The most profitable company on the FTSE 100? Rightmove.
Rightmove has reported strong financial results for the full year 2023 after increasing customer engagement through digital offerings and growing its advertising revenue – with a stonking 71 per cent operating profit margin.
The London-listed property portal said revenue surged by £31.7m in 2023, marking a 10 per cent rise from 2022, reaching £364.3m.
This boost was propelled by customers upgrading their packages and embracing digital products, such as its digital mortgage tool, which led to more and better leads for lender partners. Rightmove has also connected an estate agent broker to its online application system, allowing users to get mortgage advice without leaving the platform.
Rightmove recently added to its digital portfolio by buying HomeViews Platform that displays property development reviews by residents, for £8m.
Operating profit rose seven per cent from the previous year, climbing to £258m.
The 71 per cent margin is higher than Auto Trader (55 per cent) and Centrica (50 per cent) according to data analysis by Factset published in The Times.
The average revenue per advertiser (ARPA) – a key driver of growth for Rightmove – increased nine per cent, reaching £1,431 per month. However, total membership experienced a small decline of one per cent, which Rightmove said was primarily driven by reductions in Agency branches and New Homes Developments.
Johan Svanstrom, chief executive officer, said: “Customers were able to choose from an expanded, more sophisticated product suite, to continue to drive business results in a changing market environment.
“Our financial performance in 2023 reflects the strength of our business model and our platform network effects.
“We reshaped our strategy during 2023, setting out a plan to further digitise the property sector, expand our business, stretch our brand and accelerate the financial performance long term.”
Looking ahead to 2024, Rightmove expects further ARPA growth, driven by the introduction of the new Optimiser Edge package tool for estate agents and contract renewals.
Overall revenue is expected to grow by seven to nine per cent, although customer numbers may dip slightly due to ongoing macroeconomic uncertainties.
And Russ Mould, investment director at AJ Bell, said there are some other “nagging worries” for the property listing site.
“Being the market leader creates a virtuous circle for the company. It has the most listings and is therefore the site which prospective property buyers are mostly likely to visit when looking for their next home.
“This reinforces its position as a must-have product for estate agencies and provides significant pricing power when it comes to securing subscriptions from agencies. That’s why the threat from Onthemarket – now backed by a big US operator in Costar – is such a concern for investors,” he explained.
Rightmove shares dropped over two per cent on Friday morning.
Onthemarket, a UK property portal and rival to the likes of Rightmove and Zoopla, has just reported its own set of solid results.
Unique monthly visitors are up 81 per cent year on year and over 1,000 agents and 57,000 listings added since it was bought by Costar late last year. The site now has 14,000 advertisers.