Rightmove slides as it expects membership numbers to flat-line in 2021

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Rightmove PLC (LON:RMV) resumed dividend payments and its share buyback programme as its average revenue per advertiser continues to recover.

The property listings website operator announced the payment of a 4.5p final dividend in respect of 2020 and said the share buyback programme, which was suspended during the coronavirus (COVID-19) pandemic, will resume in March of this year.

Revenue in 2020 slumped 29% to £205.7mln from £289.3mln in 2019, reflecting the impact of lockdown measures in the UK.

Profit before tax declined to £134.82mln from £213.56mln the year before.

The average revenue per advertiser (ARPA) over the whole of 2020 tumbled 28% to £778 per month from £1,088 in 2019 but in December the ARPA was £1,103, up from £1,083 in December 2019.

Currently, Rightmove expects ARPA to increase from the December 2020 level at a rate of growth towards that seen in 2019.

Membership numbers were down 3% to end the year at 19,197 (31 December 2019: 19,809) with 425 fewer agency branches and 187 fewer new homes developments, Rightmove said.

Management expects membership numbers for the current year will be similar to the levels seen in 2020.

The company reckons that the UK market has largely shaken off “pandemic-related charges” in 2021 and that the current shortage of new property listings will be remedied once the lockdown restrictions are lifted, based on its experience the last time lockdown restrictions were eased.

“The record traffic and enquiries that followed the reopening of the market led to us sending 51 million property leads to our customers. Strong activity has continued into 2021 and we recorded our busiest ever January for traffic,” said Peter Brooks-Johnson, the chief executive officer of Rightmove.

Shore Capital said the growth rate in ARPA returning to the sort of pace set in 2019 would imply growth of 8%.

The broker said it was encouraged to note the recovery in the second half of 2020 and the positive start to 2021 but it harbours “a degree of caution around the outlook for the property market as the economic consequences of the COVID pandemic become clearer and ahead of an update on the government’s policy on stamp duty.”

“More specifically, we also retain concerns around RMV’s pricing power following a sustained period of listing cost inflation (monthly agency ARPA +185% FY09A – FY19A),” it added, sticking with its “sell” recommendation.

Freetrade’s senior analyst, Dan Lane, said the boost to site traffic will encourage investors, as “that’s Rightmove’s bread and butter after all”.

“But it might be one of the only aspects to cheer this morning. Revenues and operating profits have tanked, testing the resilience of the entire model.

“The worrying thing is that even with all of the tailwinds in stamp duty holidays and the platform seeing record visits last July, the shares still aren’t back above those pre-pandemic highs. It might seem unfair to compare today with those peaks but US cousin Zillow has more than managed it in the US,” Lane said.

“Stamp duty looks like it’s getting an extra holiday next week, which might mean a few of us might forgo ours this summer and use those pent-up savings to scour Rightmove a bit more.

“That the platform had its busiest day ever this month, eclipsing last July’s record visit haul, tells us a lot about our intentions this year but there’s the risk that complacency is setting in here. Rightmove pretty much has the online portal sector sewn up for now but if it can’t turn record website hits into profits, is that a sign the model is getting a bit bloated?” Lane wondered.

Shares in Rightmove were down 5.2% at 574.40p in lunchtime trading.

— adds broker comment and share price reaction —

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