OnTheMarket’s trading figures for the six months to the end of July show, as predicted, losses while the company is building its portal’s listing agreements and increasing staff.
In a statement issued to shareholders this morning, OnTheMarket plc repeats some figures which are familiar from recent updates, but also gives an insight into strategy and infrastructure of the portal as it seeks to challenge Rightmove and ZPG.
Highlights from the statement include:
- As of October 1, OTM had signed listing agreements with UK estate and letting agents with more than 11,000 offices, more than doubled since admission to AIM;
- “The growth in our agency branch base to date has been predominantly from offering free listings under short term introductory trial offers, with a view to converting these to full tariff contracts when the value of our offering has been demonstrated”;
- The ‘New & Exclusive’ feature “gives OnTheMarket a competitive advantage as this has been shown to hold a significant appeal to active property-seeking consumers”;
- The field team has risen from 15 in February to 40 today and the IT team is up from 21 to 52;
- “Increasingly the sales team will broaden its focus to engage with customers to seek to increase the number of agents prepared to adopt ‘New & Exclusive’ for their new instructions”;
Revenue for the six months was slightly up at £7m (six months to July 31 2017 was £6.9m). The reported operating loss of the Group was £5.7m (six months to July 31 2017: profit of £2.7m).
Losses were accounted for by OTM's strategy to invest in rapid growth in its customer base, predominantly from offering free listings under short-term introductory trial offers, with a view to converting these to full tariff contracts when the value of its offering has been demonstrated; and to utilise the proceeds from the capital raising to significantly increase marketing spend and in expansion of the team.
In terms of the wider economic landscape, OTM warns that the housing market remains under pressure from a number of factors, "including commission pressure, reduced volumes, the impending lettings tenant fees ban and Brexit uncertainty."
But it says that notwithstanding these issues "portal costs have continued to rise and some portals are competing with their agent customers for cross-sell revenues. [OTM] Directors believe that these market developments continue to provide a strong rationale for agents to support OnTheMarket, which provides a competitively priced service and increasing value to customers as website traffic grows."