Rightmove needs to do very little to stay as successful and as dominant as it is, says financial website The Motley Fool.
Certainly Rightmove’s long-term shareholders must be remarkably grateful for a strategy that includes almost daily share buy-backs by the company, named this week as the world’s most successful property portal.
Indeed, during the first half of this year, it used dividends and buybacks to return 82% of its operating profit, or £66m, to shareholders.
The Motley Fool says of Rightmove: “The company doesn’t need to fund acquisitions or expansion — all it needs to do is maintain the IT and marketing expenditure needed to protect its current position.
“Rightmove has used share buy-backs to reduce its share count from 111.4m during 2010 to just 93.8m today. These buy-backs alone have provided shareholders with an 18.7% rise in earnings per share over the last six years.
“Rightmove has delivered outright profit growth on top of this, of course, but these numbers show how useful buy-backs can be for companies with genuine surplus cash.”
For those still mystified, there’s a fuller explanation here
Essentially, when firms buy back their own shares they send out a message that they are buying into themselves because it’s a marvellous investment. That is usually perceived by the market as an extremely positive sentiment and keeps, or sends, share prices up.
Buy-backs also reduce the number of shares in the market, meaning that earnings per share increase – even if the company does not increase its own profits.
That does not exactly apply in Rightmove’s case. Its pre-tax profits in 2011 were £62.73m; the following year £83.19m; in 2013 £97.02m; in 2014 £122.04m; and last year, pre-tax profits climbed to £137.10m.
Small wonder that Mike DelPrete, a contributor to Property Portal Watch, said that of all the property portals in the world, Rightmove is the most profitable.
This is despite the fact that it does not bring in the most money – the highest revenues are made by US portal Zillow, which last year actually made losses.
Rightmove’s market capitalisation is £3.65bn and last month, on October 4, its shares hit a 52-week high of 4,416p.
But the share price has since slipped until the last couple of days when the shares have seen two strong days, closing yesterday at 3,895p.
Comments (7)
Arrogance continues to prevail….. there is an alternative; OTM – OnTheMarket.Com, but sadly far too many fence sitters gathering splinters to really take on and challenge this bumbling giant that continues to demand ever increasingly high revenues from us hard working agents….
Only slightly blinkered by understandable ignorance! Rightmove is a successful lump of legacy. It is generation 3 technology in a world where agency is latching onto the opportunities of Generation 5. Rightmove either has to spend a shed load of cash to stay where it is (that’s the sensible option) or it has to re-invent itself in a fairly fundamental way and get close to it’s agent customers.
It would be a shame if Rightmove faced criminal charges in the not too distant future.
Sorry, no it wouldn’t.
Its pre-tax profits in 2011 were £62.73m; the following year £83.19m; in 2013 £97.02m; in 2014 £122.04m; and last year, pre-tax profits climbed to £137.10m.
Meanwhile many agents who support them struggle … lambs to slaughter as they roll over and let RM dictate fees.
Couldn’t have said it better myself Woodentop.
Kinda makes you wonder what would have to happen before Estate Agents wake up and seek an alternative to Rightmoves ever increasing prices – If only there was an alternative !
20 likes and 2 dislikes may very soon be the other way around for….
RM is made of many independent estate agents. They are not singing from one voice, they don’t know each other, they don’t like each other and frankly many haven’t the guts to do anything in fear of loosing business …… waiting for someone to jump ship first. I’ve seen some say they will, waited for those that did and then laughed at them, as they stayed put. RM knows this and play on it. The only way RM will act is when all drop them and that isn’t likely to happen in the current climate.
RM is about is advertsing propertries on behalf of an agent. They do nothing else. So why not use a different web portal? You made RM, you can just as easily make another web portal be as successful and one that works for you. The opportunity is there but a missed opportunity by many?
Sadly I too have witnessed Agents promising to get behind Agents Mutual and then doing entirely the opposite.
Helen presented at our Association and a couple of Agents around the table couldn’t wait to sign the letter of intent and asked ‘can we put more money into it ?’ ‘It’s a no brainer where do I sign’.
These very agents are the ones that did not sign up to Agents Mutual and are still perpetuating ever increasing costs and profits from the very organisation that they could not wait to see the demise of.
Unfortunately these are the agents that will eventually sign up, but only when AM have become big enough to challenge RM – which unfortunately will probably never happen if these agents don’t sign up.
It brings to mind a poster i saw in my local health centre that said ‘I’d do anything to be slim and healthy – except diet and exercise’
Unfortunately this is the mentality of the UK that we live in today.