SEEK Limited (SEK) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by, and welcome to the SEEk Limited Full Year Results Call for 2026. [Operator Instructions] I will now hand over the call to SEEK Limited's CEO, Ian Narev. Please go ahead.

Thank you very much, and thanks all for joining us. We are here on the lands of the Wurundjeri Woiwurrung people of the Kulin Nation. I'd like to pay my respects to the elders past, present and emerging. Here with me in our Melbourne office, our CFO, Kendra; Peter, Head of Commercial; Grant, Head of AI; Simon, Head of Product; and Beck and Pat from our IR team. So welcome all of you. And as usual, I'll be referring during the discussion as the team will be to the Investor Relations slide pack, which you will have seen. If I start on Page 6 and before I hand over to Kendra, there are really 2 themes that I think we would like to convey through the result. Number one is, again, we did what we said we were going to do. And number two is you can see signs here having done a lot of work on a significant increase in our confidence in the future. And I think those are the 2 points that we really want to emphasize. We've done what we said and we've got increased confidence in the future. And I won't read through the ticks on Page 6, but I'd make a couple of points. Why have we emphasized that this was the sixth consecutive year of double-digit growth and the fourth consecutive half of operating leverage. And the reason we have is because these were questions about SEEK for a long period of time. Can you really grow yield consistently? Can you really grow operating leverage consistently, which we have. We've held leading placement shares. So all those controllables are there. And that really positions the business well for the future because the -- and I'll come back to this a couple of times. The thing to take away from this year's result, and I'll get to it when we talk to next year's guidance is in a year where ANZ volumes were down 1%, Asia volumes were down 12%, EBITDA grew 15%, and that is a combination people didn't think SEEK was comfortable about -- capable of not long ago. Later when we get back to guidance, you'll see the outlook for profit growth, EBITDA and profit growth for next year in the base case isn't huge, but that's in an environment where we're expecting significant reduction again in volumes. And you can -- you'll be able to do the math as you go through this, but there was always a question of just a big resurgence in volumes in order to do very well from a profit perspective. The answer is, as you can see, no. The moment it just stabilizes, then the proven combination of placement share yield and operating leverage in a year like this year delivers 15% EBITDA growth. And so I think that's the thought to carry through as you listen to this year's results and into the outlook. Obviously, there are questions about how the EBITDA line gets to the profit line and what we do with D&A, et cetera, which we understand people want to know about and Kendra will talk about. The last thing I'll say before I hand over, and I'll come back to this is having done quite a bit of work, as you would hope and expect, and I'll talk a bit about what we did later, the management team and the Board, we have come away with an increasing sense of confidence in our competitive advantage in the AI world. And that has led us to upgrade our medium-term goals. Those of you who have followed SEEK for a while know it's not necessarily common for the management team to upgrade signs of confidence, and we have done that in this result, and we'll come back to the reasons why shortly. Kendra, over to you.

Thank you, Ian. I'll go through the FY '26 financial performance, starting on Slide 8, where we have the headlines for continuing operations. This slide shows we've grown revenue, delivered operating leverage, expanded margins and converted that into higher returns for shareholders. Soon I'll step through the key components of the adjusted result, but first, I'll touch on the reported number. Reported loss of $307 million reflects 2 major items outside of our core business. The first being the Zhaopin impairment announced at the half year and the second being a $201 million net loss from the fund, which was driven, of course, by a 13% decline in portfolio valuation. Moving to Slide 9, you can see the highlights of our results. Net revenue grew 10%, a strong result in a softer macro environment. We achieved a sixth consecutive year of double-digit yield growth with an exceptional 18% growth in paid ad yields across APAC, which more than offset declines in paid ad volumes. Peter will explain the drivers of this in more detail. That revenue growth, combined with our focus on cost control, translated to 15% growth in EBITDA and a 28% increase in adjusted profit and EPS, showing that operational results we are delivering are dropping through to the bottom line. Turning to Slide 10. We delivered in-year operating leverage even as investment in innovation and AI increased. Our total expenditure was up 8% compared to revenue growth of 10% with cost growth weighted towards grow the business investment. Growth business investment was up 10%, which includes continued investment in AI and product innovation and a full year of Sidekicker costs. We're spending more on AI compute and token costs and are allocating and measuring that spend across our different customer-facing products where it's being used to run AI-enabled products as well as across internal individual users. We're building a strong understanding of the drivers of token usage and cost and optimizing it accordingly so we can direct AI investment to initiatives that clearly improve customer outcomes and internal productivity. In our run-the-business areas, costs increased 4% outside of the FX revaluation loss, which was broadly in line with inflation. Moving to Slide 11. Higher earnings are translating into free cash flow, up 21% to $246 million, the highest since FY '22 with strong operating cash flow converting to 104% of EBITDA. Net debt at year-end was just under $1 billion, and our net leverage ratio improved to 1.8x. With a strong balance sheet and reliable cash generation, the Board determined a record full year dividend of $0.52 per share. That was up 13% on last year and represents a 100% payout of cash profit for FY '26. Over to you, Peter now to tell us more about the marketplace results.

Thanks, Kendra, and good morning, everyone. I'll dig a little bit deeper on the top line results that both Ian and Kendra spoke to. I won't dwell on Page 13 a lot, only to add to Ian's commentary that what I'll go through in the following slides is that the yield growth you'll see, and we provide a little bit of visibility is actually driven by strong take-up of new products, strong take-up of value-based pricing and not driven by random price increases. Placements are stable. Revenue is growing very strongly. We'll talk a little bit about Asia growth in a minute as it relates to the completion of our freemium rollout, which we've been speaking of for a couple of years. Turning first to ANZ on the next slide. As Kendra mentioned, volumes are down in the ANZ market. So this year, it was down about 1%. We'll talk later about our forecast for that. Placement held stable, maintaining a 4x placement lead, which is consistent with previous years and strong yield growth. And you can see in the bottom right of Slide 14, the change in depth penetration from new products driving from 28% in FY '25 in depth ad revenue to 42% in 1 year. That's really driving the ANZ yield, and it's been a good year. Simon will elaborate that further when we get into the product section. You can see then the macro economy playing itself out on Slide 15 with monthly pay ad volumes declining. And that's really an indication of the Australia economy. You can see, however, in the commentary on the top left, we have seen some growth in New Zealand. I'm happy to answer any questions related to that. On a yield perspective, we provided a little bit of visibility on Slide 16, as mentioned. We've broken out our 14% yield growth. We've had questions in the past on where exactly is it coming from. So we've broken out into 3 basic categories: increase in depth adoption due to the launch of new products. increase in value-based pricing linked to our probability to place and our ROI calculations of what is -- what value we're delivering and then basic pricing. And you can see the vast majority of it is value driven. That's driven an increase of depth ad adoption materially now in 27% of ads. Shifting to Asia. Revenue grew 3%, but stronger when you back out currency. The growth underlying was driven by FX macro conditions in freemium, and I'll talk to in a minute. But as you'll see in a minute, we're quite pleased with the progress of Asia this year. So volumes were down 12%, driven in part by macro, but we had our 2 largest markets launch freemium this particular year. We're finishing the freemium program that impacted it. The corresponding increase in yield was 20%. And pleasingly, Asia is now at a similar depth penetration after many years of catch-up to ANZ. So depth penetration is now pretty consistent across APAC, a long journey by the team there. Slide 18 refers to the impact -- the longer-term impact of freemium. You can see on the top right, as the markets have rolled out, we have increased our ad volumes with each successive market. You can see then the corresponding mix shift between free and paid, driving unique visitors up on the bottom left of that chart, which in turn drives higher applications per paid ad, which allows us to drive yield. That yield is then articulated in Slide 19, where you can see a very similar mix of where the value is being created and an equally strong increase in depth adoption similar to ANZ. So the Asia business is now looking more and more like the ANZ business on multiple metrics. In terms of freemium itself, we're reaching the end of the program. The rollout themself the entire Asia portfolio is now on a freemium model. We have material early outcomes confirming what we said we would do. We now have ad types to every hire's need from and budget. We've grown our ad corpus 35% since the program started, 30% on unique hires with more work to do and 30% in unique visitors then following a larger ad corpus. Ultimately, we have pleasing leading indicators on yield, on hires. Second half revenue in Asia was up double digit in constant currency. So all pleasing indicators. We have more work to do in SME acquisition, more work to do and continue the momentum. But to Ian's commentary, we have done everything we said we would do and executed -- the team has executed across product and commercial quite well towards the end of the program. So really happy with those results. And I'll now toss over to Grant and Simon to talk a little bit further.

Actually, you're tossing over to me. Thank you. On Page 22, I might just start with a bit of a process point. I mean as you would expect in this environment, we have been giving a lot of thought as a Board, as a management team to the strategy that -- sort to have in a world of rapid technological change. And we've been doing that in a very methodical way over a number of months. We've done it ourselves, the executive team and the executive team and the Board, but with a lot of external stimulus, everything from a small business customer in a Darlinghurst cafe to a global classified expert in Munich to venture capitalists to speaking to founders of companies that are trying to compete with us. So we've done it ourselves with a lot of external stimulus. And what we found from that is in a world where there's a new release of code of models on Claude or ChatGPT and everybody suddenly thinks that SaaS companies are worth less and their future is threatened. All have come back to the fact that the core sources of competitive advantage for us, data and trust are not only going to be robust into the future, but they will actually underpin greater competitive advantage. And if you just apply basic logic to it, just from all of our knowledge, we all know models are only going to be as good as the data they have. And we also know that businesses still need customers. And if you've got 91% unprompted brand awareness in Australia, nearly 60% in Asia, deep relationships, which we'll talk about, in addition to integration with workflows, in addition to a capability to verify information, you are in a very strong position. And in fact network effect improve. So we may be wrong, but we've got a very high level of confidence in this. Number two, the world changes and the work is never done. And number three, and probably most importantly, we need to execute extremely well. But what is very clear to us is that the path for seek in the way value chains will evolve in the near, medium and long term looks very attractive. And we'll try and give you a bit of a sense of why around those themes of data and trust, and I'll hand over to Grant.

Thanks, Ian. So Page 23 provides more detail into SEEK's data advantage. As Ian said, AI models are making it easier for candidates and hires to say what they want on SEEK and on other platforms, but it's the data these models have to work with, which drives real employment outcomes. And so on Page 23, SEEK data advantage has 3 attributes: scale, non-replicable depth and real-time insight. I will start with scale on the left-hand side. Every day, SEEK sees more than 750 million signals from real employment activity. So these are not just records in the database, they are decisions of candidates and hires searching, applying, shortlisting and hiring across Asia Pacific, and we see more of them across more roles in the economy than anyone else in our region. Second is that SEEK data is deep and non-replicable on both sides of the market. So the white boxes in the center of the page recognize that profiles and job ads are public, and they can be copied or scraped. But what can't be copied is what happens next. So who applied, who was shortlisted, where there was genuine interest and which trade-offs each side will make when they're faced with decisions about real live opportunities. And that could be knowing exactly when a strong candidate begins looking again and is open to approach. It could be when a candidate is willing to accept a 10,000 lower salary for the right role or it could be when a hirer has to cut 20 applications down to a short list of 5, and they reveal which of their nice-to-have requirements they'll trade off when it really counts. These preferences are revealed through interactions on seats, so they sit in our systems, and they can't be reconstructed from the outside. The third is real-time insights. So the labor market never stands still. Roles get filled, candidates accept offers, new people start looking and preferences shift week-to-week. So a strong candidate who was open a fortnight ago may have accepted another job yesterday. Real-time data reveals who is a strong fit, where there is mutual interest and who is ready to act now, not who might have been ready a fortnight ago. And then the bullet points on the right-hand side of Page 23 are examples of what that unique data advantage makes possible. One example, when a hirer post a job, our instant batch product immediately recommends them candidates who fit the role, who are interested right now and who are open to being contacted. In other words, candidates they can call today and inspect a response from. Now that has the potential to transform time to hire and reduce wasted effort, and it means hireres can connect with the best candidates before it's too late. And it only works because of all 3 of these attributes. So depth tells us who genuinely fits, real-time signals tell us who is looking and open to an approach now and scale means we can do it for every role in every market every day. And no list of great profiles can get you that. For candidates, the intelligence works the same in reverse, and Simon will talk more about proactive recommendations and the career feed, which surface candidates who -- which surface opportunities to candidates who wouldn't have known what to look for. At the moment, they're most open to them. And the same data will power agents to make better decisions because they act on deep knowledge of the marketplace as it is today, not as it was last month. Most importantly, at the bottom of the page, this data compounds over time. So better matches create more engagement. More engagement creates new decision signals. So every candidate who and hire who uses SEEK helps make the next match better. I'll now pass you to Simon, who will talk through our advantage in trust.

Thanks, Grant. On Page 24, I just want to talk a little bit about how beyond the data advantages that Grant has just covered, SEEK is a trust advantage that positions us well for the future. We've built relationships with candidates and hires over nearly 30 years. More than 60 million candidates maintain a SEEK profile and 360,000 hirers rely on us each year to find talent. And the significance of this is not is the scale, but it's more than that. It's the nature of these relationships. It's that customers trust us with sensitive career and hiring information. They rely on us to get them recommendations and ensure they don't miss out. And increasingly, they're trusting us to act on their behalf. Over the past 7 or so years, we've also built a verified data layer through SEEK Pass covering things like identity, credentials and authority. As AI increases noise and moves from recommending to acting, this kind of verified information, permissions and trust becomes essential infrastructure for a labor market and increasingly valuable. On the next few slides, moving to 25, I want to explain how the products we're delivering and the data advantages Grant talked about come together. On the candidate side, we're applying AI to change how people discover opportunities and manage their careers. Grant mentioned we introduced the career feed last year. This is something that combines everything the candidates tell us, how they engage with SEK with our real-time understanding of the market to generate highly personalized stream of opportunities, not just the things they might like, but things that they'd be a great fit for. And in the last year, we continue to improve its relevance and functionality and increased career feed engagement by a further 30% Pleasingly, most of this engagement has been additive to our core search experience. Career feed's precise proactive recommendations appeal to people who are less active in their job search and want an easy way to monitor demand for their skills. We expect career feed to continue expanding our reach with these candidates with AI recommendations already generating more than half of all applications and placements across SEEK. We also launched career agent, which is focused on further broadening our reach and extending SEEK's role from an ongoing job discovery partner to an ongoing career relationship partner. And because we observe and Grant just referred to both sides of the labor market in real time, the career agent can identify insights such as lateral moves, emerging adjacent skills, really fine-grained salary benchmarks and live demand for a candidate's skills and experience and a fidelity and relevance to candidates that others can't match. These conversations that we're now having with candidates are revealing rich insights into candidates' aspirations, their constraints and their willingness to move. So this will enable both more relevant ongoing advice, but it also deepens our ability to match them with future opportunity. Currently, career agent can use information gathered in conversations to update and enhance the candidate profile on their behalf. And over the next few quarters, we'll launch a lot more of the tasks that an agent can do for a candidate. Initial candidate feedback has been really encouraging with Career Agent with 85% of users rating their conversations favorably. If we move to the next page, I'll talk a little bit about what we've been doing on the hirer side, where we are converting this deep candidate understanding into better placement outcomes and stronger returns for our customers. We've launched personalized targeting, which is included in our advanced and premium ad tiers. It learns from a hirer's previous recruiting outcomes on SEEK to personalized job ad targeting. And as Grant mentioned, it immediately matches candidates who are a high fit for the role, they're available right now and likely to respond to a hirer's invitation to chat or apply. As hirers review and engage with match candidates and applications, our targeting adjusts in real time. So the more hires use SEEK, the more we learn about who they're looking for and the stronger the return we can deliver. Alongside personalized targeting, we've also launched Assist, which extends AI support further into the hiring workflow. Assist explains why a candidate might be a strong fit. It recommends the next best action and increasingly is completing selection tasks on behalf of the hirer, including AI voice screen and reference checking. This automation saves candidates and hirers time, but it also brings activity that previously occurred off SEEK on to SEEK as a structured data asset, creating new signals that improve future matching and automation. These better matches and the less effort produced by these products generates faster placements and stronger returns, and that enables us to differentiate the performance of our higher value-add tiers and price according to the value we deliver. So if we look back over these last few sort of 4 products or so and taken together, you can see that underpinned by high trust and verified information, they demonstrate the compounding nature of the marketplace that Grant referred to. High trust enables customers to share more information and increasingly delegate more actions. Career feed and career agent increase engagement and deepen our understanding of candidates. And those signals improve matching and selection, which increases placement conversion, quality and speed. Stronger placement outcomes support ad tier adoption and higher yield. And our focus is to keep strengthening this flywheel, deepening trusted customer relationships, growing our proprietary 2-sided data and increasing our visibility of hiring outcomes. So that's our product update. I'll throw back to you, Ian.

Thanks. So we're just going to build the bridge and I'll hand to Kendra. That's why we feel very confident about the customer outcomes, as I say, informed by a lot of engagement with customers. Now we build the bridge between the customer outcomes and the shareholder outcomes. And we focus again before I hand to Kendra on the foundations, not that we talk about that, that we've demonstrated and built. We've got and we've held and in fact, are growing over time, significantly leading placement shares. In fact, the placement share performance has been so good over recent years, we've decided to change the methodology and see whether we can push ourselves a bit further exactly how we do that is a topic of discussion, and we'll update you on that in February. We've shown we can grow yield, and we've got a really good handle on costs and the impact on operating leverage. And so again, to repeat what I said at the start, the blueprint for shareholders to think about even now, let alone into the future is we've just had a year where volumes are down a bit, and we've grown EBITDA 15%. Next year, unfortunately, we're saying the economic condition is still going to weigh reasonably heavily, particularly in Australia against the mid-single-digit decline. We still grow, not dramatically, but we still grow. And that's from today. So a world under which volumes stabilize, let alone grow, and we're doing what we're doing on placement yield and operating leverage becomes a very attractive profit print and value creation. And with that, I'll hand over to Kendra from Slide 28.

Thanks. So we're going to talk through each of our 3 strategic goals and why with the increasing advantage AI is bringing to our business, we're confident to raise those moving forward. On Slide 28, around placement share. As Ian said, we retained a leadership position across our APAC markets and have seen a positive trend on this metric across many years. We do expect AI to change how candidates and hirers approach job searching and hiring, as Simon and Grant spoke to. So we are retiring the current version of our placement study and introducing a new research methodology across APAC that will better capture which AI systems candidates are using and how. We will continue to report placement share, though the definition will be changed from the next reporting period and not directly comparable. All of that said, the nature of our ambition here does not change, and we upgraded our medium-term goal to grow our leadership position in every market under this new methodology. On Slide 29, a few words on job ad volumes. So while we are constantly aiming to grow our placement share, our ad volumes are impacted by labor market conditions. We are looking closely for the impact of AI on hiring volumes. And to the extent we are seeing impacts on our site, it is at the edges. We see slightly reduced advertising for job roles that are more likely to be impacted by AI automation, but these are a small proportion of ads on the SEEK site. And we see increases in job ads requiring AI skills across all markets, but from quite a low base. And while there are many scenarios for how AI will impact the labor market in the future, any day you can read a new one in the paper, whatever the outcome, any impact to SEEK is limited by our broad market-wide reach. And we do expect to see some upside from the demand for new skills and potentially from increased job churn in the future. Regardless of volumes, our focus remains to improve the placement outcome of every opportunity on our platform. Turning to Page 30. We know that our customers' willingness to pay will increase when they get more confident in a successful outcome from a Seek job ad. Our consistent double-digit yield growth over several years alongside strong placement share demonstrates the success of this approach. As Simon and Grant spoke to, we will continue to use data and AI products to improve the outcomes that our products deliver, and we are confident we can capture continued yield growth and the runway for earnings. So we are upgrading our medium-term goal from high single-digit yield growth to minimum 10% yield growth through the cycle. Finally, on operating leverage, Slide 31. AI not only improves our customer-facing products, but it is creating demonstrable productivity internally at SEEK. We have more than 85% adoption of AI tools across our entire SEEK team. And in the engineering teams, we have seen a 40% increase in product delivery throughput. Cost savings from internal productivity are already and will likely continue to more than outweigh the increase we've seen in AI token and compute costs. In a competitive environment, we will continue to invest in our products and customer value, but we feel increasingly confident of our ability to do that within a reasonable cost envelope. As such, we're improving our medium-term goal from mid- to high single-digit cost growth to mid-single-digit cost growth through the cycle. So in summary, on Page 32, our 3 strategic goals are now set higher, growing our placement leadership in every market, growing paid ad yield by minimum 10% and limiting cost growth to mid-single digits while delivering operating leverage. These changes reflect our commitment to delivering real customer and shareholder value from our increasingly AI-enabled SEEK. Back to you.

Thank you, Kendra. On to Slide 34, the SEEK Growth Fund, and I'll do the sort of left-hand side, right-hand side. Quickly on the fund's performance. The fact that the total portfolio value was down 13% in the year, I don't think it will surprise any of you given the market we're in. Obviously, over the life of the fund, the ROI has still been very healthy at 12%, but this was a year where multiples came down. You can see in the backup on Slide 49 that actually there's look-through revenue of 23% in HR Saas and 10% in education. So the businesses themselves are performing well, and the earnings profile looks very good, a sign of the quality of the assets in the portfolio, multiples are obviously a little bit challenged. And you can see that the -- in the page we've made clear that the value at which we have the fund on the books includes bids from the sales process of Employment Hero and an independent expert report on HiBob, a couple of the most important assets. So that gives you a sense of the mark-to-market aspect of the valuation on the books today. If we then turn to the fund update, and I just want to take a step back and sort of remind people of the history here because it is important. We're 5 years into the fund. And if you go back to when we created the fund in 2021, 5 years was always going to be the time when we looked ahead and said, right, what's happened and what comes next. And we're in the middle of those discussions at the moment, so they are not concluded. The things we can be clear about are as follows. Number one, as has always been the case, we are focused with the fund team on maximizing long-term value, and that has not changed. We are also very aware of the fact that our investors 5 years in SEEK investors in particular, and indeed, the fund investors, the rest of the investors and indeed, the fund itself for its track record after 5 years of looking for realizations and some signs of liquidity. And that's a matter of very common priority among SEEK, the fund and its other investors. There's a very high degree of alignment on that. The first aspect of the 5 years is that the amount that SEEK was paying the fund to manage assets on SEEK's behalf outside the fund have finished. So no more money is being paid by SEEK to the fund for the management of assets outside the fund. The last payment, you'll see we've been very clear about it on Page 38, included a $9 million payment performance fee for JobAdder’. JobAdder’ after 5 years, we've now brought back the management of it in-house. We'll talk about that more in the future because of its strategic value to SEEK. We agreed 5 years ago that it would be independently valued. The business has gone very well. The fund did a very good job of managing it for us, and that linked to a formula with the last performance fee. And with that, all fees for the assets outside the fund have been paid. The bigger issue, obviously, on everybody's mind from our investors' perspective is what does this mean in terms of liquidity. We have talked for a long time about the fact that we would discuss liquidity after 5 years in terms of this liquidity window. Those of you who know the mechanism will know that the liquidity window, the major driver of it was linked to payment of carry for the funds manager. Despite the fact there's an ROI of 12%, the IRR benchmarks for the carry were not reached over the 5 years. So no carry was payable in any event. So with all of that, we actually have been working with the fund on, look, let's just work bottom up on what the plans are for liquidity. And there are 2 very important points that I'd like to emphasize on this. Number one is we have can see and have agreed a very clear bottom-up path. And obviously, we won't talk asset by asset, which will result in near-term sale of investments that are currently valued at over $1 billion. And we've made clear -- that clear in the results, and that's a matter of common interest among all of us. The second thing, obviously, is we want to sell well. We want the fund to sell well when it has the opportunity. We're not in the greatest market conditions at the moment. So we are not saying that these assets are prime for sale at any value. And on that note, the Employment Hero valuation, the Employment Hero sale is still ongoing. It may still take quite a while. We just want to be very clear about that. What you can see though is that the value at which we've got it is included in the account. So what it's telling us is we've had good affirmation of the value and the fund is making certain decisions about what options are out there and what it's willing to sell for. So the 2 things to bear in mind are there's a very clear plan now for sale of assets with a value of currently $1 billion. You can expect movement on that. We're not specific on time because of the market circumstances, but we've used the word near term for a reason. And then the remaining details regarding the future of carry, what happens for the next 5 years, et cetera, will be the subject of ongoing discussions between us and the fund, and we expect to give you details on that around the time of the AGM. Finally, before we go to your questions on Page 36 on the guidance, I believe the words -- you read the words and I think they're clear. I would just emphasize a couple of points. Number one, this is an environment. And if you speak to Blair, our economists and discussions we have with the Board and the management team, Government slowing down its employment. There's still wage price inflation, population growth is lower. The job churn is down. There's all sorts of uncertainty about the interest rate environment. There's all sorts of uncertainty about geopolitical environment. So we are by no means in a time of peak conditions in the employment market. And so we have assumed in the -- what we call the base case, but it's roughly the mid, you can see left that we're going to see mid-single-digit volume declines. That underpins the case for next year. You can also see a high degree of confidence on the yield and a high degree of confidence on the expenditure. To the extent we're wrong on the volume declines, you can see each 1% change impacts group revenue by approximately $9 million. So our view is too bullish or too bearish for people, you can do your own numbers and work out what that means. The second thing I would emphasize, which I don't think you have seen in a SEEK results guidance before, we've said under any conditions, there is maximum cost growth of 5%. And that shows you where we are in our investment cycle, what handle we've got in our costs and what we need to do. There's no slowing down of investment in competitive advantage. We've got a rosy view of the future, but that is a ceiling on the cost for next year. And that gives you a sense of how we're feeling about where we are in the investment cycle and what a good understanding we now have of the cost drivers. And so to finish what I said before and move to questions, we're in an environment where despite a pretty bleak outlook for job volumes, we still grow, not dramatically admittedly, but we still grow. And you can do the math to work out not if the job market rolls back, but if it just stops declining, the sorts of numbers you get coming out of SEEK with the yield growth and the operating leverage in addition to whatever assumptions you might make about capital coming back from the fund create what we consider to be a pretty positive value creation outlook. And with that, I'll hand over for Q&A.

[Operator Instructions] Our first question is coming from Eric Choi from Barrenjoey.

I'll go one by one then. Can I just start with the growth fund. So hypothetically, if the growth fund sold $1 billion plus worth of assets, can we assume the net proceeds to SEEK post any leakages, maybe that would be around $800 million? And if so, like if you just do the quick math, let's say, $400 million debt paydown, $400 million buyback, you'd be saving like $15 million to $20 million of interest and you'd be buying back high single-digit percentage of your stock. Would that be sort of mid-teens EPS accretive, maybe FY '28? Sorry, that's the first question.

Thank you. We'll leave you the math, Eric, on the impact for investors. We own 83% of the fund. It's up to the fund what it decides to distribute once it sells assets. That's up to the trustee of the fund. We've got representatives on that board that we don't control the fund. We would expect the vast majority of capital realized to be returned. That would be considered at the time, that's what we would expect, and we own 83% of the fund. So you can do those maths. And in terms of what it means for shareholders, obviously, we're prepared under a number of modeling on a number of different ways that we might -- that the capital might come back to shareholders. We don't have any specific guidance to give on that at the moment, except to say even though we're very bullish on this business, we're investing well in it, and there won't be any need for seek to channel proceeds from the fund into investment in the core business, so -- or into major M&A. So that gives you the answers you need to know, restricts the answers on the possible uses of the proceeds.

Excellent. Can I ask a follow-up, another mathy one. Just on FY '28 implications. There's a lot of commentary out there that sort of NPAT is sitting at $200 million again. But can I just take your new medium-term yield and cost targets and imply if we assume kind of volumes flat in FY '28 that, that would be implying a sort of $650 million EBITDA. But perhaps more importantly, can you just confirm the big step-ups in D&A or things below EBITDA again in '28. So if you were to hypothetically get a $650 million EBITDA in '28, would that translate to $250-ish or NPAT or kind of mid-20s EPS again, kind of similar to what you did in '26?

Thanks, Eric. I'll take that. And again, I'm not checking your math exactly. But if you do take a scenario where volumes are flat in FY '28 and beyond, and we're committing to minimum 10% yield and mid-single-digit cost, you would get to NPAT growth in the mid-20s. As far as D&A goes, we're moving this year -- sorry, in '27, we're moving into the period where the full 5 years of unification CapEx is now being amortized, and that accounts for the step-up as well as with AI accelerating product development that is making us relook at some of the useful lives of our assets. Any of those reviews is baked into that $180 million to $190 million range. That is not on top of the $180 million to $190 million range in next year's guidance. So no, there's nothing we can see at this stage that would significantly step up below the line into '28.

Excellent. A quick follow-up, Kendra, please. That mid-single-digit volume growth decline you've baked in for next year, does that basically extrapolate like the minus 0.3 to 0.4 month-on-month declines you're seeing today? And if so, like what can you see in your data to suggest those sort of slight month-on-month declines are just cyclical factors and not structural, i.e., AI impact on the job force related?

Yes. So everything you've just said. So yes, on the calculation of the extrapolating the current volume trajectory, going back to what Ian said in terms of all of the macro indicators that we've built into our forecast, none of them are looking hugely positive, which suggests that most of this is cyclical and not AI structural. As you can see from the deck, to the extent we are seeing changes due to AI, those are very much on the edges of our job volumes.

The only thing I'd add to what Kendra said, I think it's quite important is a lot of people are thinking what if the AI thing gets even more pronounced. It isn't the big thing driving sentiment at the moment. And so you've got to look at this against, well, what's geopolitical risk going to look like? What's the inflation out going to look like. So we're not looking at any AI risk from a position of a booming job ad environment. So it's very -- people -- they're a bit of an assumption of, it could only get worse from here. Well, it can always get worse, and we're predicting it will get worse next year, but there's a number of factors driving this, and we would hope that at least some of them won't weigh down the job market for months and years.

Our next question is coming from Entcho Raykovski from E&P.

I'll start with the first one. It's on the updated yield growth targets. I'm just wondering if you can firstly confirm that the new 10% plus target applies to each of ANZ and Asia separately. And just as part of that question, like is there a greater opportunity in Asia given that the growth in unique -- given the growth in unique car as you've seen post the freemium rollout? I'm very conscious that Recruit Holdings, for example, I'm sure you've seen, they've recently been reporting some significant growth in average revenue per job ad, which perhaps shows the opportunity in certain markets. And I wonder whether you can almost -- I know that's in the U.S., so a different market, but can we extrapolate that to some Asian markets as well where there might be a significant opportunity? Maybe I'll hold off on the second one after you answer this one.

So briefly, before I hand to Peter, I can confirm the 10% plus yield growth target applies to ANZ and Asia separately. Recruit does measure their yield quite differently to the way we do, but obviously, we're seeing quite significant growth and some of those themes are similar. So Peter?

Yes. Just on your follow-up question on the Asian markets in particular. First point, in each and every market, we are always looking for upside and opportunities to price to the value we create. If we see it, we will take it. And we've proven we would do that over the last 5 years very consistently. This particular year as to the yield in Asia, this is our first year post freemium with known markets launching. And in a freemium launch environment, as we launch markets, we make big movements in yield as we offer free ads as well. We will not have that effect this year. So the yield year-on-year comps get more difficult. Having said that, we're very confident of 10% at a minimum. And we're optimistic that over time, we will create more placement value, which then creates more yield value.