Rightmove profits climb, but customer numbers could decline

Rightmove (LSE: RMV), the leading online property portal in the UK, announced a rise in both annual revenue and profit. However, despite expressing confidence in the future, the company hinted at a potential decrease in customer numbers for the coming year. This news caused Rightmove shares to drop 4.2% during early trading on Friday.

For the year ending December 2023, Rightmove reported a 7.7% increase in pre-tax profit, reaching £259.8 million, compared to £241.3 million in the previous year. Underlying operating profit also experienced an 8% rise, reaching £264.6 million from £245.4 million. Additionally, earnings per share improved by 5%, reaching 24.5 pence from 23.4 pence.

Revenue witnessed a 10% increase, reaching £364.3 million from £332.6 million. This growth can be attributed to customers upgrading their packages and using more digital products. The improved financial performance was reflected in a 9.4% increase in the dividend, reaching 9.3 pence per share from 8.5 pence. Notably, there was no share buyback announced.

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Rightmove reported a 9% increase in average revenue per advertiser (ARPA), reaching £1,431 per month from £1,314 in 2022. However, the company also saw a 1.2% decrease in total membership, reaching 18,785 from 19,014.

This decrease reflects a 1% drop in estate agency branches and a 4% decline in new homes developments since the beginning of the year. While traffic volume to Rightmove’s website was described as “resilient,” the total time spent on the platform decreased to 15.4 billion minutes in 2023, compared to 16.3 billion minutes in 2022.

Despite this decrease, the total time spent in 2023 remained 27% higher than the 12.1 billion minutes recorded in 2019. Rightmove also reported continued growth in subscriptions for its top packages, including Optimiser Edge, 2020 for agents (with 35% of independent agents subscribed, up from 34% in December 2022), and Advanced for developers (with 53% of developers subscribed, up from 42% in December 2022).

Looking ahead to 2024, Rightmove expects ARPA to grow by £100 to £110, driven by the new Optimiser Edge package, ongoing product adoption, and contract renewals. This is expected to contribute to an overall revenue growth of 7% to 9%. However, the company acknowledges the possibility of a slight decline in customer numbers due to the ongoing economic uncertainties.

Rightmove anticipates maintaining a 70% underlying operating margin in 2024 and has confirmed that its capital allocation policy remains unchanged. While the company remains optimistic about the future, investors reacted cautiously to the potential customer decline, causing Rightmove shares to fall 2.5% year-to-date.