OnTheMarket (LON:OTMP), the agent-backed company which operates the OnTheMarket.com property portal, today announced its unaudited interim results for the six months ended 31 July 2019 (“H1 19/20”).
o Based upon an ARPA of £331 per month, in September 2019 the Group provided its UK residential advertisers an average of 34 leads per £100. In its H1 2019, Rightmove provided its UK residential advertisers on average 16 leads per £100.
Financial highlights and KPIs
· Group revenue of £8.0m, up 14% (H1 18/19: £7.0m).
· Administrative expenses of £14.8m, up 23% (H1 18/19: £12.0m), primarily as a result of the Group’s investment in its sales and IT teams.
· Adjusted operating loss1 of £6.7m (H1 18/19: £5.0m).
· Operating loss of £7.2m (H1 18/19: £5.7m).
· Loss after tax attributable to shareholders of £7.0m (H1 18/19: £5.7m).
· Loss per share of 11.16p (H1 18/19: 9.57p).
· Cash of £8.8m as at 31 July 2019 (£15.7m at 31 January 2019).
· ARPA2 £108 (FY 18/19: £130), reflecting the larger number of agents listing under free, short-term introductory trial contracts in the period.
· Average branch numbers listed at OnTheMarket.com of 12,434 (H1 18/19: 7,788) with period end listings of 12,543 (H1 18/19: 9,777).
· Web and mobile visits3 increased by 75% to 120.7m (H1 18/19: 69.0m).
o Following earlier preliminary trials, conversion activity commenced in earnest during this period and, at 31 July 2019, 1,308 branches had been signed under new paying contracts. This had increased to 2,346 branches as at 30 September 2019.
o Average leads per advertiser were more than double that achieved in H1 18/19 and averaged 93 per advertiser per month for the period.
· Product development:
o The first new efficiency tool for agents was the Market Appraisal Guide, OnTheMarket’s version of Rightmove’s ‘Best Price Guide’.
o New agent advertising products were launched and the first sales of Spotlight properties and advertising banners were made.
· Further progress in the litigation between Agents’ Mutual and Gascoigne Halman:
o Following the judgment in the Group’s favour issued by the Competition Appeal Tribunal at the Court of Appeal in January 2019, the Group received payment in July 2019 of a further £1.1m in respect of cost recovery. This more than offset professional fees incurred in the period in relation to litigation and led to net income of £0.2m.
Post period end developments and outlook
· The Group is trading in line with its recent guidance:
o The Group had a cash balance at 30 September 2019 of £8.6m.
o The Group’s revenues cover fixed operational costs before marketing expenditure and are growing.
o The Directors have prepared and reviewed projections under different scenarios and, based upon these analyses, have a reasonable expectation that the Group has adequate financial resources to continue its operations for the foreseeable future.
· Conversion of free-of-charge trial agents to paying contracts and recruitment of new agents:
o As at 30 September 2019, 2,346 branches had been signed under new paying contracts since conversion commenced, at an average ARPA of £288 per month.
o 42% are under long-term contracts of 3 or 5 years with associated share issuance to align interests. ARPA on these contracts averages £331 per month.
o Following the introduction of shorter-term, lower-cost contracts, the rate of sign-ups has accelerated. ARPA on these contracts averages £203 per month.
· Strong agent listings and property stock:
o Agent offices listing at 30 September 2019 were 12,622, reflecting the recruitment of new agents offset by the removal of agent branches following the expiry of free trial periods.
o UK residential property listings on 30 September 2019 were 641,672, approximately 85% of Zoopla’s and 64% of Rightmove’s4. In the period from 3 July 2018 to 30 September 2019, OnTheMarket’s UK residential property listings grew by around 90,000 and Zoopla’s fell by around 66,0004.
· Increasing portal traffic, brand awareness and consumer engagement:
o In September 2019, the portal attracted a record 27.2m visits.
o Prompted awareness of the OnTheMarket brand among active property-seekers is up from 27% in June 2018 to 50% at the end of September 2019.
o At 30 September 2019, almost 1.2m people were using OnTheMarket’s property alert service. Average monthly instant alerts sent exceed 100m.
· Delivering greater value and growing leads to agent shareholders and customers:
o OnTheMarket’s monthly average leads per UK residential property advertiser rose to 112 in September 2019. Rightmove’s fell to 168 in H1 2019, while Zoopla’s last reported equivalent figure was 90 (H1 2018)5.
Ian Springett, Chief Executive Officer of OnTheMarket plc, commented:
“Our results for the six months to 31 July 2019 were in line with our expectations.
“Our recent guidance indicated that agents had not committed to full-tariff, long-term paying contracts at the pace expected, however they have responded positively to the changes to our offering.
“We continue to convert agents to full-tariff, long-term contracts with share issuance. 42% of branches signed to new paying contracts since conversion began have been under these contracts. Following the share issuance arising from these contracts, over 3,000 agent firms operating over 6,000 UK agency branches will be OnTheMarket shareholders, increasing the strong core membership around which we are building OnTheMarket. Their backing for their portal in a variety of practical ways is key to creating an edge over our rivals in the portals market.
“We have recently supplemented our offering to agents with the introduction of lower-priced, short-term offers, with the aim of maximising the number of paying agents and migrating all to full-tariff contracts progressively. Take-up of these short-term offers has led to an encouraging acceleration in the rate at which agents are converting onto paying contracts.
“The continued strong growth in the operational performance of the OnTheMarket.com portal provides encouragement for the future. We have delivered another set of record-breaking traffic and leads results for our estate and letting agent shareholders and customers.
“I thank all my colleagues for all their hard work in driving OnTheMarket forward in pursuit of its objectives.”
1) Adjusted operating loss or profit is defined as operating loss or profit before finance costs, taxation, share based payments and exceptional or non-recurring items. This is an alternative performance measure and should not be considered an alternative to IFRS measures, such as revenue or operating loss or profit. Please see the Financial Review and Key Performance Indicators section below for a reconciliation of operating loss / profit to adjusted operating loss / profit.
2) Average revenue per property advertiser, being revenues due from property advertisers for a period divided by the number of property advertisers for that period. ARPA presented herein is the average of the monthly ARPAs for the period unless otherwise stated. A property advertiser is a listed agency branch or a new home development advertising on OnTheMarket.com.
3) Visits comprise individual sessions on OnTheMarket’s web based portal or mobile applications by users for the period indicated as measured by Google Analytics.
4) Zoopla listings of UK residential properties were 756,428 as at 30 September 2019 and 822,250 as at 3 July 2018. Rightmove, in its August 2019 House Price Index, stated that it “at any time displayed a stock of over one million properties to buy or rent”.
5) H1 2019 is the most recently published information available for Rightmove and H1 2018 the most recently published information available for Zoopla.
6) Unless otherwise stated, all figures refer to the six months ended 31 July 2019 and comparative figures are for the six months ended 31 July 2018 (“H1 18/19”).