We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us

Rightmove - Double digit growth, driven by price

Nicholas Hyett | 27 July 2018 | A A A
Rightmove - Double digit growth, driven by price

No recommendation

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Rightmove plc Ord 1p

Sell: NaN | Buy: NaN | Change NaN (NaN%)
Chart View factsheet

Market closed | Prices delayed by at least 15 minutes | Switch to live prices

Revenue in the first half rose 10% to £131.1m, with underlying operating profit up 11% to £101m - an operating profit margin of 77%.

The interim dividend rose 14% to 25p.

Rightmove shares rose 1.1% in early trading.

View the latest share price and how to deal

Our View

Rightmove was set up in 2000 by four big estate agency chains, and quickly established a dominant position in online property search, making its website a must-see destination for buyers.

The group makes its money by charging agents to appear on the site.

Rightmove says a decade or so ago, agents typically spent around £2,500 per office per month on print media. Although agents' overall advertising budget is lower these days, Rightmove has consistently eaten into print media's share of advertising revenue, and now generates revenues per agent of £987 a month.

Rightmove charges on a per office basis, and as long as the agent's in business, it's an expense that can't be spared. That's allowed Rightmove to hike prices for years.

Unfortunately there may be early signs of cracks in the foundations. A flagging property market means estate agents are increasingly under pressure. A recent study found that 150 estate agents went bust last year, and up to 7,000 are at risk of going to the wall.

With end customers struggling, forcing through new price rises could be difficult. As a result Rightmove's looking to diversify the range of services it offers - especially with tools to help estate agents become more efficient.

For all that the business is very high quality. Capital requirements are low operating profit margins are over 75% and it has a proven strategy for growing sales, profits and returns to shareholders. The prospective yield is 1.3%, but, all being well, that's' expected to grow in the years ahead. Remember there's no guarantees on dividends though.

The shares are trading at around 27 times expected earnings, well above their average rating since listing.

Register for updates on Rightmove

Half Year results

With Agency and New Home membership broadly stable at 20,450, revenue growth has been driven by a £76 increase in Average Revenue Per Advertiser (ARPA). ARPA per month averaged £987 in the half.

Agency ARPA was up £75 to £940, while New Homes ARPA rose £76 to £1,286. Growth was driven by the sale of additional advertising products in both divisions as well as increases in core membership prices.

Agency now makes up 76% of revenues, with New Homes accounting for 16% and the remainder generated from other sources, like third party advertising.

Rightmove consumer traffic rise 5% year-on-year, averaging 139m visitors a month, with time on site up 4% to 1.1bn minutes a month. Market share of traffic across desktop and mobile was 74%.

Rightmove expect full year ARPA growth to be £80 and are confident of meeting full year expectations.

Find out more about Rightmove shares including how to invest

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.