Domain says it’s a great place to work despite woes at parent Nine

Nine-controlled digital property listing company Domain Holdings has denied it is afflicted with the same cultural issues that have hit its parent company.

Domain has struggled against larger competitor REA.

Nine-controlled property listing company Domain has credited its exiting chief executive for cleaning up cultural problems that have hit its parent company.

Domain chairman Nick Falloon, a former chair of Nine Entertainment, told the company’s annual general meeting on Wednesday that prior to CEO Jason Pellegrino joining six years ago, there had been “well-publicised cultural problems within ­Domain.”

Mr Pellegrino replaced Antony Catalano in 2018 amid allegations of a “boys’ club” culture at the company.

A recent investigation into Nine found extensive misconduct including sexual harassment and bullying in the television business, with Nine CEO Mike Sneesby resigning last month.

Domain is currently searching for a replacement for Mr Pellegrino, who will stand down without a successor in place.

“I think it’s fair to say if I go back prior to Jason joining us, that we did have some well-publicised cultural problems within Domain,” Mr Falloon told shareholders.

“One of Jason’s challenges was to change that, and I think he’s done an exceptional job there and the culture within Domain on all the reports we receive from the board, from our staff and people is nothing but very positive.

“Something like 80 per cent of people say it’s a great place to work. So look, we don’t have any noticeable cultural problems within this company.” Mr Pellegrino did not elaborate on Domain’s previous cultural problems.

Domain has struggled against its main rival, the much larger REA Group, which is controlled by News Corp, publisher of The Australian. REA has a market capitalisation of $30.4bn, almost 16 times Domain’s current market value of $1.92bn.

Domain shares slipped 6.91 per cent to $2.83 on Wednesday and are down almost 18 per cent so far this year.

Mr Pellegrino, who last month announced his departure after six years in the job, gave an upbeat assessment of Domain’s performance so far this financial year, with listings in the first quarter experiencing strong underlying growth.

Departing Domain chief executive Jason Pellegrino.

He said that based on Domain’s billing cycle, listing volumes increased 8 per cent year-on-year, and 6 per cent excluding “win back” activity – a series of communications to inactive customers that encourage them to re-engage with the app.

Mr Falloon said Domain’s core listings business was its largest growth engine, connecting audiences with agents and companies across digital, print and social platforms.

“We see the opportunity to supercharge core listings growth by diversifying our revenue base through our ancillary businesses, and expanding our unique data and assets,” he said.

Mr Fallon deflected a question from activist shareholder Stephen Mayne about whether Greg Ellis, a current Domain non-executive director and former REA CEO, would be available to replace Mr Pellegrino.

“We announced today we’ve retained one of the major search firms to start that process (of finding a new CEO) and that is under way,” Mr Falloon said.

“There is an ongoing process that’s under way for the succession process, and we’ll comment on that when that’s developed.”

Earlier Mr Falloon said Domain would canvass both internal and external candidates for the role.

Mr Falloon also denied Peter Costello’s sudden resignation as Nine chair would have any impact on the length of his tenure at ­Domain.

“It will have no impact whatsoever as to what I may or may not do in 12 months’ time,” he said. “That’s something I will consider in the fullness of time.”

Mr Costello resigned in June amid widespread bullying and sexual harassment allegations across Nine’s broadcast divisions, which were aired formally with the publication of a company-wide workplace review.

Domain has been unable to capitalise on the nation’s residential property boom and to expand into adjacent areas in the way REA did. It also struggled to expand its geographic footprint, and made an unsuccessful play for PEXA in 2021.

E&P said that while the listings trends at Domain remained solid, the market would be disappointed with growth that came in lower than recent price increases.

“We recognise that Domain has significantly underperformed REA over the past 12 months, but we don’t expect this update to drive a closing of the gap,” E&P said.

Citi said Domain remained exposed to fluctuations in the property market and changes to housing-related tax rules.

“If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty achieving our targets,” Citi said.