Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 7% year-on-year, with the letting segment growing by 12%.
- ARPA (Average Revenue Per Advertiser) tracking in line with guidance, showing strong financial performance.
- High consumer engagement with 8.3 billion minutes spent on the platform, indicating strong user retention.
- Successful product innovations, including the launch of the lead-to-keys product and a new commercial landing page.
- Strong operational performance with a 95% retention rate for agency members and a significant reduction in the number of leavers.
Negative Points
- New home developments have slowed, impacting membership growth in this segment.
- Continued challenges in the property market, with affordability constraints and elevated mortgage rates.
- Operating costs increased by 15%, primarily due to higher people costs and increased headcount.
- The lengthy completion times for property transactions (seven months) delay cash flow for agent partners.
- The market remains in a transitional phase, with new agent formation and new home developments yet to pick up significantly.
Q & A Highlights
Q: In regards to the evolution of competition, your share of time spent year-to-date is about the same as last year, and your retention of agents seems to be the highest you've had for a long time. Is all of that correct? And is there anything you did or saw that was different in H1 as a result of competition?
A: Yes, I can confirm what you said. Positions generally remain very intact across all different metrics. We continue to be very focused on executing our plans with an eye towards both near-term and long-term goals. From a competitive perspective, there isn't much additional new news or commentary. We continue to plug along with our business and accelerate it at the same time. (Johan Svanstroem, CEO)
Q: It feels a little bit like you're caught between cycles. We're starting to see the property market up, but not enough that we see new agent formation or new home developers breaking ground on new developments. Is there anything more that needs to happen for those things to happen? Or is it literally just a matter of time?
A: Yes, I think that's a good way of phrasing it—between cycles or being in somewhat of a transitionary period. The catch-up effect on the resale side with listings volumes, pent-up demand, and positive sentiment has built solidly throughout the year. On new homes, it's slower for longer. There are bigger tankers to turn around, but there are calls for optimism. (Johan Svanstroem, CEO)
Q: At the CMD, you guided to GBP120 to GBP130 of ARPA in 2025 and 2026. Now obviously, the shape of the business has changed a little bit with the push into lettings that you've had thus far this year. Does that guidance still hold?
A: We absolutely stand behind the revenue numbers that we set out at the CMD. The way that we'll get to them, as things stand right now, is with higher customer numbers on the agency side and slightly lower ARPA. The lettings volume adds are diluted ARPA. If we were to see a mix shift back towards the more traditional mix, you would see a pickup in ARPA. (Alison Dolan, CFO)
Q: Could you help us think through how the cyclical recovery in the U.K. property market will impact your state agency business? Is the right way to think of it that on a bit of a lag, we get a bit more agent formation and a bit more product uptake, and it's more of a 2025 story?
A: We haven't seen much new agent formation in the first half. Transaction numbers are a big part of that, and the recovery has been tentative. The seven months from listing to transaction close is a long time for a new agent to market themselves and try to win mandates with no revenue coming in. So that would discourage formation. (Alison Dolan, CFO)
Q: On the strategic initiatives, particularly commercial, you mentioned a new landing page. Is that an important catalyst in terms of getting the sales team out more aggressively looking to win new customers?
A: The new landing page is not a major catalyst for sales doing something different. It is more about showing that we stand behind our investment in this area and helping partners. Sales work continues as before, but the new landing page does provide better division segmentation logic. (Johan Svanstroem, CEO)
Q: On mortgages, from 35,000 feet down into the very specifics, if I remember correctly, the traffic for the agent broker panel was being directed only after a failed. How has that evolved?
A: Yes, the current broker setup is on the decline of the main MIP with the main lender partner. The feedback from our first partner and more recently, the second one, has been very strong. It's a new way for them to get leads, and the volumes are building, which is quite exciting. (Johan Svanstroem, CEO)
Q: Regarding the investment in Covage, you own about 7% of that right now. Have you got any visibility on whether or not Covage might need a follow-on investment, and would you be willing to make that investment?
A: We are a minority investor in Covage. It's an extremely interesting and potential technology platform. We are joined by three of the largest lenders in the country in this investment. There's a lot of good thinking and action in starting to build what these different parties do together with Covage. (Johan Svanstroem, CEO)
Q: On lead-to-keys, what happened between March and May 10? There seems to have been an accelerated uptake in customers.
A: The product had been worked on for quite a while and was officially launched in Q4 last year. The pickup has been steady, and the feedback from agents has been very positive. It's now on a continuous rollout track, and we're quite happy about that. (Johan Svanstroem, CEO)
Q: On the cost of integration of Home Views, how much has been spent so far?
A: We took costs of about GBP700,000 in relation to Home Views in the first half. This was a mix of payroll for the members of the Home Views team that we retained and integration costs of their platform onto ours. (Alison Dolan, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
