How SEEK defied downturn, hammered competition and boosted profit by 38%

Online job juggernaut SEEK, run by entrepreneur brothers Paul and Andrew Bassett, has shrugged off the looming economic slowdown to post a 38% in net profit to $76.3 million for 2007-08.

Online job juggernaut SEEK, run by entrepreneur brothers Paul and Andrew Bassett, has shrugged off the looming economic slowdown to post a 38% in net profit to $76.3 million for 2007-08.

SEEK’s dominant position in the online job ads market allowed the company to post strong top-line growth, with revenue up 34% to $210.2 million. Joint chief executive Paul Bassett said the strong growth was due to the continued migration of advertisers from newspapers to online, plus a bigger focus on the SME, healthcare, education and government sectors.

“SEEK continues to benefit from its clear market leadership position in terms of brand recognition and job seeker metrics when compared to its competitors,” he said in a statement.

Bassatt says that while the employment market is slightly soft, the first six weeks of trading in 2008-09 were in line with expectations and the company remains “confident of growing its profitability” in the next 12 months.

Perhaps what’s most impressive about SEEK’s results is the extremely healthy profit margin the company operates on – just over 36%. This is a result of its absolute dominance of Australia’s online job advertising market.

The company quotes statistics from Nielsen NetRatings which shows that the number of ads and unique visitors on SEEK is more than the combined figures from its two nearest competitors, MyCareer and CareerOne. According to the data, the number of ads on SEEK increased 10% in 2007-08 to 175,763, while MyCareer’s ad numbers fell 1% to 53,433 and CareerOne’s ad numbers increased 6% to 65,806.

While any dip in employment over the next 12 months will obviously hurt SEEK, its extraordinary market dominance will give it a level of resilience and pricing power that should insulate its profits.

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