Rightmove’s share price fell hard on Friday, despite the firm announcing record results on the back of its advertisers paying an average of over £1,000 a month for the first time.
However, there was speculation that the City was uneasy that Rightmove’s agency numbers dropped last year – albeit by just 2%.
The shares picked up later in the day.
Rightmove announced a profits margin of 74% and pre-tax profits of £198.3m for last year.
The number of estate agency branches listing on Rightmove dropped to 17,328, but revenue from estate agencies was up 9% to £201m.
Chief executive Peter Brooks-Johnson told the Financial Times that Brexit uncertainty had prompted some agents to leave the industry.
He said that these included some slightly older proprietors who have said ‘I don’t need to be doing this any more’.
He said: “We would expect to see a bit more (departures) this year but I don’t think about that as a measure of the health of the agency industry.”
One analyst, Sherri Malek of RBC Capital Markets, said there were “risks related to the market backdrop”.
Another analyst, William Packer, said the fall in share prices on Friday was a “harsh reaction”.
He said that as at January, agency numbers advertising with Rightmove were stable.
Reporting on a briefing to analysts, he said that Rightmove had been upbeat, with 50% of agents spending less than 5% on Rightmove – described as an “addressable opportunity”.
Packer, of Exane BNP Paribas, said: “Management also played down their exposure to branch numbers as the revenue model is increasingly based upon total contract value as agents change their physical footprints.”
He said that while bears would focus on weaker agency numbers, “we see Rightmove as well placed to continue to grow its agency business via innovation and pricing power even as the estate agency industry structure matures with digital”.
Packer added that Rightmove management had said at the briefing that its pricing was going to plan.
A writer on investment website Motley Fool hailed Rightmove’s results as “amazing”.
The article says: “Estate agents have no choice but to list their properties on Rightmove. And the company understands this.
“The firm’s operating profit rose by 11% last year, mostly because the average monthly revenue collected from each of the firm’s advertisers rose by 9% to £1,005.
“Agents are said to be unhappy with Rightmove’s ever-increasing prices. A number of big agencies have grouped together to launch a cheaper rival service, OnTheMarket.com. They may succeed, in which case I’d expect Rightmove’s profits to fall sharply.
“But for my money, Rightmove’s domination of the market is so complete that rivals are unlikely to be able to gain enough momentum to rival the market leader.
“That’s why I continue to rate these shares as a buy at current levels. In my view, a price tag of 25 times forecast earnings isn’t too much to pay for such a profitable and dominant business.”
While Rightmove share prices dipped by some 6% at one stage on Friday, down to about 448p, by the end of the day they had recovered to being just 2% down. They start the new week trading at around 472p.
“The article says: “Estate agents have no choice but to list their properties on Rightmove. And the company understands this.”
The article says: “Estate agents (think they) have no choice but to list their properties on Rightmove. And the company abuses this. – fixed that for you.
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Onthemarket . Take a bow. You have done the opposite to rightmove that you were created for. W.o.t
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You have the product , you have the customers.
Now you need a backbone .
The city agents who created it obviously mislead it’s members and had no plan to kill rightmove. Just get a massive payday by listing on the ftse.
Time to leave but tell zoopla will only come back if they refuse Payanyway listings.
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Chris Wood – anti RM blogger.
lets have a bet on how many comments this story gets today, I’m going for over 100
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Thanks for your serious input.
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“Chief executive Peter Brooks-Johnson told the Financial Times that Brexit uncertainty had prompted some agents to leave the industry”.
Really? I would say pricing.
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Yep a typical arrogant paragraph which I’d expect. We all know that Rightmove ‘thinks’ we can’t do without them but what it doesn’t go on to say is that plenty of Agents have left them and are doing absolutely fine without them!!! OnTheMarket at the moment is giving us as an agent 5 times more leads than Rightmove every month and has been for 6 months!! Rightmoves arrogant bubble will burst and the curtains will be drawn there’s no doubt about that! You only need to look at countrywide for the best example of what happens when you think you’re invincible!
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The Countrywide point is very relevant and there are countless examples of falling the market leaders – just take a look at the big banks and their decline along with the likes of so many others. I’m sure there are hundreds of them but very, very few who had to rely on a 74% profit margin to keep the city boys happy.
As agents we just have to remember that only 26% of our money is actually spent on marketing for us whilst almost three times that amount goes to the (current) shareholders – but we are the ones with the product and the marketplace.
Where did we all go wrong??
Roll on OTM but we need to conquer Hoopla first.
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A writer on investment website Motley Fool hailed Rightmove’s results as “amazing”. The article says: “Estate agents have no choice but to list their properties on Rightmove.
And that statement illustrates why you should take pontifications by so-called experts with a very large pinch of salt.
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BREXIT uncertainty? What a load of S#}t.
The Rightmove share price will continue to fall as agents continue to leave. NOTHING to do with people retiring.
What Christmas tree does this chap think we’ve fallen off?!?!?
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But it isnt falling is it, thats the problem. The share price as of right now is at an all time high. The biggest thing as i have stated before is how many will stay with OTM once they actually have to start paying. If the number is significant then the future is bright, if the numbers dwindle then it just strengthens RMs hand.
Like it or not, that is the truth. People can thumbs down and moan about RM, but until you actually leave, nothing will change.
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2007 possibly –
The article says “Estate Agents have no choice but to advertise their properties in our paper…..”
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Where there was only one paper true BUT you could vary how many pages, how often and 100% control the content. You could pull out for the whole of December and not get penalised for going back in. Most importantly, the savvy agents sold the space to clients so they had NO newspaper advertising costs. Some even made a profit. So Rightmove was such a great idea was it?
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Eventually hostages either escape or die.
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Until the corporates on lower cost per branch fees jack it in RM willl be safe.
Sadly it is a harsh reality.
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For some reason each time I hear Rightmove, I think of the lyrics to ‘Stand and Deliver’
I’m the dandy highwayman who you’re too scared to mention
I spend my cash on looking flash and grabbing your attention
Coming off Rightmove is nothing to do with the market, we would stay if Rightmove didn’t just hike our price from £1100 per month to £3600 per month.
Well done to OTM as we have got more leads from them, two of our most recent sales totalling £13m came from OTM and not Rightmove!
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“Well done to OTM as we have got more leads from them, two of our most recent sales totalling £13m came from OTM and not Rightmove!”
Said the OTM rep
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Does Benjamin not run Yooodle no more then? Rep for OTM?
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What’s more worrying is that I’m not sure you knew by heart or had to look up YouTube lyrics, Adam!! As for falling off the tree, well the 50% (of 98%) they already hit will get hit as per and the 50% that only spend 5% will REALLy get hit to make up for the 2% loss of agents, look out sheep.
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Rightmove are a disgrace to the industry and don’t respond to the needs of agents at any level. They are only concerned about how much money they can make at whatever the cost.
I hope OTM gets it right
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If OTM don’t, something else will.
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Rightmove SP up 3% at this point today.
From the results:
“Continued traffic growth with visits up over 4% averaging nearly 132 million visits per month(4) and time on site up 5% at over 1 billion minutes per month(4)”
“2018 was another strong year for Rightmove. We extended our market leadership and reinforced our position as the place consumers turn to first when thinking about moving home.”
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But not from RM marketing spend. RM only exist because of the support and promotion the agents have given them for nearly two decades.
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The amount of leads generated by Rightmove, to our branches, doesn’t justify the subscriptions they demand. It’s been like that for some time now, so for those reasons, I’ve given my notice. If we all did this, they’d have to take notice? I realise it’s difficult for some agents,but I have monitored where my profits are made, where they are cost effective and for me, Rightmove are far too expensive to justify keeping. They would rather lose agents than excercise restraint, in what is currently a challenging marketplace.
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What will it take for you to remain and are you going to OTM ?
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if they’d kept their subs the same, I’d probably have stayed. I despise greedy people and they are hiking their rates, just because they feel they can. Well the tipping point has now been breached and it’s goodbye from me. Maybe I’ll try OTM, however, it may be a regional/ geographical thing, but we get most of our “portal leads” from Zoopla. We have our own website, local property press, proactive staff using our data base effectively, a high street presence and a large proportion of our instructions/sales are generated from these sources. I have taken all portal advertising down from our premises and going forward, I will not promote, encourage clients to use them, or become a “slave” to them. OTM and Zoopla need to be kept in check, because, given the opportunity, they’ll be exactly the same.
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Budgie Boy,
If you are not on OTM – try it – we get 8x more leads that RM produced for us and 4x what Z currently produces !
Worth a try !
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I gave my notice to RM on Friday along with my reasons and opinion of their ‘amazing‘ business model. Had a reply on Saturday saying sorry you’re leaving and my account manager will be in touch to discuss on Wednesday (to be fair, she’s away just now).
Why?
Dec 2016: £858.73pcm
Jan 2019: £1140pcm including me dropping some extras.
Thats almost 33% in two years, more if I’d kept the same membership level.
Zoopla Dec 2016: £610.80
Zoopla Feb 2019: £621.60
Commercial suicide? Yes, if I keep paying RM. Can’t remember the last time I had a valuation request, and every account review involves them telling me how to use intel to screw my competitors.
Haven’t had a call from Zoopla in probably three years now, (except from their sales team inviting me to join- 5 years now guys, great database management). Don’t even know who my account manager is as the previous two have left, s’pose you get what you pay for, but for half the cost of RM I’ll suck it up for now.
Might talk to OTM as they now let us ‘bedroom’ agents in.
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“He said that these included some slightly older proprietors who have said ‘I don’t need to be doing this any more’.”
Almost correct! I am an older proprietor and I said I don’t need to be paying rightmove anymore! Interestingly they take their figures up to end January. I suspect that I, along with many others terminated at the end of February after the price rise was announced. Let’s challenge rightmove to disclose their numbers of agents at the end of April and watch the share price fall.
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I keep hearing about agents leaving and have no doubt that is true however, are those agents Lettings or Sales & Letting, all the agents I know that have left have been Letting agents only? if this is the case I agree that NO letting agent need RM as the demand for rentals is very high and Landlords are not interested in the least where the agent advertises their properties unlike Vendors who harp on about RM. Leaving RM is hard it put’s sales agents in a vulnerable position where other agents would use it to their advantage to inform vendors that they are not on RM. It would be great if agents would just speak to each other and all act the same but, that is never going to happen.
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I haven’t read Ian Springett’s email circulated today, however despite my negative issues with OTMV1 Sell-out, a real test for Rightmove’s future Portal status is OTM’s Retention Rate after the Free Trial period plus the addition/increase of the 12,500 so far
Call it “Tipping Point”, “Crossroads”, ‘OTM Day”, call it whatever you like, one thing is for sure, Rightmove’s blatantly indifferent treatment of its Subscribers, Smug Investor Update, Annual Profit Statement – these should all be nails driven deep into their farewell
Rightmove’s behaviour & financially bullying attitude to its Subscribers (in terms of forcibly increasing their Subscriber costs annually with little evidence to justify such increases) needs to be exposed within the media, it needs to be publicised, Rightmove needs to be exposed for it’s bullying tactics where it simply fails to engage with its paying Subscribers
If our industry fails to expose Rightmove’s behaviour then the financial bullying will continue unabated. It is time to act Ladies & Gentlemen
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Imagine if half of the agents using a well known and surprisingly heavily used portal suspended their DD payments for a month…..by way of protest…. might make the (fat) cat investors review their take on pigeons? (To mix my metephors) Might that be construed as incitement to form a cartel?
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