OnTheMarket plc – Final results to 31 January 2019

OnTheMarket plc – Final results to 31 January 2019

STRONG FIRST YEAR OF OPERATIONAL PROGRESS TOWARDS DELIVERING TRANSFORMATIONAL GROWTH STRATEGY

OnTheMarket plc (AIM: OTMP), the agent-backed company which operates the OnTheMarket.com property portal with over 12,500 branches under contract, today announces its audited results for the year ended 31 January 2019. A final results presentation will shortly be available to view at https://plc.onthemarket.com/investors.

Operational and strategic highlights

  • Conversion of agents from free to paying contracts is underway and new agents are being recruited directly to paying contracts. A total of almost 1,000 branches have been signed under paying contracts since conversion commenced, with an average ARPA of £337 per month.
  • Of these new contracts, 57% are long-term commitments of three or five years with shares and the majority of the balance are on 1 year contracts with an option to convert to a longer-term contract with shares.
  • The ongoing growth in paying contracts is key to the Group’s transition into profitability and is supported by:
    – Growing property stock: As at 3 June 2019, the portal displayed over 650,000 UK residential property listings, already approximately 65% of Rightmove’s1 and over 83% of Zoopla’s1. Continued growth in agent branches on OnTheMarket.com remains key to our strategy and future success;
    – Growing consumer traffic: In May 2019, a record 25.4m visits were made to the portal, up 8% from the previous record in January 2019;
    – Growing consumer engagement: In the month of May 2019, more than 1m people were using our property alerts service and over 100m instant alert emails were sent. Across 2018, Rightmove sent an average of 65m instant alert emails per month to over 2m people;
    – Growing leads to agents: In May 2019, the Group’s average leads per UK residential property advertiser rose to 102 per month. Based on their most recently published information, Zoopla’s average per month fell to 92 (H1 2018) and Rightmove’s fell to 171 (FY 2018);
    – Improving value for money: Based upon an ARPA2 of £337 per month, in May 2019 the Group provided an average of 30 leads per £100. In FY 2018, Rightmove provided on average 17 leads per month per £100, down from 28 leads in FY 2015. The Board is particularly pleased with this as it highlights the significant value we are providing to our customers; and
    – Matching Rightmove’s core agent products: In March 2019 we began rolling out products which support agents’ operations within the listing fee and provide them with additional advertising opportunities at extra cost.
  • Preparatory work to extend our offering to new home developers has begun.
  • The Group continues to evaluate opportunities to acquire businesses, particularly in the area of property technology, which can offer solutions to current business problems faced by its agent customers.
  • With revenues broadly covering operational costs before marketing expenditure and growing, a cash balance at 31 May 2019 of £10.2m and the continued support of agents, we are well placed to deliver long-term value to shareholders.

Financial highlights and KPIs

  • As at 31 January and 31 May 2019, OnTheMarket had signed listing agreements with UK estate and letting agents with more than 12,500 offices. This reflects continued recruitment of new agents on free trials or straight to paying contracts, offset by agents who have been removed from the portal following the end of their free trial periods.
  • ARPA2 £130 (2018: £198), reflecting the strategy to grow rapidly through free short-term introductory trial offers. Average branch numbers listed at OnTheMarket.com 9,460 (2018: 5,694), visits3 158.9m (2018: 77.3m).
  • Group revenue of £14.2m (20184: £13.6m).
  • Administrative expenses of £27.8m (20184: £9.7m) after advertising expenditure of £14.9m (2018: £2.2m) as the Group invested capital raised in increased marketing and expansion of the team, in line with the new growth strategy. The Group is pleased to report that its marketing spend during the year was more efficient than originally envisaged and expects to continue this trend in the future.
  • Adjusted operating loss5 £13.6m (2018: adjusted operating profit5 £3.9m).
  • Operating loss of £14.5m (2018: £10.8m) which includes £0.9m (2018: £14.7m) of specific professional fees, share-based payments and non-recurring items.
  • Loss after tax attributable to shareholders £14.5m (2018: £12.1m).
  • Cash balance at 31 January 2019 £15.7m (2018: £3.2m).

Ian Springett, Chief Executive Officer of OnTheMarket plc, commented: “OnTheMarket has delivered a year of strong operational progress since its IPO in February last year. The Group’s strategy to build strong network effects and deliver increasing value to our agents is working. We are established as one of the leading portals and our progress to date has given us confidence that we can continue to build on this strong start and develop a market-leading, agent-backed alternative to Rightmove and Zoopla.

“We are benefitting from growing agent support and are strongly positioned to continue our growth in agent offices listing and in agent firms converting to becoming investors alongside long-term paying contracts. The Board believes that with the continued support of agents, we are well placed to deliver long-term value to shareholders.”

1)Rightmove, in its 2018 Annual Report, stated that it had “1 million UK residential properties”. As at 3 June 2019, Zoopla stated on its website that it was listing 562,144 UK residential sales properties and 225,592 UK residential lettings properties, totalling 787,736 properties – down from 822,250 as at 3 July 2018.
2)Average revenue per property advertiser, being revenues due from property advertisers for a period divided by the average number of property advertisers for that period. ARPA presented herein is the average of the monthly ARPAs for the year.
3)Visits comprise individual sessions on OnTheMarket.com’s web based portal or mobile applications by users for the period indicated as measured by Google Analytics.
4)Revenues and administrative expenses for the year ended 31 January 2018 have been restated under IFRS 15. Further information is set out in note 2.4.
5)Adjusted operating loss / profit is defined as operating loss / profit before finance costs, taxation, share-based payments, specific professional fees or non-recurring items. This is an alternative performance measure and should not be considered an alternative to IFRS measures, such as revenue or operating loss / profit. Please see the Financial Review and Key Performance Indicators for a reconciliation of operating loss to adjusted operating loss.

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