# OnTheMarket delivering revenue growth plus EBITDA margin which exceeds 40% says Zeus Capital

- Link: https://www.directorstalkinterviews.com/onthemarket-delivering-revenue-growth-plus-ebitda-margin-which-exceeds-40-says-zeus-capital/4121046637
- Published: 2022-01-24T11:16:28+00:00
- Author: Amilia Stone

**OnTheMarket plc** (LON:OTMP) trading update reveals “Group’s operational performance
has continued to be strong” with continued “focus on disciplined operational and
cost management.”

Key points include:

 * FY(Jan)22 revenue “expected to be slightly ahead of market consensus” (Bloomberg:
   £30.45m)

 * Cost of new website and brand launch “capitalised rather than expensed”

 * FY(Jan)22 Group adjusted operating profit “will be at least £2.5m”

**Outlook**: “The Directors believe the outlook for the Group is unchanged to that
announced in its interim results on 12 October 2021”.

**Next update: **OnTheMarket will provide “a further update in a post year-end trading
update in late February.”

**Zeus view:** We adjust our FY(Jan)22 forecast as follows:

 * Nudged revenue up £0.1m to £30.5m

 * Raised adj PBT 19.0% from £2.1m to £2.5m

 * Raised EBITDA 8.2% from £4.9m to £5.3m

 * Cut overheads 2.1% from £14.4m to £14.1m

 * Made no change to forecast cash at year end

Current year profitability improves: EBITDA margin rises 131 basis points from 16.1%
to 17.4%.

We will review our forecast for FY(Jan)23 after its trading update in late February.

**Valuation**: Sales multiples provide a clear guide to fair value (_see our 12 
October 2021 research note_) showing the link of sales multiples to cash generation.

OnTheMarket, with long-term contracted subscription revenues, is delivering revenue
growth plus EBITDA margin which exceeds 40%.

This year we expect 32% revenue growth and 17% EBITDA margin (i.e. 49% combined);
next year we forecast 19% revenue growth and 21% EBITDA margin (i.e. 40% combined).

At 119p, with 13p of cash, OnTheMarket is trading on current year EV/sales of 2.8x
and 2.4x next year. Investors confident OTMP will operate to the “rule of 40”, should
expect OTMP to trade on over 6x sales (i.e. c 226p a share.

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