OnTheMarket on track to beat full-year expectations

Property portal operator OnTheMarket reported a 46% improvement in revenue in its first half on Tuesday, to £14.9m, with average revenue per agency (ARPA) ahead 52%.

The AIM-traded firm said that adjusting for Covid-19-related customer support discounts of £1.8m in the prior year, revenue and ARPA growth was still strong in the six months ended 31 July, at 24% and 28% respectively.

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

Profit after tax was down 29% year-on-year at £0.5m, which the board said was 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.

The company said it retained a “strong” balance sheet, with cash generated from operating activities of £2.6m after repaying Coronavirus Job Retention Scheme (CJRS) loans of £0.4m, down from £2.9m after receiving CJRS loans of £0.3m a year earlier.

Period-end net cash totalled £9.9m, with no borrowings, compared to £10.7m before deferred creditor payments of £0.4m at the end of January.

Average monthly advertisers listed were down 5% period-on-period, reflecting a reduction in the second half of the 2021 financial year as agents on long-term free-of-charge contracts were asked to migrate to paying contracts.

Since 31 January, agency branches listing had risen 5%, and new home developments listed by 6%.

The number of branches listed under paying contracts was stronger, rising 3% since 31 January to 10,190 at period end on 31 July.

OnTheMarket reported continued strong operational performance, with traffic and average monthly leads per advertiser up compared to both the first and second halves of the prior financial year.

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

Looking ahead, the board said that after a positive first six months, it now anticipated revenues to be “slightly ahead” of expectations, and adjusted operating profit to be “substantially ahead” of forecast for the full year ending 31 January.

Demand for residential properties in the UK had remained at very high levels, although sales and lettings instructions remained subdued.

The rollout of a refreshed brand and website was planned for the second half, which the firm said was designed to further encourage consumer engagement and provide increasing support and a competitive advantage to customers.

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

The company also reported an “encouraging pipeline” of new commercial arrangements to further differentiate and add value to its offering.

Its “strong” balance sheet would support its strategic vision to create a tech-enabled property business across the broader property ecosystem, and drive long-term profitable growth, the directors said.

“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,” said chief executive officer Jason Tebb.

“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.”

Tebb said the first stage of the company’s transition was complete, with the company seeing that 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 unique selling points 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.

“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.”

At 0855 BST, shares in OnTheMarket were up 10.49% at 101.65p.