Record Profit for Rightmove as Agents Pay More For Listings Packages

Leading British property portal Rightmove released its results for the first six months of 2022 to the market this morning. Highlights of Rightmove's operations over the period include:

• Revenue was up 9% year-on-year at £162.7 million
• Operating profit was up 6% at £121.3 million with a record profit after tax of £98.3 million
• Basic earnings per share up 8% to 11.7p and interim dividend for 2022 up 10% to 3.3p

Rightmove is one of the most consistently successful portal companies in the world with its profits being driven by the incredible network effects that drive its pricing power. A key metric for the company is ARPA (average revenue per agent) which increased by 11% (£1,290) compared to the comparison period of 2021.

The most recent growth in ARPA was put down to the successful migration of Rightmove's agent customers to its premium listings packages. The portal saw a record number of what it referred to as 'organic upgrades' to its Optimiser 2020 package as it phases out cheaper packages. A press release claims that 34% of independent agencies are now subscribed to the Optimiser 2020 package compared to 31% last year.

Departing company Chief Executive Peter Brooks-Johnson said of his company's performance:

“Our success during the first half of the year demonstrated the ongoing resilience of our customer base and the continuing love for and trust in our brand. Despite the housing market cooling slightly, activity on our platform was significantly higher than in the pre-pandemic market of 2019, with home-hunters using Rightmove for 1.5 billion minutes every month. Our continuous improvements and innovation have helped to increase engagement from home-hunters in tools such as sold prices, along with further investment from agents and developers as they continue to believe in the effectiveness of our digital products and tools to help them run and grow their businesses”.

Agents often criticise Rightmove for both its pricing and its lack of innovation but a company press release was keen to point out product developments in the pipeline.

Rightmove launched the 'Lead-to-Keys' concept last month which allows rental agents to create contracts, generate offers and sign and store contracts digitally. There was also the release of banking-based referencing for tenants allowing them to search for and secure a rental property entirely online - a feat the company claims is an industry first. Further functionality around the rental experience is expected over the second half of the year.

“I’m excited by our recent developments to make the process of renting a property easier for tenants and agents. The new lead-to-keys workflow will give tenants the ability to search, view, secure and contract on a property, all from their mobile phones. I hope that this will alleviate some of the stress in this very competitive rental market”, said Brooks-Johnson

The Rightmove tech team are also working on an integrated Mortgage in Principle functionality for the platform which will allow users to tailor their property searches with the confidence of being granted a mortgage once they find the right property.

The only slight potential cause for concern for Rightmove executives might be declining customer numbers. Whilst the situation can hardly be described as an exodus, the portal has consistently lost agent customers since 2019. In a recent interview Jason Tebb, boss of agent-backed Rightmove rival OnTheMarket, claimed that at least 1,000 agents are now shunning Rightmove and Zoopla and listing exclusively on OnTheMarket.

Leaky customer retention aside, Rightmove's performance in the first six months of 2022 has seen the Milton Keynes-based company bring in record profits as its share price continues to recover strongly from lows of GBX 542 seen in June. At the time of writing, shares in Rightmove (LON:RMV) were trading at GBX 640.