Results for the year ended 31 December 2019 28 February 2020 - - PowerPoint PPT Presentation

28 February 2020

Full Year

for the year ended 31 December 2019

Results

Agenda

2

• 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

• 1. FY 2019 Highlights

Peter Brooks-Johnson, CEO

3

Highlights

4

Revenue up to £289.3m (2018: £267.8m)

+8%

Revenue:

Underlying operating profit1 increased to £219.7m (2018: £203.3m)

+8%

Profit:

Underlying basic EPS2 increased to 20.2p (2018:18.3p)

+10%

EPS:

Total dividend of 7.2p (2018: 6.5p) per ordinary share. Final dividend increased by 0.4p to 4.4p (2018: 4.0p)

+11%

Dividend:

Free cash flow returned to shareholders through dividends and buybacks (2018: £168.5m)

£148.8m

Cash returned:

Membership as at 31 December 2019 down 3% year on year (2018: 20,454)

19,809

Advertisers3:

Time in minutes down 1% year on year (2018: 12.28bn)

12.13bn

Site traffic4:

Per month, up £83 (2018: £1,005)

£1,088

ARPA3:

4

• 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
• 3. For Agency and New Homes customers
• 4. Source: Google Analytics

• Two further iterations of Tenant

Passport experiment

• Acquisition of Van Mildert, a

tenant referencing company in September

• Launch in September of

mortgage tools with Nationwide Building Society

• Auto Featured Property

launched in May

• Next generation digital

marketing solution ‘Rightmove Active Extension’ launched in June

• New Optimiser 2020 package

launched in November

• New intelligent product ‘Sold by

Me’ launched in November

Innovating in property advertising Innovating for agent efficiency

• Launch of a new version of our

Best Price Guide in June

• New algorithm powered

intelligent tool ‘Opportunity Manager’ launched in November

Innovating for future growth

Strategic Highlights

5

• 2. Financials

Robyn Perriss, FD

6

Revenue

7

Revenue

£ millions

220.0 243.3 267.8 289.3

50 100 150 200 250 300 2016 2017 2018 2019 £ millions

Revenue Bridge

7

Source: Rightmove

Number of customers

8

Membership and ARPA

£842 £922 £1,005 £1,088 2,000 4,000 6,000 8,000 10,000 12,000 2016 2017 2018 2019

+9% +8% +10% £80 £83 £83

20,121 20,427 20,454 19,809 2 4 6 8 10 12 14 16 18 20 22 2016 2017 2018 2019

• Agency branches down 6% since the start of

the year to 16,347

• New Homes developments up 11% to 3,462
• We continue to be the only place to see

virtually the whole UK property market with 900,000 properties

Membership

1

ARPA

1

Thousands £ per branch/development per year

Membership numbers down 3% Continued ARPA growth2

8

Source: Rightmove1: For Agency and New Homes customers 2. Last 12 Months £1,088 £960 £980 £1,000 £1,020 £1,040 £1,060 £1,080 £1,100 LTM ARPA

9

Cost, profit and margin

75.5% 75.8% 75.9% 75.9% Margin: 53.8 58.9 64.5 69.6

10 20 30 40 50 60 70 80 2016 2017 2018 2019 £ millions

Costs1

£ millions

166.2 184.4 203.3 219.7

50 100 150 200 250 2016 2017 2018 2019

Underlying operating profit1

9

Source: Rightmove

• 1. Before share-based payments and NI on share-based incentives

Income statement

10

Year ended 31 December 2019

£m

Year ended 31 December 2018

£m

Revenue 289.3 267.8 Operating costs (69.6) (64.5) Underlying operating profit Underlying operating profit margin 219.7 75.9% 203.3 75.9% Share-based payments (4.9) (4.3) NI on share-based incentives (1.1) (0.4) Operating profit 213.7 198.6 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

10

Source: Rightmove

8% 8% Growth YOY 8%

Summary balance sheet

11

As at 31 December 2019

£m

As at 31 December 2018

£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

Source: Rightmove

Cash bridge and dividend

• £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 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%

Full year 2019

£millions

Cash Dec 2018 EBITDA before IFRS 2 Working capital Tax payments Capex Acquisition

• f

Van Mildert Share buybacks (incl costs) Dividends Lease payments Other incl net interest Cash Dec 2019 Source: Rightmove

12

• 3. Housing market update

Peter Brooks-Johnson, CEO

13

Source: 1. HMRC 2. Rightmove (adjusted for working days)

1,670 1,613 900 858 886 885 933 1,073 1,219 1,230 1,235 1,220 1,191 1,174

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Transaction (thousands)

The UK housing market is resilient, but the leading indicators were slow in H2

• The number of housing transactions in 2019 was only 1.4%

lower than 2018

• Notable slow down in new listings in Q3 reduced the amount
• f available stock by 10% at the end of the year compared to

2018

• Reduction in available stock yet to be apparent in transaction

numbers, but limited choice may hamper transaction numbers in early 2020 if it does not reverse

Housing Transactions 2006-2019 (UK)1 New Sales Listings Compared to 20182

14

80% 85% 90% 95% 100%

40% 60% 80% 100% 120% 140% 160% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Proportion of 2017

Estate Agency membership compared to 2017

Leaver Rate Joiner Rate 0% 5% 10% 15% 20% 25% 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

Increasing 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

end of 2018 and into 2019

• Anecdotal evidence that time to complete also

increased

• Low-stock branches more vulnerable to cash flow

impact of increased transactions times

• Slow down in Agency leavers in second half of 2019

Branch distribution by sales stock

15

Source: Rightmove

0% 50% 100% 150% 200% 250% Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Proportion of 2017 Site Sold Rate New Development Listing Rate

Developers brought forward listings in late 2018/early 2019 to combat sales rate decline New listings/site sold rates balanced in H2 2019 leading to small growth in developments listed

New Homes development flow was consistent in the second half of 2019

New Homes development numbers indexed to 2017

16

Source: Rightmove

1,000 2,000 3,000 4,000 July August September October November December

Developments numbers in second half of 2019

Early 2020 market encouraging, but demand

• utstripping 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

Consumer demand January 2020 vs January 2019

17

Source: Rightmove

80% 85% 90% 95% 100% 105% 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

January sales agreed (indexed to 2014)

Early 2020 market encouraging, but some agents will be impacted by H2 2019 overhang

• Commission rates slightly increased and the
• verall Agency revenue pool is at least stable
• Sales agreed up over 12% on January 2019
• Sale fall through rate at its lowest since 2014
• Market fundamentals remain positive:
• Employment rates remain at record high
• Mortgage interest rates remain low
• Certainty, for now

18

Source: Rightmove

• 4. Strategic update

Peter Brooks-Johnson, CEO

19

Making home moving easier in the UK

• 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 three pillars of our strategy: Our aim is to create a simpler and more efficient property marketplace

Buyers Sellers Renters Landlords Agents Developers The place consumers turn to first and engage with most Unrivalled exposure, leads and products for our customers

20

SIMPLICIT ITY

0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 4 6 8 10 12 14 2015 2016 2017 2018 2019 Billions of Visits Time Visits Billions of Minutes

• Continuing high engagement with 12.1 billion

minutes spent on Rightmove

• Over 1.6 billion visits in 2019, up 2% year on year
• Time spent per property listed increased 4%,

however fewer properties reduced total time by 1%

• Traffic to our research tools grew 7% with

consumers spending over 480 million minutes on features such as sold prices

• 40.5 million leads sent to our customers, 2% more

per property listed, but 4% down on 2018 in total

0% 20% 40% 60% 80% 100% Rightmove Zoopla Primelocation OnTheMarket Comscore methodology change

The place consumers ‘turn to first’ and engage with most

21

Source: 1. Google Analytics & Rightmove 2. Comscore

Traffic1 Market Share of top 4 property portals2

• 38% of Agency branches now taking either the Enhanced or

Optimiser package, up from 27% in December 2018

• Record revenue from digital marketing solutions for New

Homes developers gaining targeted access to our unique in- market audience of home hunters

• Encouraging early sales of new Optimiser 2020 package

launched in November with nearly 200 sales in two months at an average uplift of just under £300

• 2020 product sales and pricing progressing according to

plan

500 1,000 1,500 2,000 2,500 3,000 3,500 2017 2018 2019

Enhanced package1

1 2 3 4 5 6 7 8 9 2015 2016 2017 2018 2019

£ millions

Digital marketing solutions revenue2

500 1,000 1,500 2,000 2,500 3,000 3,500 2015 2016 2017 2018 2019

Optimiser package1

Unrivalled exposure, leads and products for our customers

22

Source: Rightmove1.Estate and rental agents 2.New Homes developers

Innovating for property advertising

23

• 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

Innovating for agent efficiency

24

• 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

Opportunity Manager rolled out as part

• f Optimiser 2020 package
• 1. Property Academy - mystery shopping for the Best Estate Agent Guide 2019, based on 4,300 sales calls

Opportunity Manager can be enhanced by several Rightmove products

25

Auto Featured Property Local Valuation Alert Rightmove Discover Opportunity Manager

Innovating for future growth

26

Help home movers be “transaction ready” Help property professionals be more efficient

Opportunity

Helping tenants to be transaction ready

27

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

Prototype to simplify and automate communication between agent and tenant Referencing order flow integration in progress Referencing speed improvements under way Market leading landlord protection

• insurance. Rightmove experience in

digital marketing yet to be deployed

Search View Reference Contract Move in

Rightmove Passport Van Mildert Van Mildert Insurance Customer efficiency Revenue Growth Rightmove tenant proposition

Long term opportunity For Rightmove Initiatives Capability Journey

• 5. Outlook

Peter Brooks-Johnson, CEO

28

29

Outlook

• 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