Some high growth stocks are usually a permanent feature of an investor’s portfolio, more so because of resilience they display during turbulent times. Two such best growth stocks are
REA Group Ltd (ASX: REA)
REA Group has demonstrated a robust financial result with significant growth across key metrics for the nine months ended 31 March. The company reported a substantial 18% year-over-year increase in revenue reaching $1,247M. This strong top-line growth translated into an impressive 19% rise in EBITDA (excluding associates) to $734M. Looking at the most recent quarter, Q3 revenue alone grew by 12% to $374M and EBITDA (excluding associates) increased by 12% to $199M. This growth was broad-based with double-digit revenue increases observed across Residential, Commercial, Financial Services and India segments. The interim dividend declared for FY25 stands at $1.10 per share fully franked, marking a 26% increase year-over-year. Furthermore, the company successfully repaid all external debt amounting to $209M in December 2024 leaving a healthy cash balance of $338M as of 31 December.
REA Group has solidified its market leadership in Australia. The company's flagship platform realestate.com.au recorded an average of 12.3M monthly visitors in Q3 FY25 extending its lead over the nearest competitor by 5.5M people. This audience strength translates directly into value for customers with seller leads on realestate.com.au increasing by a remarkable 50% year-over-year. Residential revenue benefited from a 15% yield increase primarily driven by a 10% average price rise for Premiere+ listings, increased depth penetration and growth in add-on products like Audience Maximiser and Luxe. Commercial revenues also saw an average 11% price rise and increased depth penetration and listings. REA India's revenue soared by 28% year-over-year largely propelled by strong growth in adjacency services on the Housing Edge platform. The company's ongoing investment in enhancing consumer experiences including AI integration and new product delivery underpins its strategy for future growth with capital expenditure expected to remain within 7-9% of revenue for FY25. The outlook remains optimistic with strong employment and anticipated interest rate cuts expected to support continued buyer demand and vendor confidence in the Australian property market.
Xero Limited (ASX: XRO)
Xero Limited has reported strong financial results for the full year ended 31 March (FY25) showcasing continued growth and profitability. The company's operating revenue reached $2.1 billion, marking a 23% rise year-over-year (or 20% when adjusted for constant currency). This strong performance resulted in a Rule of 40 outcome of 44.3% for FY25, an increase from 41.0% in the previous period. Adjusted EBITDA saw a 22% increase to $640.6M and free cash flow grew by 48% to $506.7M with a free cash flow margin of 24.1%.
A 6% increase in total subscribers to 4.414M was noted globally with 414K net new subscribers excluding the impact of removed long idle subscriptions. Average revenue per user (ARPU) rose by 15% to $45.08 driven by product mix improvements, pricing changes and growth in payments. Annualized monthly recurring revenue (AMRR) also increased by 22% to $2.4B. Xero's average monthly churn remained historically low at 1.03% (excluding long idle subscriptions) indicating strong customer retention. The total lifetime value of subscribers increased by 16% to $17.9B.
Xero is focused on its strategy aiming to enhance accounting, payroll and payments offerings in its key markets (Australia, UK, and US). Xero's achievements included introducing Xero Simple in the UK to assist with Making Tax Digital, increasing direct bank feeds in the US from 20 to over 700, and acquiring Syft to enhance insights and reporting. Payroll enhancements were made in Australia and the UK with a deeper partnership with Gusto for a US payroll solution in FY26. Payments saw the launch of Tap to Pay in the mobile app for Australia, UK and US, and expanded bill payment solutions through partnerships. Xero expects its total operating expenses as a percentage of revenue to be around 71.5% in FY26 with a higher ratio in H1 FY26. The company's strong balance sheet with total available liquid resources of approximately $2.3B provides financial flexibility for future growth opportunities.
(Source: Company Announcements)
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