OnTheMarket Reports Solid Financials and Increasing ARPA Despite Agent Decline and Market Gloom

July 10, 2023
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The publicly listed British property portal OnTheMarket has released its results for the 12 months ended January 31st. Notable points from the Rightmove competitor's report for the period include:

  • Revenue was up 14% year-on-year at £34.4 million.
  • Adjusted EBITDA was up 38% at £8 million while post-tax loss was comparable to the previous year (£0.2 million).
  • The average revenue per agent (ARPA) was up 12% at £210.

Launched as an agent-backed rival to Rightmove and Zoopla in 2015, OnTheMarket has now completed what the company terms its building, growth and diversification phases and will now firmly concentrate on monetisation via its 'four pillars' strategy.

Commenting on a set of results that are expected to mark a shift in gears for the company, OnTheMarket's Chief Executive, Jason Tebb said:

“What a year it has been for OnTheMarket. Our record growth, despite a year of unprecedented macro-economic turmoil, is a direct result of the continued success of our ‘four pillars’ strategy. A focus on delivering a suite of valuable products and services to our customers, paired with our model of fair and sustainable pricing, has helped bring serious and tangible competition into the portal marketplace at a time when it is more important than ever...

We have built the portal that I always wanted when I was an agent and I strongly believe our customers will support the continued growth of a business that has their best interests at heart. Now it is time for us to drive growth, moving on to what we believe will be the most important phase yet, as we continue to diversify the services and products we provide to our loyal base."

OnTheMarket's revenue growth has been driven by migrating agents from free to paid plans and adding new customers in the New Homes segment which saw revenue growth of 60% compared with the comparison period.

The company ended the year with cash of £11.3m and no borrowings and in February managed to retain most of its agent shareholders who reached the end of their lock-in period.

2022 might have seen OnTheMarket grow revenue but there were a few slightly worrying signs for the company in other metrics.

Traffic to the site fell compared to the previous year, though this was largely due to a buoyant property market in the first half of 2021, and the number of leads per advertiser fell slightly from 117 to 105.

The drop in traffic and leads ought to be viewed in the context of a British property market which is being held down by inflation, mortgage affordability issues and record energy prices. While OnTheMarket's traffic dropped 14% in 2022, Rightmove's dropped by 9%.

The report also revealed that the company's launch of its OnTheMarket Software division was not without significant hiccups. The portal's attempt to diversify into software may stand it in good stead for an expected prolonged market downturn through the rest of 2023 but the software's delayed development meant an impairment charge of £1.5 million.

Perhaps most concerning for investors and management was the "higher than expected" number of agent contract cancellations in 2022. The average number of agents listing on the portal dropped from 13,296 in 2021 to 13,086 in 2022.

The company's share price has dipped significantly over the last six weeks and OnTheMarket's outlook for 2023 sounded a cautionary note, warning investors that...

"After a strong 2022, the UK residential property market is in a state of flux. A generation of property owners are coming to terms with higher interest rates, mortgage affordability, record energy prices and high inflation. Consumer sentiment will continue to be a key factor in the second half of the year, as will the behaviour of estate agents and housebuilders which may ultimately affect their decisions on supplier spend levels."

July 10, 2023
Since March 2020 Edmund's job has been to read about, write about, collect data on, analyse and generally know about real estate marketplaces and the companies that run them. Before that he worked at the aggregator Mitula Group (which became Lifull Connect) for five years.

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