Increased Revenue and Marketing Cuts Lead to Profitability for OnTheMarket

The majority-agent owned British property portal OnTheMarket has today released a trading update for the year up to the 31st of January. The headline numbers are revenue of £22.5m and adjusted operating profit of £1.5m (both subject to auditing). Despite having to furlough many of its staff, defer payment to creditors and offer discounts to its stricken customers at the onset of the pandemic, the portal company outperformed expectations and turned a profit with end-of-year cash reserves standing at £10.7m.

The UK's property market, while not seeing as much growth as that of the USA, has seen its own mini-boom in recent months thanks to a suspension of stamp-duty taxes and an increased desire for more space among its population. This along with a reduction in marketing spend and a focus on cost-cutting are cited by OnTheMarket as significant factors in its latest set of results.

Today's missive expects the marketing spend to go back up with the eventual loosening of covid restrictions in The UK and also says that the company will be investing in new products, with an intention to diversify "across a broader suite of products and services".

Commenting on today's results, recently appointed OnTheMarketCEO Jason Tebb said:

"Our broad and deep agent ownership and support, our commitment to fair pricing and our focus on our agent customers at the heart of our business will continue to differentiate OnTheMarket. We will seek to further evolve our offering through on-going product innovation and increasing consumer engagement through targeted, data-led marketing and the provision of a suite of additional services which will benefit estate agents, housebuilders and consumers."

Interestingly, today's trading update did not include any information around agent numbers, a metric that will perhaps prove the largest challenge for Tebb. While OnTheMarket managed to increase its agent numbers in April when it was giving out shares to agents who agreed to drop its competitors Rightmove and Zoopla, customer numbers have stagnated since. Quoted at 12,497 in the company's previous yearly update, the number of paying agents was last given as 12,245 in a trading update in November.

Given that OnTheMarket is majority-owned by agencies and has previously been critical of Rightmove's policy of raising ARPA, the firm is unlikely to want to increase prices for its customers any time soon but may have to look again at the issue if it fails to move the needle around agency numbers.