Full Year Results for the year ended 31 December 2019 28 February 2020 - Rightmove Plc
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Full Year
Results
for the year ended
31 December 2019
28 February 2020
Agenda
1. FY 2019 Highlights
Peter Brooks-Johnson, CEO
2. Financials
Robyn Perriss, FD
3. Housing market update
Peter Brooks-Johnson, CEO
4. Strategic update
Peter Brooks-Johnson, CEO
5. Outlook
6. Appendix
2
1. FY 2019 Highlights
Peter Brooks-Johnson, CEO
3
Highlights
Revenue: Profit: EPS: Dividend:
+8% +8% +10% +11%
Revenue up to £289.3m Underlying operating profit1 Underlying basic EPS2 Total dividend of 7.2p
(2018: £267.8m) increased to £219.7m increased to 20.2p (2018: 6.5p) per ordinary share.
(2018: £203.3m) (2018:18.3p) Final dividend increased by
0.4p to 4.4p (2018: 4.0p)
Cash returned: Advertisers3: Site traffic4: ARPA3:
£148.8m 19,809 12.13bn £1,088
Free cash flow returned Membership as at 31 December Time in minutes down 1% Per month, up £83
to shareholders through 2019 down 3% year on year year on year (2018: 12.28bn) (2018: £1,005)
dividends and buybacks (2018: 20,454)
(2018: £168.5m)
1. Before share-based payments and NI on share-based incentives
2. Before share-based payments, NI on share-based incentives and no related adjustment for tax
4 3. For Agency and New Homes customers
4 4. Source: Google Analytics
Strategic Highlights
Innovating Innovating Innovating
in property advertising for agent efficiency for future growth
• Auto Featured Property • Launch of a new version of our • Two further iterations of Tenant
launched in May Best Price Guide in June Passport experiment
• Next generation digital • New algorithm powered • Acquisition of Van Mildert, a
marketing solution ‘Rightmove intelligent tool ‘Opportunity tenant referencing company in
Active Extension’ launched in Manager’ launched in November September
June • Launch in September of
• New Optimiser 2020 package mortgage tools with Nationwide
launched in November Building Society
• New intelligent product ‘Sold by
Me’ launched in November
5
2. Financials
Robyn Perriss, FD
6
Revenue
Revenue Revenue Bridge
289.3
300
267.8
243.3
250
220.0
£ millions
200
£ millions
150
100
50
0
2016 2017 2018 2019 Number of
customers
7
7 Source: Rightmove
Membership and ARPA
1
Membership Membership numbers down 3%
22
20,121 20,427 20,454 19,809 • Agency branches down 6% since the start of
20
18
the year to 16,347
16
14 • New Homes developments up 11% to 3,462
Thousands
12
10
8
• We continue to be the only place to see
6 virtually the whole UK property market with
4
2
900,000 properties
0
2016 2017 2018 2019
ARPA
1
£83
Continued ARPA growth2
£83 £1,100
£ per branch/development per year
12,000 £80 £1,088
£1,005 +8% £1,080
+9% £1,088
10,000 £922
+10% £1,060
£842
LTM ARPA
8,000 £1,040
£1,020
6,000
£1,000
4,000 £980
2,000 £960
0
2016 2017 2018 2019
8
8 Source: Rightmove 1: For Agency and New Homes customers 2. Last 12 Months
Cost, profit and margin
Costs1 Underlying operating profit1
Margin: 75.5% 75.8% 75.9% 75.9%
80
250
69.6
70 219.7
64.5
58.9 203.3
60 200
53.8 184.4
166.2
£ millions
£ millions
50
150
40
30 100
20
50
10
0 0
2016 2017 2018 2019 2016 2017 2018 2019
9 Source: Rightmove
9 1. Before share-based payments and NI on share-based incentives
Income statement
Year ended Year ended
Growth YOY
31 December 2019 31 December 2018
£m £m
Revenue 289.3 267.8
Operating costs (69.6) (64.5)
Underlying operating profit 219.7 203.3 8%
Underlying operating profit margin 75.9% 75.9%
Share-based payments (4.9) (4.3)
NI on share-based incentives (1.1) (0.4)
Operating profit 213.7 198.6 8%
Net financial expense (0.1) (0.3)
Profit before tax 213.6 198.3
Income tax expense (40.5) (37.8)
Profit for the year 173.1 160.5 8%
10
10 Source: RightmoveSummary balance sheet
As at As at
31 December 2019 31 December 2018
£m £m
Property, plant and equipment 12.8 15.2
Intangible assets 21.9 2.9
Deferred tax assets 2.7 2.8
Total non-current assets 37.4 20.9
Trade and other receivables 24.0 22.5
Contract assets 0.4 0.4
Cash and money market deposits 36.3 19.9
Total current assets 60.7 42.8
Trade and other payables (19.5) (18.1)
Contract liabilities (2.1) (2.1)
Lease liabilities (12.2) (13.0)
Income tax payable (18.9) (16.8)
Deferred tax liabilities (0.9) -
Provisions (3.2) (1.1)
Total liabilities (56.8) (51.1)
Net assets 41.3 12.6
11
11 Source: RightmoveCash bridge and dividend
Full year 2019
• £148.8m (2018: £168.5m)
returned to shareholders
in the year
• 16.3m (2018: 25.0m)
shares bought back at an
average price of £5.45 and
£millions
cancelled
• Closing cash and money
market deposits of
£36.3m (2018: £19.9m)
• Final dividend increased by
0.4p to 4.4p bringing the
full year dividend to 7.2p
(2018: 6.5p) up 11%
Cash EBITDA Working Tax Capex Acquisition Share Dividends Lease Other Cash
Dec 2018 before capital payments of buybacks payments incl net Dec 2019
IFRS 2 Van Mildert (incl costs) interest
12 Source: Rightmove3. Housing market update
Peter Brooks-Johnson, CEO
13The UK housing market is resilient, but the
leading indicators were slow in H2
Housing Transactions 2006-2019 (UK)1
1,800
1,600
Transaction (thousands)
1,670
1,613
1,400
1,200
1,235
1,230
1,220
1,219
1,191
1,174
1,000
1,073
800
933
900
886
885
600 858
400
200
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
New Sales Listings Compared to 20182 • The number of housing transactions in 2019 was only 1.4%
100% lower than 2018
95% • Notable slow down in new listings in Q3 reduced the amount
of available stock by 10% at the end of the year compared to
90%
2018
85%
• Reduction in available stock yet to be apparent in transaction
80% numbers, but limited choice may hamper transaction
numbers in early 2020 if it does not reverse
Source: 1. HMRC 2. Rightmove (adjusted for working days)
14Increasing time to sell led to a cash flow impact in
H1 2019 for low stock branches
• Buyer hesitancy increased time to sell notably at the Estate Agency membership compared to 2017
end of 2018 and into 2019 160%
140%
• Anecdotal evidence that time to complete also
Proportion of 2017
increased 120%
100%
• Low-stock branches more vulnerable to cash flow 80%
impact of increased transactions times
60%
• Slow down in Agency leavers in second half of 2019 40%
Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19
Leaver Rate Joiner Rate
Branch distribution by sales stock
25%
20%
15%
10%
5%
0%
1-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 100+
Branch stock level
December 2018 December 2019
15 Source: RightmoveNew Homes development flow was consistent
in the second half of 2019
New Homes development numbers indexed to 2017
250% New listings/site sold
Developers brought forward rates balanced in H2 2019
200% listings in late 2018/early 2019 to
Proportion of 2017
leading to small growth in
combat sales rate decline developments listed
150%
100%
50%
0%
Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19
Site Sold Rate New Development Listing Rate
Developments numbers in second half of 2019
4,000
3,000
2,000
1,000
0
July August September October November December
16 Source: RightmoveEarly 2020 market Consumer demand January 2020 vs
January 2019
encouraging, but demand
outstripping supply
• Respite from uncertainty leading to significant
increase in activity post election:
• Record traffic in January, over 150m visits in a
month for the first time with consumers
spending nearly 1.2bn minutes on Rightmove
• Demand up on a year ago in most regions
• New property listing numbers are slower to
recover:
• New listings in January 2020 at the same level
as January 2019, February looking more
positive
• Fewer and smaller price reductions than last
two years
17 Source: RightmoveEarly 2020 market encouraging, but some
agents will be impacted by H2 2019 overhang
• Commission rates slightly increased and the • Market fundamentals remain positive:
overall Agency revenue pool is at least stable • Employment rates remain at record high
• Sales agreed up over 12% on January 2019 • Mortgage interest rates remain low
• Sale fall through rate at its lowest since 2014 • Certainty, for now
January sales agreed (indexed to 2014)
105%
100%
95%
90%
85%
80%
2014 2015 2016 2017 2018 2019 2020
• Looking forward, slower H2 2019 will impact some agents in early 2020:
• Some smaller agents will continue to struggle with lack of cash flow from the slower activity
• Slower listings market has an impact on hybrid agents
18 Source: Rightmove4. Strategic update
Peter Brooks-Johnson, CEO
19Making home moving easier in the UK
Our aim is to create a simpler and more efficient property marketplace
Buyers
Sellers Agents
Renters Developers
Landlords
SIMPLICITY
The place consumers turn to first Unrivalled exposure, leads and
and engage with most products for our customers
The three pillars of our strategy:
• The place consumers ‘turn to first’ and engage with most
• Offer unrivalled exposure, leads and products for our customers
• Innovate to create a better marketplace
20The place consumers ‘turn to first’
and engage with most
Traffic1 • Continuing high engagement with 12.1 billion
14 1.8
minutes spent on Rightmove
12 1.6 • Over 1.6 billion visits in 2019, up 2% year on year
1.4
10 • Time spent per property listed increased 4%,
Billions of Minutes
1.2
Billions of Visits
8 however fewer properties reduced total time by 1%
1
6 0.8 • Traffic to our research tools grew 7% with
4
0.6 consumers spending over 480 million minutes on
0.4 features such as sold prices
2 0.2
• 40.5 million leads sent to our customers, 2% more
0 0
2015 2016 2017 2018 2019 per property listed, but 4% down on 2018 in total
Time Visits
Market Share of top 4 property portals2
100%
80%
60%
40% Comscore methodology change
20%
0%
Rightmove Zoopla Primelocation OnTheMarket
21 Source: 1. Google Analytics & Rightmove 2. ComscoreUnrivalled exposure, leads and products
for our customers
• 38% of Agency branches now taking either the Enhanced or
Enhanced package1 Optimiser package, up from 27% in December 2018
3,500
• Record revenue from digital marketing solutions for New
3,000
Homes developers gaining targeted access to our unique in-
2,500
market audience of home hunters
2,000
1,500 • Encouraging early sales of new Optimiser 2020 package
1,000 launched in November with nearly 200 sales in two months
500 at an average uplift of just under £300
0
2017 2018 2019 • 2020 product sales and pricing progressing according to
plan
Optimiser package1 Digital marketing solutions revenue2
3,500 9
£ millions
3,000 8
7
2,500
6
2,000 5
1,500 4
3
1,000
2
500 1
0 0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
22 Source: Rightmove 1.Estate and rental agents 2.New Homes developersInnovating for property advertising
• Influencing potential sellers early in their journey is
important to ensure agents are part of the potential
seller’s “consideration phase”
• Sellers tend to consider agents who successfully sell
“properties like mine”
• Sold By Me Automatically and dynamically targets
sellers moving locally and out of area by showcasing an
agent’s success on the most viewed page on
Rightmove
• Properties are automatically chosen to be closest to a
seller’s home location where we know it and maximum
price
• Exclusively available to customers who take the new
Optimiser 2020 package
• Good consumer engagement with over 100,000
consumer interactions in January alone
23Innovating for agent efficiency
Opportunity Manager rolled out as part
of Optimiser 2020 package
• Nearly two thirds of home hunters sending a
Rightmove lead have yet to select an agent to
sell their current home
• In a recent exercise 87% of agents missed an
instruction opportunity in a lead1
• Opportunity Manager uncovers potential sellers
within the pool of buyers an agent already knows
just before they’re ready to consider instructing
an agent
• It helps agents prioritise and manage the
contact with those prospects
• Powered by a real time algorithm to intelligently
spot buyers that are most likely to turn into
potential home sellers in the agent’s area
24 1. Property Academy - mystery shopping for the Best Estate Agent Guide 2019, based on 4,300 sales callsOpportunity Manager can be enhanced by several
Rightmove products
Rightmove Discover Local Valuation Alert Auto Featured Property
Opportunity Manager
25Innovating for future growth
Help home movers Help property
be “transaction Opportunity professionals be
ready” more efficient
26Helping tenants to be transaction ready
Lettings process dogged by lack of visibility for tenant and agent, duplicate data entry, last minute
reference failures and a lack of pace leading to wasted effort for tenant and agent
Rightmove is in a unique position to create integration efficiencies for agent and landlord whilst
generating revenue and commission for agents
Journey
Search View Reference Contract Move in
Long term opportunity Capability
Rightmove Passport Van Mildert Van Mildert Insurance
Customer efficiency
For Rightmove
Revenue Growth
Rightmove tenant proposition
Initiatives
Prototype to simplify and Referencing order Referencing speed Market leading landlord protection
automate communication flow integration in improvements insurance. Rightmove experience in
between agent and tenant progress under way digital marketing yet to be deployed
275. Outlook
Peter Brooks-Johnson, CEO
28Outlook
• Continued ARPA growth driven by customers spending more on
packages and pricing with 2020 pricing rollout according to plan
• Customer numbers in the first half of 2020 likely to follow a similar
trajectory to the second half of 2019 as a result of the slower listing
market
• More product innovation on track for delivery in 2020
• Confident in delivering the Board’s full year expectations
29
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