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Zeus Capital

OnTheMarket plc Adding Property Developers

What’s new: OnTheMarket, the agent-backed company which operates the OnTheMarket.com property portal, is pleased to announce that it has signed a portal listing and additional advertising products agreement with Barratt Developments PLC, Britain’s largest housebuilder.

There is no comment on current trading.

Zeus view: With over 60% of UK Estate Agents using OnTheMarket, management continues to build the contracted agent customer and shareholder base and in addition is now building a network of property developers. We observe:

  • Property Portals provide a very high marketing yield for the fragmented property development market;
  • Property owners (e.g. the developers) enjoy the pricing uplift from low cost and highly effective marketing;
  • Professional housebuilders which monitor the “marketing yield” are attracted to new low-cost marketing solutions;
  • Data is very valuable for Property Developers, providing growth potential;
  • The slow property market makes Property Portals an extremely useful marketing solution for property developers.

In our opinion, OnTheMarket provides an exceptional opportunity for Property Developers to reduce their marketing costs and improve their “marketing yields”. Property Developers will make their decisions based on the economic reality. The Barratt Developments agreement will inevitably be followed by agreements with other leading developers and smaller developers. 

While management provides no comment on current trading, the OnTheMarket website shows new Agents’ Testimonials (see pages 5 to 24 of this note) which shows continuing improvement in Agent engagement and NPS.

NPS (Net Promoter Score) is a measure of the highest market yield: in our opinion the dominant UK property portal has a negative and declining NPS, while OnTheMarket has clearly positive and rising NPS.

Valuation: The equity value of a UK property portal, which arguably beats its peers in terms of leads generation, cost-efficiency and marketing yield, can be measured in terms of price to revenue or value per office or advertiser. In our view, after break even, OTM should trade on over £10k per advertiser (i.e. over £125m).

OnTheMarket plc (LON:OTMP), the agent-backed company which operates the OnTheMarket.com property portal, is the third biggest UK residential property portal provider in terms of traffic. It aims to deliver a market-leading, agent-backed alternative to Rightmove and Zoopla, offering a first-class service to agents at sustainably fair prices and becoming the go-to portal for serious property-seekers.

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