is digital revenues only
Lead generation offering in home loans expanding into new services Current lead generation offering Can I afford this property? question on Property Details Page to create conversion funnel Audience Targeting Qualification Finance partner forms displayed on share of voice rotation User nominates requirements & timeframe for purchase Leads delivered to finance partner who seeks to convert into new home loans Cost per lead model for Domain Delivery Setting the platform for further growth Existing partnerships provide material lead generation revenues in home loans Growing revenues through more qualified leads Realising opportunities in an untapped market Significant room for growth in finance category Expanding our lead generation offering to other services e.g. utilities, telecoms and insurance 74 74 Growth Note: Growth figure is for year-on-year revenue growth for FY15 to end February 2015 +81% YoY revenue growth
Commercial Real Estate // Paul Kitchin, General Manager, Commercial Real Estate 75 75
A complete multi-platform offering under one brand Digital Advertising Print Advertising Digital Display Advertising 76 76
Market shifting to digital with print remaining an important part of the marketing mix Commercial real estate industry Market segments Large diversified property groups International brands with national office representation National commercial brands State based commercial brands Franchise or independent agency, primary focus is residential Example key players GPT, Dexus Property Group, Grocon, Stockland CBRE, Colliers International, Jones Lang LaSalle, Knight Frank, Savills Burgess Rawson, Chesterton's, LJ Hooker Commercial, Ray White Commercial Brock (SA), Deans Property (NSW), Fitzroy s (VIC), Wright Property(QLD) Barry Plant, Harcourt's, Hocking Stuart, LJ Hooker, Ray White The commercial real estate advertising market is worth around $100m and is relatively stable Digital represents more than 50% of the market Print remains an effective medium for brand building and lead generation 77 77
Significant investment in product driving digital growth Significant investment in new desktop site New homepage and auction centre Responsive layout with improved search Integration with CommercialGuru, Singaporebased commercial site New iphone app Traditional and map based search, unique to the market 4.5 stars and more than 100 new downloads per day Digital revenue up 32% YoY in FY15 to end February 2015 78 78
Focus on growing audience and driving revenue opportunities Harnessing our internal networks and partnerships to drive listings and traffic growth Promoting content to grow audience engagement Leveraging strong reputation in editorial content Providing comprehensive content including news, advice, research and data Search and content working together to maximise audience growth Continue existing momentum in traffic growth and enquiries Average daily UBs up 27% in 2014 Email enquiries up 21% in 2014 79 79 Note: Average daily UBs from Nielsen Online Market Intelligence
Advertising campaign to grow awareness of new website and iphone app Three key messages in market: Advertising opportunities Start searching today Download our iphone app 80 80
and online across Fairfax network of digital mastheads 81 81
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Summary information This presentation contains summary information about Fairfax Media Limited and its activities current as at 31 March 2015. The information in this presentation is of a general background nature and does not purport to be complete. It should be read in conjunction with Fairfax Media Limited other periodic and continuous disclosure announcements which are available at www.fairfaxmedia.com.au. Not financial product advice This presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire Fairfax Media Limited securities and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Statements made in this presentation are made as at the date of the presentation unless otherwise stated. Past performance Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Future performance This presentation contains certain forward-looking statements. The words expect, should, could, may, predict, plan and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Actual results, performance or achievements may vary materially for many projections because events and actual circumstances frequently do not occur as forecast and these differences can be material. This presentation contains such statements that are subject to risk factors associated with the industries in which Fairfax Media Limited operates which may materially impact on future performance. Investors should form their own views as to these matters and any assumptions on which any forward-looking statements are based. Fairfax Media Limited assumes no obligation to update or revise such information to reflect any change in expectations or assumptions. The inclusion of forward-looking statements in this presentation should not be regarded as a representation, warranty of guarantee with respect to its accuracy or the accuracy of the underlying assumptions or that Fairfax Media Limited will achieve, or is likely to achieve, any particular results. 84 84