Rightmove – New Homes Selling Too Fast

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Rightmove Plc (LON:RMV)’s half year revenue rose 58% compared to last year, reaching £149.9m. That reflects increased customer spending and average revenue per advertiser (ARPA). Compared to pre-pandemic times, revenue’s up 4%. Underlying operating profit was up 91% to £117.1m.

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For the second half, Rightmove expects further ARPA growth, ongoing uptake of more lucrative products and for the number of agencies that use its platform to remain “broadly stable.”. However, the group said growth from estate agent customers is being slightly offset by new home developers, who are seeing such strong demand they aren’t spending as much on advertising.

An interim dividend of 3.0p was announced.

The shares fell 2.1% following the announcement.

Rightmove’s Core Estate Agent Customers Are Rebounding Strongly

Sophie Lund-Yates, Senior Equity Analyst at Hargreaves Lansdown

“New home developments are selling out before they’re even built. That means, quite rightly, developers are reining in marketing spending – why pay for Rightmove to advertise your houses when they are quite literally selling themselves? Lockdowns triggered a housing market boom, and for the UK, which is already a nation obsessed with home ownership, this should have been good news for the likes of Rightmove. Instead, that housing boom has gone supersonic and wiped out Rightmove’s usefulness to the new home market.

The flipside of that is Rightmove’s core estate agent customers, who appear to be rebounding strongly. The declines in the number of agencies using Rightmove since before the pandemic is worth attention, but for the time being this is being offset by higher revenue per advertiser, as those branches still using the Rightmove platform can’t really afford to stop. That gives Rightmove enviable revenue visibility, and feeds into a remarkable operating margin of 77%.”

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