Rightmove interim profits up, dividend lifted

Rightmove posted a jump in first-half revenue and profit on Friday as it lifted its interim dividend and said it was confident of delivering on its full-year expectations.

In the six months to 30 June, revenue was 10% higher at £131.1m, while operating profit rose 12% to £98.2m, pre-tax profit grew 12% to £98m and the group upped its dividend by 14% to 25p a share.

Meanwhile, average revenue per advertiser was up £76 on the same period a year ago to £987 a month while membership numbers were stable, with agency and new homes customers up slightly since the start of the year to 20,450 versus 20,427 at the end of December 2017.

Visits were up 5% year-on-year in the first half, averaging 139m a month and time on the website was up 4% and averaging 1.1bn minutes per month.

Full-year average revenue per advertiser is expected to be around £80 year-on-year, with ARPA growth more weighted to the second half than in 2017 due to the timing of 2018 pricing activities.

Chief executive officer Peter Brooks-Johnson said: "Home hunters continue to turn to us first to search and research in the only place you can see virtually the whole of the UK property market. Our restless innovation delivers the fastest and easiest way to 'find your happy' from the 1.2 million UK residential properties on Rightmove leading to consumers sending over 22 million enquiries in the period.

"The continued stable membership numbers and our subscription advertising model, together with the strength of the Rightmove offer for both customers and consumers, give us confidence in delivering expectations for the current year despite muted sentiment towards the UK property market."

Liberum said: "We do not expect much change to consensus and Rightmove continues to be a very well-run company that is dominant in its space. Our issue is that the valuation has probably reached its level for now and there would need to be signs of an acceleration in ARPA via new services/products to push the valuation further."

UBS maintained its 'sell' rating on Rightmove on valuation grounds following the "in line" results.

"Post an in-line set of H118 results with forward earnings unchanged we maintain our sell on valuations grounds. H118 as expected did not surprise on the upside to justify a further re-rating in our view.

"At current prices Rightmove trades on 26x FY19E earnings per share and implies revenue growth needs to be sustained at circa 9% over the next 10 years versus UBS estimate of around 7% and H118 results of 9.7% with ARPA growth of 8.5%.

"We continue to view the implied revenue growth is overly optimistic at this stage given a depressed property commission pool, potential rental disruption and limited visibility into Rightmove's product pipeline."

At 1020 BST, the shares were down 2.5% to 4,963p.