Rightmove Announces Strong 2014 Financial Results

Simon Baker

February 28, 2015

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Rightmove1Rightmove has released it full year 2014 financial results.  Revenues were up 19% year on year and the legendary EBITDA margin was up slightly to 74.6%.  Of equal importance, traffic, leads generated, APRA, and the number of advertisers were all up year on year.  All of this in an environment where OnTheMarket has launched and been creating quite a stir in the UK market.

According to Nick McKittrick, the CEO of Rightmove, “Rightmove’s popularity with the British home moving public has gone from strength to strength as more home movers visited more often and spent more time on Rightmove than ever in 2014. The trend continues with a record 100 million visits and 1.5 billion pages of property viewed in January as more home movers visit the only place with one million properties in the UK.”

Financial highlights

  • Revenue up 19% to £167.0m (2013: £139.9m)
  • Underlying operating profit(1) up 20% to £124.6m (2013: £104m)
  • Underlying operating margin(1) of 74.6% (2013: 74.3%)
  • Basic earnings per share up 32% to 97.7p (2013: 74.1p)
  • Underlying earnings per share(2) up 24% to 100.3p (2013: 81.0p)
  • Final dividend of 22p (2013: 17p) per ordinary share making a total dividend of 35p for the year (2013: 28p), up 25%
  • £103.4m (2013: £85.6m) of cash returned to shareholders through dividends and share buybacks in the year

Operational highlights

  • Traffic growth, up 10% year on year to 15.4bn pages (2013: 14.0bn)
  • Leads up 19% to 42.8m (2013: 36.0m)
  • Number of  Agency and New Homes advertisers up 5% to 19,304 (31 December 2013: 18,425)
  • Average revenue per advertiser (ARPA)(3) up £77 (+13%) to £684 per month (2013: £607) with around 70% of ARPA growth driven by customers spending more on our additional advertising products and packages

(1)   Before share-based payments and NI on share-based incentives.
(2)   Before share-based payments and NI on share-based incentives and no related adjustment for tax.
(3)   For Agency and New Homes customers.

Here is the Rightmove’s CEO’s Strategic report in full …


Rightmove’s popularity with the British home moving public has gone from strength to strength, as more home movers visited more often and spent more time than ever on Rightmove in 2014. Today they come to search and research the only marketplace with over one million properties in the UK.

We count nearly every agent in the UK as a customer and we care about all of our customers’ business success and focus on building strong relationships that support their ambitions. This approach continues to serve us well as we have grown our customer base by 5% during 2014 to a record high.

The importance and trust in our brand was highlighted by figures released by Google showing that Rightmove was the most searched for business in the UK in 2014 and a national survey showing that 94% of home sellers expect their property to be marketed on Rightmove. The ubiquity of our brand coupled with our commitment to ongoing innovation has significantly increased consumer engagement. Traffic increased by 10% to 15.4 billion pages and consistent with being a multi-platform digital leader, over half of our visits now come from mobile devices.

On the back of this record traffic the number of leads we generated for our customers increased to 43 million, up 19% on 2013 and more than double the number of leads we generated in 2012. Our market share of leads has increased and the share of viewings and sales from our leads remains at over 80% meaning vendors are five times more likely to find a buyer on Rightmove than any other website.

Our culture of restlessness has driven further improvement and innovation in the year. We launched Instant Property Alerts which alert home movers within minutes of a property coming to the market. We send over one million alerts every day and a quarter of our registered users with property alerts have already signed up to get them instantly. We also launched a number of new products, including Property Alert Sponsor to enable agents to advertise in our Property Alerts, in addition to a series of enhancements to our existing products.

Our culture, of course, comes from our people and I am proud of the business we have built together. We strive to make Rightmove a great place to work and this enables us to attract and retain the best talent and provide the best service for consumers and customers. I am delighted that in our 2014 ‘Have Your Say’ people survey, again over 90% of ‘Rightmovers’ think it is a great place to work. I would like to thank everyone for everything they have done over the past year.

We have seen increased adoption of our additional advertising products and packages as customers invest more to drive their brand exposure and gain the competitive edge. Average revenue per advertiser (ARPA) increased by 13% in 2014 with around 70% of the ARPA growth driven by customers spending more on these products and packages. Spending on additional products and packages now accounts for 40% of Agency and New Homes revenue.

With an increase in both the number of agency offices and the number of new home developments, our membership base grew by 5% in the last 12 months. This, coupled with the increase in ARPA, has driven our significant revenue and profits growth in the year.

Business Model

Rightmove is the UK’s largest property portal and operates a two-sided model that benefits from strong network effects. On the one side we have the UK’s largest and most engaged property audience and on the other side we have the largest inventory of properties from over 19,300 advertisers.

Consumers engage with Rightmove when searching and researching the property market and when selling or letting their property. Rightmove is a free consumer service that is compelling to buyers and renters as they can see nearly the whole of the market and is compelling to sellers and landlords as it is where nearly all buyers and renters are searching and researching the market.

Our customers are primarily estate agents, lettings agents and new homes developers advertising properties for sale and to rent in the UK. We offer the most significant and effective exposure for their brand and properties, the largest source of high quality leads together with best in class tools, market insight and support.

Our principal sources of revenue are the monthly subscription fee paid by customers to advertise all their properties and the monthly subscription fee paid for additional advertising products and packages that promote their properties, brand and proposition more strongly.

Our model benefits from a strong network effect with the growth of home movers and property advertisers providing a ‘virtuous circle’ enhancing the Rightmove value proposition.

Our growth potential comes from continuing to realise the value embedded in our market leading audience through product innovation and pricing, helped by the ongoing structural shift of property advertising spend from offline to online with further opportunity afforded from a cyclical recovery in the UK housing market.

We also have a number of smaller business units, including advertising overseas and commercial properties, providing property related data and valuation services, and providing a platform for property related advertisers such as mortgage providers and removal companies.

Our Strategy

We have a disciplined focus on the UK property advertising market. We focus on increasing the size and engagement of our audience of property consumers to provide great value for our customers. We focus on growing organically through our customers investing more in their presence on Rightmove and by broadening our offering to cover more of the consumer journey.

Our Brand

Our strong brand recognition with the public and the simplicity of the core service we provide make Rightmove the public’s first choice to help them find their next home. Much of our success comes from the positive experience that home hunters have in using our services in addition to our considerable investment over 15 years in promoting the Rightmove brand.

We have continued to invest in our brand in 2014 with our new ‘find your happy’ campaign. The campaign plays on the theme that finding the ‘right’ home creates one of life’s most positive emotions…happiness. And there’s a happy out there for everyone. A ‘walk to work’ happy, a ‘close to a good school’ happy, a ‘smell the sea air’ happy. We are using the campaign to empower people to search and research homes on Rightmove that means they will ‘find their happy’.

Our brand building has focused on national TV, more recently through our partnership with Channel 4 across all of their property content. We also specifically target London through additional outdoor media, 400 Rightmove branded taxis and our Time Out partnership. We launched refreshed material at the start of 2015 across all our media, including national TV, building on the largest consumer themes of ‘more indoor space’, ‘more outdoor space’, ‘a place of my own’ and ‘minimal commute time’.

Rightmove’s position is strong when measured by traditional classified advertising metrics, with brand awareness close to 90% and over ten million unique users. Our commanding position is revealed when one looks at how often consumers visit and what they do. The depth of consumers’ engagement with Rightmove not only leads to more consumers turning to Rightmove first and spending more time on Rightmove, but most importantly to more and better quality leads leading to better outcomes and value for our customers.

We have over 60% market share of visits and leads, over 70% share of page impressions, over 80% share of sales generated from our leads compared to our nearest competitor and over 90% of sellers expecting their property to be marketed on Rightmove.

Innovation

Our mission is to empower the UK’s decisions around property. We want to continue to be the place that consumers turn to first and engage with the most when searching and researching property to ensure we are the brand they insist on.

To that end, in addition to our ongoing investment in our brand, we continue to innovate and invest in our market leading desktop, mobile and tablet platforms to deliver the most engaging experience for consumers. Our focus is on having the largest, most up to date and accurate property inventory in the UK coupled with the best search and research capability and fastest property alerts.

We are the most up to date site and over one third of our agents are now using the real-time data feed, which we built last year and has become the industry standard, to get their vendors’ properties onto Rightmove immediately. To complement this we launched Instant Property Alerts to alert consumers within minutes of a property coming to market. Via Property Alerts alone, we have 1.4 million highly engaged subscribers to whom we delivered over a quarter of a billion property alerts in 2014.

We serve by far the most pages of property pricing information in the UK and we have an opportunity to grow this advantage further by extending our offering to consumers researching the market. We added our popular ‘Sold Prices’ functionality to our mobile and tablet platforms in 2014. This functionality is unique in that it matches our unrivalled catalogue of current and archived properties, containing over two billion property images, to Land Registry sold prices.

We also launched a new ‘Market Info’ section to help consumers better understand their local market. In the first month alone this new content was viewed over two million times. Looking forward, our innovation lab is launching a new valuation app early in 2015.

The infrastructure that underpins Rightmove is critical to our success and in 2014 the team achieved an enviable 99.995% for availability and a webpage load time of just over one second which is twice the speed of our nearest competitor.

Competitive Edge

We want to offer the most significant and effective exposure for our customers’ brands and properties, be the largest source of high quality leads and empower our customers’ decisions through best in class tools, market insight and support.

In addition to the valuation opportunities within the 43 million leads we generated, over 70,000 individual home sellers used our Local Valuation Alert product to request a valuation directly from their local agents.

We launched an upgrade to our popular market intelligence tools under the banner of ‘Rightmove Intel’ to provide further insight into local markets for our agents and ensure they have the competitive edge. Drawing on the most comprehensive dataset available, Rightmove Intel builds on our existing set of tools which are used by 90% of our customers who generate over half a million reports using these tools every month.

We care about our customers’ business success and building strong relationships is vital in order to support their ambitions. We are spending more time with customers than ever before as we expand and segment our account management team and increase their efficiency through better sales and administrative tools and back-office support. We have also provided more training and introduced new tools to facilitate better conversations with customers.

We refreshed our ever popular seminar programme focusing on the 21st century home mover, their digital footprint, and how agents can use Rightmove to better identify and understand the consumer and their evolving property-related needs. We ran over 25 seminars across the country for more than 2,000 participants and also introduced more specialised content in the form of webinars. Already in 2015 we’ve run six seminars across the country from Torquay to Inverness.

Other Businesses

Our overseas homes advertising business has grown strongly with customer numbers up 70% in the year to over 2,000. Audience figures set new records with over 80 million overseas searches, up 33% on last year. Rightmove now has 170,000 overseas homes advertised for sale, an increase of over 50% compared to a year ago.

Our commercial property advertising business has established itself as the UK’s largest commercial property site with over 45,000 properties advertised and close to 70 million commercial searches in 2014, up 75% on last year.

Our data services business continues to grow as we help a wide range of customers, including banks and surveyors to leverage Rightmove’s UK property database, which is the largest of its kind covering nearly two-thirds of the UK owner occupied and privately rented housing stock.

Current trading and outlook

The outlook for the UK online property advertising market remains positive as consumers and customers become ever more digital and the market continues to shift from traditional advertising channels. We are well positioned to benefit from this transition due to our market leading position which is strengthening on both sides of the network.

Our customers choose to spend money with Rightmove based on the value we deliver. We are delighted that nearly every agent in the UK has chosen to remain on Rightmove following the recent launch of a new entrant, OnTheMarket.com, cementing Rightmove as the best property advertising option in the UK.  As at the end of February customer numbers were unchanged from our record year end position.

With our market leading position strengthening, average spend per advertiser continuing to grow and record January traffic numbers, the Board remains confident of making further progress in growing the business organically in 2015 and beyond.

Source: Rightmove PLC Final Results 31 December 2014

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Simon Baker is the Founder and Executive Chairman of Online Marketplaces and Property Portal Watch. Involved with property portals for 15 years, he’s a well-recognized expert and industry consultant.
As former CEO/MD of the REA Group for 8 years, Simon led the group to its current market-leading position. When he joined REA Group in 2001, it had $4m in revenues, $6m in losses and an $8m market cap.
By 2008, the company presided over $155m in revenues, $35m in EBITDA and enjoyed a peak market cap of $1b. Simon is currently Chairman of the Mitula Group and Real Estate Investar and a serial portal founder and, investor.