ii view: should you bet the house on optimistic Rightmove?
Hiring tech staff, driving AI product enhancements and with minutes spent on its website rising to 16.4 billion from 2023’s 15.4 billion. Buy, sell, or hold?
28th February 2025 11:44
by Keith Bowman from interactive investor
Full-year results to 31 December
- Revenue up 7% to £390 million
- Adjusted operating profit up 4% £274 million
- Final dividend of 6.1p per share
- Total 2024 payment up 5% to 9.8p per share
- Net cash held of £41.3 million, up from £38.8 million
Guidance:
- Expects full-year 2025 revenue growth of between 8% and 10%
Chief executive Johan Svanstrom said:
"We delivered strong results, demonstrating yet again the resilience of Rightmove's business model.
"We have a clear strategy to further digitise the home moving market, powered by the UK's largest set of property data and insights. There is a long runway of opportunity to both broaden and deepen Rightmove's services on one connected platform, and our team is continuing to drive that momentum in 2025."
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ii round-up:
Rightmove (LSE:RMV) today detailed annual results broadly matching City expectations, with early guidance for 2025 implying further growth potential.
Revenue for the online property advertiser climbed 7% in 2024 to £390 million, generating adjusted operating profit of £274 million. Aided by the group’s ongoing drive into areas such as mortgages, rental services, and commercial real estate, Rightmove predicts revenue growth of up to 10% in 2025.
Rightmove shares, which in 2024 fended off a takeover bid from Rupert Murdoch's Australian property business REA Group, rose 3% in UK trading. The FTSE 100 company came into this latest news up 14% over the last year, similar to the blue-chip index itself and estate agent Savills (LSE:SVS).
Property professionals, such as estate agents, lettings agents and new-home builders, pay Rightmove a subscription fee to advertise their properties on its website.
Average Revenue Per Advertiser (ARPA) for 2025 is expected to increase by between £95 and £105 from 2024's £1,524 per month, driven by agents and developers purchasing its high-end Optimiser Edge advertising package.
Rightmove flagged property market trends in the early months of 2025 which are supportive of its customer’s businesses, with client numbers expected to grow by 1% over 2025.
Group year-end net cash held of £41.3 million, rose from £38.8 million at the end of 2023. A final dividend of 9.8p per share, payable to eligible shareholders on 24 May, increases the total payment for 2024 by 5% to 9.8p per share.
ii view:
Rightmove promotes itself as the fourth-busiest UK-based digital platform in 2024, behind only the BBC, digital publisher and owner of the Daily Mirror - Reach, and the UK government's own website. Employee numbers rose 14% in 2024 to just under 900, with 60% of new hires being in technology roles.
Agency related sales generated its biggest slug of revenues at 72%. New home developer demand made up a further 18%, with other businesses such as commercial property, data services, overseas listings, and third-party advertising accounting for the balance of 10%.
For investors, a recent tick up in UK inflation now offers more uncertainty about further interest rate cuts, mortgage affordability, and the potential impact on consumer desire to move home. The fall in housing transactions to 1 million in 2023 from 1.5 million in 2021 will have pressured customer or agency numbers, with some having gone out of business. A price-to-net asset value above the three-year average may suggest the shares are not obviously cheap, while a forecast dividend yield of under 2% compares to over 5% for property owners and REITs Land Securities Group (LSE:LAND) and British Land Co (LSE:BLND).
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To the upside, the previous takeover approach from REA Group suggests potential for M&A activity. Hopes of further UK interest rate cuts persist, potentially increasing housing transaction numbers and encouraging more homeowners to move. A diversity of customer types is present from buyers and renters under agency customers to new home sales from developers, while it has targeted areas of growth away from its core include mortgages, rental services and digitalising the rental process, as well as commercial real estate.
In all, and while risks remain, Rightmove’s dominant market position continues to justify its place in many already diversified investor portfolios.
Positives:
- Strong market position
- Diversity of customers
Negatives:
- Uncertain economic outlook
- Costs generally remain elevated
The average rating of stock market analysts:
Strong hold
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