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Rightmove still getting it right

Estate agents are paying more to appear on the property portal as housing stock dries up
February 25, 2022
  • Customer numbers fall slightly 
  • Average revenue per advertiser up 9 per cent on 2019

In 2018, we considered whether Rightmove (RMV) would become a victim of its own success. Was it squeezing its customers too tightly? Could it be undercut by cheaper rivals? Three-and-a-bit years later, the answer seems to be a resounding 'no'.

After slashing prices at the start of the pandemic to keep estate agents on side, the property portal is performing better than ever. Average revenue per advertiser is up 9 per cent at £1,189 per month, house hunters are visiting the site more often and are spending longer browsing for properties. 

The current state of the housing market is having mixed effects on Rightmove. On the one hand, healthy transaction numbers and lack of available stock have encouraged many estate agents to invest heavily in Rightmove products, to ensure they win the instructions that are available. 

But management said the lack of new stock has resulted in fewer new entrants to the agency industry, and made existing agencies cautious about expanding their branch networks.

Estate agents and letting agents aren’t Rightmove’s only customers; new home developers also buy advertising from the group. However, the number of new housing schemes listed on Rightmove fell by nearly 6 per cent in 2021, as many developers forward-sold their properties. Moreover, demand for homes is so high that some developers don’t need to spend money on discretionary advertising.

As a result, Rightmove’s customer base shrank by 1 per cent in 2021, despite a small increase in agency customers. 

While Rightmove’s customer base is worth keeping an eye on, it does not detract from the group’s consistent profit growth, lean business model and powerful market share. Buy. 

Last IC View: Buy, 702p, 1 Aug 2021

RIGHTMOVE (RMV)   
ORD PRICE:651pMARKET VALUE:£5.5bn
TOUCH:650.8-651.2p12-MONTH HIGH:810pLOW: 552p
DIVIDEND YIELD:1.2%PE RATIO:31
NET ASSET VALUE:8.3p*NET CASH:£32mn

 

Year to 31 DecTurnover (£mn)Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p)
201724317815.75.80
201826719817.86.50
201928921419.62.80
202020613512.64.50
202130522621.37.80
% change+48+67+69+73
Ex-div:28 Apr   
Payment:27 May   
*Includes intangible assets of £21.1m, or 2.5p a share