OnTheMarket report strong growth, performance ahead of expectations

OnTheMarket plc (LON:OTMP), the majority agent-owned company which operates the OnTheMarket.com property portal, has today announced its unaudited interim results for the six months ended 31 July 2021 (“H1 21/22”).

Highlights

·      Revenue and ARPA up 46% and 52% respectively. Adjusting for COVID-19 H1 20/21 related customer support discounts of £1.8m, revenue and ARPA growth still strong at 24% and 28% respectively.

·      Adjusted operating profit increased 163% to £2.1m, despite increases of 105% in marketing expenditure, to £4.5m, and 28% in staff costs, to £4.7m.

·      Profit after tax of £0.5m, reduced by non-recurring costs arising from the Glanty acquisition, the repayment of government grants and an increase in non-cash share-based agent recruitment charges.

·      Strong balance sheet retained with cash generated from operating activities of £2.6m after repaying CJRS loans of £0.4m (H1 20/21: £2.9m, after receiving CJRS loans of £0.3m). Period-end net cash was £9.9m, with no borrowings (31 January 2021: £10.7m before deferred creditor payments of £0.4m).

·      Average monthly advertisers listed were down 5% period on period, reflecting a reduction in H2 20/21 as agents on long-term free of charge contracts were asked to migrate to paying contracts. Since 31 January 2021, agency branches listing have risen 5% and new homes developments listed by 6%.

·      Increased branches listed under paying contracts, up 3% since 31 January 2021 to 10,190 at 31 July 2021.

·      Continued strong operational performance, with traffic and average monthly leads per advertiser up versus both H1 and H2 20/21.

·      Significant progress in strategy to build a differentiated, technology-enabled property business, with the acquisition of Glanty, new commercial partnerships and new website functionality and lead types.

Outlook:

·      After a positive first 6 months, the Board now anticipates revenues to be slightly ahead of expectations and adjusted operating profit to be substantially ahead of expectations for the full year to 31 January 2022.

·      Demand for residential properties in the UK has remained at very high levels, however sales and lettings instructions remain subdued.

·      Rollout of refreshed brand and website planned for H2 21/22 release, designed to further encourage consumer engagement and provide increasing support and competitive advantage to our customers.

·      Agents using OnTheMarket.com as their only property listings portal now represent 968 branches, demonstrating our ability to help customers secure instructions and complete transactions, without them needing any other portal subscriptions.

·      Encouraging pipeline of new commercial arrangements to further differentiate and add value to our offering.

·      Strong balance sheet to support our strategic vision to create a tech-enabled property business across the broader property ecosystem and drive long-term profitable growth.

The Company will be hosting a live presentation open to all existing and potential shareholders via the Investor Meet Company platform at 6:00pm BST on 19 October 2021. Full details of this session will be included in a separate announcement to be released shortly after these interim results are published.

Jason Tebb, Chief Executive Officer of OnTheMarket, commented:

“I am delighted to report that the first half of our year has seen a strong financial performance, operational growth and real progress with our strategic objective of building a differentiated, tech-enabled property business.

Since joining OnTheMarket I have been focussed on engaging with our customers to understand how we can better serve them. Having spoken with hundreds of agents, I am encouraged that they are not only pleased we are listening, but also that the changes we have made to our proposition have been well received.

The first stage of our transition is complete and we see this as the start of a mutually beneficial journey. We will continue to innovate and are actively exploring further new customer product and service offerings. As part of the next stage of our development we are undertaking a review of our branding and proposition to clearly articulate our USPs to serious property seekers and at the same time provide more tools for our agents and housebuilders, continuing to add value to customers and consumers alike.

None of this would be possible without the hard work and enthusiasm of my colleagues. I thank all of them and look forward to working with them to deliver value to all of our stakeholders.

With a growing and loyal customer base, strong engagement with serious and active property-seekers, progress against our strategic roadmap and a balance sheet and cash generation to support the Group’s current strategy, the Board looks to the future with confidence.”

Footnotes

1)    Adjusted operating profit is defined as operating profit before share based payments (including charges relating to shares issued for agent recruitment), specific professional fees and non-recurring items. This is an alternative performance measure and should not be considered an alternative to IFRS measures, such as revenue or operating profit. Please see the Financial Review and Key Performance Indicators section below for a reconciliation of operating profit to adjusted operating profit.

2)    Period-end net cash in the 2020 column is net cash at 31 January 2021. Net cash at 31 July 2020 was £9.8m.

3)    Average revenue per property advertiser, being revenues due from property advertisers for a period divided by the number of property advertisers for that period. ARPA presented herein is the average of the monthly ARPAs for the period unless otherwise stated. A property advertiser is a listed agency branch or a new home development advertising on OnTheMarket.com.

4)    Advertisers are either estate and lettings agent branches or new home developments listed at OnTheMarket.com.

5)    Period-end figures in the 2020 column are at 31 January 2021. Advertisers, agency branches and new home developments as at 31 July 2020 were 13,757, 12,245 and 1,512 respectively.

6)    Visits comprise individual sessions on OnTheMarket’s web based portal or mobile applications by users for the period indicated as measured by Google Analytics.

7)    Unless otherwise stated, all figures refer to the six months ended 31 July 2021 and comparative figures are for the six months ended 31 July 2020 (“H1 20/21”).