Interim Results - Rightmove/media/Files/R/Rightmove/2019/half-year-results... · Agency and New...
Transcript of Interim Results - Rightmove/media/Files/R/Rightmove/2019/half-year-results... · Agency and New...
Interim Resultsfor the half year ended 30 June 2019
26 July 2019
Disclaimer
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This presentation has been prepared by Rightmove plc (the “Company”). No representation or warranty (express or implied) of any nature is given nor is any
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Agenda
1. HY 2019 HighlightsPeter Brooks-Johnson, CEO
2. FinancialsRobyn Perriss, FD
3. Housing market updatePeter Brooks-Johnson, CEO
4. Strategic updatePeter Brooks-Johnson, CEO
5. Q & A
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1. HY 2019 HighlightsPeter Brooks-Johnson, CEO
Highlights
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 tax3. For Agency and New Homes customers4. Source: Google Analytics
Revenue up to £143.9m(2018: £131.1m)
+10%
Revenue:
Underlying operating profit1
increased to £111.0m (2018: £101.0m)
+10%
Profit:
Underlying basic EPS2
grew to 10.2p (2018: 9.1p)
+12%
EPS:
Interim dividend increased by 0.3p to 2.8p (2018: 2.5p*) per ordinary share
+12%
Dividend:
Free cash flow returned to shareholders through dividends and buybacks (2018: £76.9m)
£54.0m
Cash returned:
As at 30 June 2019 down 1%(31 December 2018: 20,454)
20,209
Advertisers3:
Time in minutes for the 6 months ended 30 June unchanged year on year (2018: 6.5bn)
6.5bn
Site traffic4:
Per month, up £90 (2018: £987)
£1,077
ARPA3:
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* 2018 comparatives have been restated for ease of comparability to reflect the 10:1 share split effective 31 August 2018
Access to our unique in-market audience of home hunters saw new homes developers spend a record £4.6m on our digital marketing solutions up from £3.8m in H1 2018
Auto Featured Property launched in May with nearly 500 branches now signed up. June saw the early roll out of our next generation digital marketing product, Rightmove Active Extension (RAE)
Further progress helping agents to be more efficient with the launch of a new suite of tools to help agents identify their most valuable markets and a new version of our Best Price Guide
Continued focus on innovating in the rental market; including Version 2 of the Rightmove Tenant Passport including a credit check and agreement to acquire Van Mildert, a tenant referencing company
Penetration of the Enhanced and Optimiser packages has reached 35% of estate agency customers, up from 27% in December 2018
Strategic Highlights
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2. FinancialsRobyn Perriss, FD
Revenue
Source: Rightmove
£ m
illio
ns
220.0
243.3
267.8
131.1
143.9
-5
20
45
70
95
120
145
170
195
220
245
270
2016 2017 2018 H1 2018 H1 2019
8
Revenue bridge
£ m
illio
ns
Revenue
131.1
11.0 0.7 1.1 143.9
0
20
40
60
80
100
120
140
160
Revenue HY2018
ARPA growth Customergrowth
Increase inOther revenue
streams
Revenue HY2019
£842£922
£1,005 £987£1,077
0
2,000
4,000
6,000
8,000
10,000
12,000
2016 2017 2018 H1 2018 H1 2019
20,121 20,427 20,454 20,450 20,209
10
12
14
16
18
20
22
2016 2017 2018 H1 2018 H1 2019
Thousands
Th
ou
san
ds
Agency and New Homes Membership numbers down 1%
• Agency branches down 3% since the start of the year to 16,768
• New Homes developments up 10% to 3,441
• Customers advertising 1.1m UK residential properties on Rightmove
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ARPA Record absolute ARPA growth
• ARPA up £90 year on year to £1,077(1) per month
• ARPA growth driven by package upgrades and core membership price increases
1: For Agency and New Homes customers
Source: Rightmove
Membership and ARPA
+9%+9%
+10%
£80£83
£90
£ p
er
off
ice
/de
ve
lop
me
nt
pe
r y
ear
1. Before share-based payments and NI on share-based incentives Source: Rightmove
Underlying operating profit1
166.2
184.4
203.3
101.0
111.0
0
50
100
150
200
250
2016 2017 2018 H1 2018 H1 2019
£ m
illio
ns
75.5% 75.8% 75.9% 77.0% 77.1%Margin:
10
Costs1
53.8
58.9
64.5
30.132.9
0
10
20
30
40
50
60
70
2016 2017 2018 H1 2018 H1 2019
£ m
illio
ns
Costs, operating profit and margin
Income statement
Source: Rightmove
6 months ended30 June 2019
£m
6 months ended30 June 2018
£m
Revenue 143.9 131.1
Operating costs (32.9) (30.1)
Underlying operating profit 111.0 101.0
Underlying operating profit margin 77.1% 77.0%
Share-based payments (2.2) (2.1)
NI on share-based incentives (0.6) (0.7)
Operating profit 108.2 98.2
Net financial expense (0.1) (0.1)
Profit before tax 108.1 98.1
Tax (20.6) (18.8)
Profit for the period 87.5 79.3
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Source: Rightmove
As at 30 June 2019
£m
As at 30 June 2018
£m
Property, plant and equipment 14.1 16.1
Intangible assets 2.9 3.1
Deferred tax assets 3.1 5.5
Total non-current assets 20.1 24.7
Trade and other receivables 25.6 21.1
Contract assets 0.4 0.3
Cash and money market deposits 54.1 28.1
Total current assets 80.1 49.5
Trade and other payables (17.1) (17.8)
Contract liabilities (2.0) (2.0)
Income tax payable (20.5) (18.1)
Lease liabilities (12.6) (13.6)
Provisions (0.7) (1.0)
Total liabilities (52.9) (52.5)
Net assets 47.3 21.7
Share capital 0.9 0.9
Other reserves 0.5 0.5
Retained earnings 45.9 20.3
Total equity 47.3 21.7
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Balance sheet
Half year 2019
* 2018 comparatives have been restated for ease of comparability to reflect the 10:1 share split effective 31 August 2018Source: Rightmove
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• £54.0m (2018:£76.9m) returned to shareholders in the period
• 3.6m (2018: 10.0m*) shares bought back and cancelled
• Closing cash and money market deposits of £54.1m (2018: £28.1m)
• Initial consideration of £16.0m in relation to Van Mildert will be financed from existing cash balance
• Interim dividend increased by 0.3p to 2.8p (2018: 2.5p*)
Cash bridge and dividend
19.9
112.2 (4.5)(16.9)
(0.6) (35.5)
(18.6)
(1.1) (0.8) 54.1
0
20
40
60
80
100
120
140
Cash Dec2018
EBITDAbeforeIFRS 2
Workingcapital
Taxpayments
Capex Dividends Sharebuybacks
(inclcosts)
Purchaseof shares
Leasepayments
Cash HY2019
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3. Housing market updatePeter Brooks-Johnson, CEO
Source: 1. HMRC England, Scotland and Wales 2. Rightmove * Provisional data
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-2,500,000
-1,500,000
-500,000
500,000
1,500,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-5.00%
-3.00%
-1.00%
1.00%
3.00%
Cumulative transactions in England, Scotland and Wales1
2018 2019 YTD 2019 vs 2018
Transaction volumes have held up well in the first half, but the hesitancy from H1 will flow through to transaction completions in H2.
-8.0%
-6.0%
-4.0%
-2.0%
0.0%Jan Feb Mar Apr May Jun
Sales agreed in England, Scotland and Wales vs 20182
The housing market is unremarkable, but uncertainty is causing some buyer hesitation
*
*
16 Source: Rightmove
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 100+
Branch stock level
Branch distribution by sales stock
June 2018 June 2019
Longer time to sell has been felt more acutely by low-stock estate agent branches
-2%0%2%4%6%8%
10%12%14%
Jan
18
Fe
b 1
8
Mar
18
Ap
r 1
8
May
18
Jun
18
Jul 1
8
Au
g 1
8
Se
p 1
8
Oct
18
No
v 1
8
De
c 1
8
Jan
19
Fe
b 1
9
Mar
19
Ap
r 1
9
May
19
Jun
19
Time to sell (YoY change) • Buyer hesitancy has increased time to secure a buyer by 10% in the first half of 2019 versus 2018
• Anecdotal evidence that time to complete is also increasing
• Low-stock branches are more vulnerable to the cash flow impact of increased transaction times
17 Source: Rightmove
The ban on tenant fees and reduced buy to let has impacted low-stock agents
• Impact of tax changes and stamp duty changes has significantly reduced new lettings stock coming to market
• Many rental agents have plans in place to replace the lost revenue, but the new revenue sources convert to cash later in the process115,000
120,000
125,000
130,000
135,000
140,000
145,000
150,000
155,000
160,000
Jan
-18
Fe
b-1
8
Mar
-18
Ap
r-1
8
May
-18
Jun
-18
Jul-
18
Au
g-1
8
Se
p-1
8
Oct
-18
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Mar
-19
Ap
r-1
9
May
-19
Jun
-19
Available rental properties
0%
10%
20%
30%
40%
50%
60%
70%
80%
1-10 11-20 21-30 31-40 41-50 50+
Branch stock level
Distribution of rental agent branches leaving the industry
18 Sources: HMLR, Rightmove
New home “starts” remain stable at near 8 year highs
0.60
0.80
1.00
1.20
1.40
1.60
1.80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2011 2012 2013 2014 2015 2016 2017 2018 2019
The impact of the housing market on new home "starts"
New home "starts" (12m rolling average) New homes listed on Rightmove (12m rolling average)
• The unremarkable transaction numbers have encouraged developers to continue to grow at their recent high pace of development although “starts” were 10% higher on average in the 5 years before 2008
• Rightmove products, in particular our digital marketing suite are used by developers to maintain and grow sales rates in all but the most supply constrained market conditions
Help to buy introduced
UK housing
transactions reach 1.2m
Article 50 invoked
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4. Strategic updatePeter Brooks-Johnson, CEO
The three pillars of our strategy:
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Our aim is to create a simpler and more efficient property marketplace
Making home moving easier in the UK
BUYERSSELLERSRENTERSLANDLORDS
AGENTSDEVELOPERS
• 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
The place consumers turn to first and engage with most
Unrivalled exposure, leads and products for our customers
The place consumers ‘turn to first’ and engage with most
Sources: 1. Google Analytics & Rightmove 2. comScore21
Market share of top 4 property portals2
Time1
11.7 11.712.3
6.5 6.5
0
2
4
6
8
10
12
2016 2017 2018 H1 2018 H1 2019
Bill
ion
s o
f M
inu
tes
Visits1
1.5 1.51.6
0.83 0.85
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2016 2017 2018 H1 2018 H1 2019
Bill
ion
s
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Rightmove Zoopla.co.uk Primelocation OTM
ComScore methodology change
Source: Rightmove 1: Estate and rental agents 2: New Homes developers
• 35% of agency branches now taking either the Enhanced or Optimiser package
• Record revenue from digital marketing solutions for new homes developers gaining targeted access to our unique in-market audience of home hunters
• Opportunity to grow revenue through more product sales, product innovation and pricing
• Delivering efficiency savings for our customers allows more spend on marketing
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0
500
1,000
1,500
2,000
2,500
3,000
3,500
2017 2018 H1 2018 H1 2019
Enhanced package1
Unrivalled exposure, leads and products for our customers
0
1
2
3
4
5
6
7
8
9
2015 2016 2017 2018 H1 2018 H1 2019
£ M
illio
ns
Digital marketing solutions revenue2
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2015 2016 2017 2018 H1 2018 H1 2019
Optimiser package1
• Auto Featured Property launched in May
• Nearly 500 branches signed up since launch representing a run rate of over £3m pa
• Delivers double the detail property views at the key points in the marketing lifecycleagents use it to win and retain business
• Aimed at larger stock branches with average stock of branches signed up at over 110 properties
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Product innovation which delivers growth…
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Product innovation which delivers growth…
• Active Display launched at the start of 2018 now delivering nearly 50% more impressions for New Homes developers at a run rate of £7m pa
• Next generation digital marketing product Rightmove Active Extension (RAE) in early roll out
• During trialling RAE demonstrated 33x performance of equivalent Google keyword audience
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… for the long term
Source: Rightmove
Branding products – allow a customer to talk directly about their brand to differentiate themselves
Property products – make an individual property stand out
Direct response products – directly create and channel a potential home seller lead for an agent
+18%
+19%
+22%
+33%
+24%
+29%
+21%
+24%
+11%
+7%
+35%
+20%
+10%
+22%
+21%
Pro
du
ct
rev
en
ue
• The Tenant Passport has been enhanced with an Equifax credit check which also includes an automated anti-money laundering check, identity validation and CIFAS (fraud protection database) check
• Rightmove have agreed to purchase Van Mildert for an initial consideration of £16m subject to FCA regulatory approval. Completion expected by end of October
• Van Mildert will give us in-house tenant referencing capabilities and a market leading Rent Guarantee Insurance product
• Opportunities to leverage the scale of the Rightmove platform and create integration efficiencies across the process for tenants and agents
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Product innovation which creates change
Search Pre Qualify Enquire Reference
Summary and outlook
• ARPA growth driven by pricing and customers spending more on packages
• Customer numbers 1% lower at 20,209
• Rightmove continues to be the place consumers turn to first
• Second half expected to follow a similar pattern for ARPA and branch numbers with development numbers stable
• More product innovation on track for delivery in 2020
• Confident in delivering the Board’s full year expectations
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5. Q&A
Interim Resultsfor the half year ended 30 June 2019
26 July 2019
APPENDIX
1. Growth in H1 compared to H1 in the previous year
Source: Rightmove
FY 2016 FY 2017 FY 2018 H1 2018 H1 2019
Period end membership
- Agency offices 17,462 17,626 17,328 17,585 16,768
- New Homes developments 2,659 2,801 3,126 2,865 3,441
Total 20,121 20,427 20,454 20,450 20,209
Growth +2% +2% 0% 0%1 (1%)1
- Overseas advertisers 2,476 2,297 2,234 2,412 2,218
ARPA
- Agency 801 879 953 940 1,023
- New Homes developments 1,126 1,201 1,323 1,286 1,346
Total 842 922 1,005 987 1,077
Growth +12% +10% +9% +8%1 +9%1
- Overseas advertisers 200 210 228 228 247
Retention rate
- Agency (% of agents at start still listing at end of period) 89% 89% 88% 94% 92%
- New Homes developments (monthly churn rate) 5.7% 6.7% 4.2% 4.7% 3.8%
- Overseas advertisers (monthly churn rate) 7.4% 7.6% 6.7% 6.5% 4.8%
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Key performance indicators
Revenue sources
Source: Rightmove
H1 2019 H1 2018
Agency 73% 76%
New Homes 19% 16%
Other 8% 8%
H1 2019percentage of revenue
H1 2018percentage of revenue
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January 2010 January 2014 January 2018 January 2019 June 2019
Pe
rce
nta
ge
of
Ind
ep
en
de
nt
Est
ate
Ag
en
cy O
ffic
es
Total spend per month
Source: Rightmove32
£1000/m+ £1500/m+
61%
56%
46%
25%
19%
15%
1%9%
Distribution of independent agent spend
Capital Structure
1. 2018 comparatives have been restated for ease of comparability to reflect the 10:1 share split effective 31 August 2018Source: Rightmove
Share capitalH1 2019
mH1 2018 restated
m
In issue at 1 January 907.7 932.7
Purchase and cancellation of own shares (3.6) (10.0)
Total issued share capital 904.1 922.7
Shares held in treasury (14.3) (16.7)
Voting rights share capital 889.8 906.0
Own shares held by the EBT/SIP (3.1) (3.1)
Issued ordinary shares less shares held by the SIP/EBT 886.7 902.9
Weighted average number of shares
Number of shares entitled to a dividend b/fwd 889.8 910.4
Effect of share buybacks (1.8) (6.1)
Effect of share-based incentives exercised 0.4 1.6
Effect of shares purchased by the EBT (0.2) -
Number of shares used in basic EPS calculation 888.2 905.9
Dilutive impact of share-based incentives outstanding 3.6 5.7
Number of shares used in diluted EPS calculation 891.8 911.6
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