25th Feb 2022 21:51
(Alliance News) - The UK property market saw a frenzy of activity in 2021 and Friday's numbers from Rightmove PLC appear to reflect that, with the firm benefiting from its dominant market position as an online real estate portal.
Rightmove reported annual revenue of GBP304.9 million, up a substantial 48% from GBP205.7 million in the prior year. On a pre-pandemic comparative of 2019, revenue was up by 5.4% from GBP289.3 billion.
Rightmove said the granting of "exceptional Covid customer discounts" in 2020 was behind the revenue growth, while 2019 revenue growth was led by higher average revenue per advertiser which it said was up by 9% on two years prior.
Pretax profit rose by 67% to GBP225.6 million from GBP134.8 million in 2020. When compared to 2019, profit before tax saw a more modest but still notable increase of 9.5% from GBP213.6 million.
The company explained that as consumer demand returned in the year and reduced the amount of properties on the market, property agents were incentivised to boost their spend with Rightmove to win more business.
"Rightmove is the ultimate lesson in pricing power," Sophie Lund-Yates, equity analyst at Hargreaves Lansdown said, "regardless of what's going on in the wider market, whether it's up or down, today's estate agents can ill afford not to advertise on Rightmove.
That allows Rightmove to pump up its prices as it so chooses, it also offers insulation from the housing market rollercoaster. It makes money from agents, rather than being too bothered about how many houses are being sold."
However, Rightmove explained that the market climate resulted in fewer new entrants to the agency industry for it to recruit. Despite this, the company managed a 1% increase in total agency membership, with a record 91% retention rate.
Agency revenues were up 58% year-on-year to GBP224.5 million from GBP141.6 million. This was also a 7.3% increase from GBP209.2 million in 2019.
Russ Mould, investment director at AJ Bell, said: "Its site has the most listings and is therefore the one which prospective property buyers will likely go to first when looking for their next home. This reinforces its position as a must-have product for estate agencies and gives it significant pricing power when it comes to securing subscriptions from agencies."
"It doesn't hurt that the UK housing market has been buoyant of late, which means its estate agent customers are happy to pay more for Rightmove's services," he continued.
New Homes listings on Rightmove fell by 6% over the year, as construction was hit by delays due to Covid. Total revenue from New Homes was GBP50.0 million, which was a 10% decrease from 2019, but a 23% increase from 2020.
In 2022, Rightmove expects the number of transactions to return to pre-pandemic levels as the market normalises, and its outlook is confident.
Hargreaves Lansdown's Lund-Yates said: "A severe housing market downturn would affect the top line, as it would see estate agents under pressure and potentially needing discounts. Worse still would be an accelerated reduction in the number of operating estate agents. This is already a structural issue, but the decline is tempered at the moment, and one that's being offset by Rightmove's ability to increase prices and cross sell a suite of extra products."
Mould concurred: "Growth in revenue, earnings and cash flow is heavily reliant on charging agents more. Initiatives like new digital marketing solutions and a more concerted push into the rental sector will help but are unlikely to move the dial in the same way."
The company will pay a final dividend of 4.8 pence per share, a 6.7% increase from 4.5p in 2020. The total dividend for 2021 will be 7.8p, while 4.5p was the only payout for 2020.
"Following a year of strong recovery and a return to the growth trajectory our stakeholders expect, we are confident that our investment in technology and people will uphold Rightmove's position as the UK's number one property portal. We are committed to investing in our core business, to providing the premium service that our customers expect and the truly compelling consumer experience home hunters know and love, in addition to pursuing our complementary new strategies," Chair Andrew Fisher commented.
Rightmove closed up 4.6% at 643.69 pence in London on Friday. Over the past year the stock has gained 14%.
By Heather Rydings; [email protected]
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