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  • Mal McCallion

Rightmove reveals 5-year raid on agent revenues

If you think Rightmove is already taking too much of a chunk from the average estate agent’s wallet, you might want to look away now ...

As of last Monday’s ‘Investor Day’, the dominant UK portal's plans to increase their take of agents’ revenues over the next five years are now available for perusal, in plain sight. The specific figure?

£2,000 per branch, per month, by 2028.

That’s a +40% increase from the £1,400 that each agent pays on average in 2023.

Note that these are separate figures from new homes developers, which confident new CEO Johan Svanstrom has stated drove their headline-grabbing performance in recent weeks. The convenient fudge of merging these two figures together - developers and agents - to obscure what is really happening in agency is laid bare by slide 54 of their 136-page, 4-hour long beast of a deck, presented to their investors a few days ago.

I’ve gone into detail into the figures at the foot of this blog, for all you neeks out there but the core numbers between 2023 and 2028 are;

  • RM to increase revenues from £360m to £600m (+67%)

  • Profits to rocket from £263m to £420m (+60%)

  • Agent ARPA to increase from £1,400 to £2,000 per month (+40%)

  • Mortgage revenue to increase from £2m to £25m (+1150%)

I’ve previously speculated that Rightmove’s new CEO is going to come out of his predecessor's metaphorical party kitchen and hit the dancefloor hard. Turns out he’s actually just built a nightclub next door to your flat and is going to +own+ partying for the next 5 years.

There are some other announcements that also bear some scrutiny;

  • AI; Rightmove already has 12 ‘experiments’ on the go with another seven planned for next year, leveraging their IT resources to seek to get ahead of any competition;

  • Data ‘moat’; during the post-presentation Q&A, Svanstrom’s slightly testy answers to a few questions about competition was to emphasise RM’s huge data stores of properties and consumer behaviour, gained from 24 years of estate agent feeds;

  • “Lead to Keys’ (L2K); RM’s march into the ‘full transaction’ for rentals, encompassing additional services including utilities and broadband;

  • GoGreener; a slightly box-ticky mention of property and construction’s impact on UK carbon emissions and a determination to use RM’s position to do good, said once very early on and not returned to in 135 other slides;

  • Commercial; seen as a £35m opportunity by 2028, they’re turning what had been an ‘opportunistic’ approach to servicing this sector into a dedicated sales team with enhanced products to pitch.

And the elephant in the room? For many hours and scores of slides, CoStar’s takeover of OnTheMarket sat quietly, unremarked-upon, twirling its trunk. Jovial Johan and smiling squad roamed across the industry landscape, stalking large revenue opportunities and picking-off lumbering agent ARPA increases, exposed mortgage leads and herds of slow-moving tenant services upsells. It was only when the Q&A session hoved into view that the analysts in the room forced a focus on the big beast.

Of the nine questioners present on the day, six returned to the competitive threat posed by the US giant’s looming arrival on the UK property portal scene. The first time the question was simply ignored, as the top team chose to answer preferred supplementary ones instead.

The rest were increasingly tetchy exchanges along the lines of “I’m not going to comment specifically on what CoStar are doing …”, “We welcome new entrants but we have competition already today …”, “The Rightmove audience is very different to other audiences …” and “You phrased the question as if we’re not doing anything; we’re doing a lot, a lot, a lot …”

It’s obviously the prerogative of a semi-monopolistic market leader to arrogantly dismiss its incoming challengers. However, there was a definite sense of not wanting to talk about CoStar because of nervousness rather than confidence.

Overall, Rightmove’s Investor Day was a both-barrelled shot at the heart of the UK property industry, ruthlessly leveraging its firepower to capture nearly double the available revenue and profits over the next five years. How has it been received from the financial markets? Well, the share price is just 4% down on its peak just before the CoStar announcement last month.

Mission accomplished for Svanstrom and co. But a very real danger for anyone else considering being part of their story over the next half-decade who aren't similarly confident of their ability to generate +40% or more revenues ...

The Numbers;

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