OnTheMarket Reports First Profitable Year as It Weans Agents Off Freebies

British property portal OnTheMarket has this morning released its annual performance report for FY21. The main headline metric from the company's yearly performance is the 22% revenue growth which led to an adjusted operating profit of £2.4m.

The figures represent the LSE listed firm's best year since its 2015 launch as well as its first profitable fiscal year. As OnTheMarket's results presentation points out several times, revenue growth would have been even higher at 36% were it not for the £2.6m in discounts given to agents during the worst of the pandemic.

In terms of operational performance metrics, the highlights from OnTheMarket's pandemic-affected year include:

• Revenue from New Homes up significantly from £0.1m to £1.5m with a 128% increase in developments listed
• The percentage of listing branches on paying contracts went up from 68% to 93%
• Marketing expenditure down by more than half to £5.9m from £12m
• ARPA (average revenue per advertiser) up 16% to £142

Along with the steady migration of agent customers from the initial free-to-list contracts to paid ones, the very significant reduction in marketing costs has been instrumental in bringing the majority-agent-owned portal to the profitability threshold. Despite a drop in marketing activity, brand awareness continues to increase with 54% of property seekers and 45% of all UK adults now aware of the brand.

Commenting on the results, recently appointed ex-agent CEO Jason Tebb said:

"I am delighted to be reporting a strong performance in my first set of results. Despite the unprecedented conditions we have faced, we have continued to grow the business and achieve profitability. Our operational and financial progress is a testament to the efforts of the team and, since joining OnTheMarket in December, I have been incredibly impressed by them and the underlying strength of the business."

“OnTheMarket has come a long way since its launch by agents in 2015. From this position of strength, it is now time for the next stage of our development and our new strategy is based on a clear vision of building a tech-enabled property business. We will become more than just a portal and provide best in class products and services that benefit agents, housebuilders and consumers."

Tebb will be hoping that the strong tailwinds from a booming domestic housing market continue and that his firm's new set of tools and functionalities can head off competition from the likes of Boomin. Since Tebb was announced in September as the replacement for interim CEO Clive Beattie (after the ousting of the controversial Ian Springett by shareholders in March 2020) he has appeared to be leading OnTheMarket on a path towards a more rounded business model.

After speaking candidly about the company's shortcomings in his first industry interview, Tebb oversaw the purchase of lettings agent software company Glantly in March and today gave another hint that OnTheMarket is looking to move away from a pure-play classifieds model towards being "a property technology company" with "products and platforms across the entire property marketplace".