26th Jul 2024 10:23
(Alliance News) - Rightmove PLC enjoyed an improved first-half, with key metrics climbing, but online estate agent rival OnTheMarket remains "one to watch" as it grows in strength under the ownership of New York-listed CoStar Group Inc.
Rightmove shares were 0.1% lower at 567.20 pence each in London on Friday morning.
Rightmove said that for the first six months of 2024, pretax profit rose 1.8% to GBP132.7 million from GBP130.3 million the year before. Revenue increased by 7.1% to GBP192.1 million from GBP179.5 million "as both agents and new homes developers renewed contracts, upgraded their packages and invested in additional products".
Average revenue per advertiser climbed 6.1% to GBP1,497 per month from GBP1,411 a year prior. Membership numbers edged up 1% since the start of the year to 19,061.
Rightmove meanwhile declared an interim dividend of 3.7 pence per share for the half year, up 2.8% from 3.6p for the first half of 2023.
"We're pleased to deliver a strong set of H1 results, and to be progressing in executing our plan to build an even more valuable digital platform for the UK property industry," commented Chief Executive Officer Johan Svanstrom. "Our performance came against the backdrop of the sustained challenging mortgage rate environment. The period saw a pick-up in existing-homes listings and transactions, a continued yet softening imbalance of demand and supply for rentals, and a tentative outlook for new homes development volumes."
Going forward, Rightmove said it expects an underlying operating margin of 70% for the full year, as it continues "to invest in product innovation for both our consumers and our partners, and [is] accelerating our strategic growth areas of commercial real estate, rental services and mortgage lead generation".
CEO Svanstrom continued: "With the election now concluded, the property market looks forward to potential interest rate reductions which will further stimulate activity.
"On the back of our leading position in the market, we have exciting momentum expanding our products and innovation for consumers and partners and remain confident in Rightmove's long-term prospects."
Shore Capital Markets said it was "reassured" by Rightmove's half-year earnings.
"We remain of the view that Rightmove can continue to generate attractive growth thanks to its dominant market position and the strength of its proposition to agents, developers and consumers. That said, this week's quarterly update from CoStar suggests that OnTheMarket is making good progress under its ownership," Shore added.
CoStar reported that OnTheMarket's agent advertisers now stand at around 17,000, while property listings stood at 710,000 at the half-year end, up 41% on-year.
In December, CoStar completed the acquisition of OnTheMarket PLC for GBP99 million.
CoStar said the combination would create a "genuine disruptor" to the established UK market leaders.
Andy Florance, founder & chief executive officer of CoStar, fired a warning shot to Rightmove at the time.
"The current market leader has grown complacent focusing on margin over innovation, and pricing ahead of value," he said.
Wealth Club analyst Charlie Huggins commented on Friday: "CoStar's acquisition of OnTheMarket means Rightmove now faces a highly credible and deep-pocketed rival. Innovation is becoming increasingly important and that comes at a cost.
"Rightmove still retains a very dominant position, and it will be difficult for CoStar to make a significant dent. Even without much growth, Rightmove is still a cash cow. But with the competitive environment hotting up, Rightmove cannot afford to rest on its laurels."
For 2024, Rightmove still expects revenue growth of 7% to 9%.
By Eric Cunha, Alliance News news editor
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