Record results for Rightmove announced today

Rightmove’s full year results for 2008, issued today, show that it grew revenue by 31% and profits by 33%, despite the huge slump in the property market – with agents paying more for the service.

But although the report emphasises the market conditions, there are no statistics regarding a fall-off in estate agency numbers on Rightmove. Instead, by combining estate agency and letting agency numbers, Rightmove has been able to show an actual gain of 2,000 agents.

The site does however hint at the likely attrition rate among its selling agents, saying: “We believe that around 20% of estate agent offices have left the industry since the start of the downturn in July 2008. In many, though by no means all cases, these were smaller businesses that always spent less on advertising. Therefore the majority of the overall decline in property advertising spend has come from a reduction in newspaper spending by agents who continue to trade and not as a result of agents leaving the industry.”

It continues: “The overall decline in the number of agents, coupled with a sharp reduction in house building across the UK in 2008, has inevitably resulted in shrinkage in our advertiser base. This had an impact on revenue in the second half of 2008 and will inevitably impact 2009 as we experience the full-year financial consequence of the disappearance of these advertisers.
 
“Nonetheless, during 2008 we gained more than 2,200 individual estate agent and letting agent offices, with lettings representing an area of particularly rapid growth. Setting aside the substantial contraction in the overall base of agents in the market, the gains in agents far outweighed the loss of agents who remain in business.”
 
Those agents on Rightmove last year were paying more than ever before to be on the site: Rightmove’s success came about as its advertisers paid an average of 26% more than in 2007, their average  fee being £307 a month compared with £243 the year before.

However, its debts have grown from £11.8m in 2007 to £16.9m in 2008.

Rightmove has bought back 11.9m shares at a cost of £45m. It proposes to reward shareholders with a dividend of 10p, up from 8p in 2007.

The company expects to make £5m in savings this year after a restructure which saw redundancies across the business but mainly in its sales operation.

It highlights in the results the success of its Rightmove Choice products, saying these now have more than 30% take-up.

In his chairman’s statement, Scott Forbes said: “2008 was another year of growth for Rightmove despite difficult economic conditions and the worst UK housing market in modern history.

“With new-build starts at an 85-year low in 2008, record low home sales resulting in 2,500 to 3,000 estate agency office closures and widespread job losses, 2008 has been a challenging marketplace. Nevertheless, a combination of clear online market leadership, management dedicated to providing continuously improved customer value and a strong financial position has enabled Rightmove to continue to perform and deliver for customers and home hunters.”

He said that general property advertising spend fell ‘dramatically’ last year, but the compelling benefits of internet advertising benefited Rightmove. Revenue increased from £56.7m in 2007 to £74m last year.

He went on to praise staff, whose numbers were reduced by 23% last November. He said: “I would like to thank our former and current employees for their dedication, performance and the way in which they conducted themselves during this difficult time.”

In the rest of the statement, Rightmove made clear that its market dominance gave its advertisers cost-effective service.

Rightmove hinted that times to come will be tough, conceding that the housing market downturn and the credit crunch will be “too pronounced” to insulate the business.

But it added: “However, we believe the underlying strength of the business, and our ability to invest in marketing and product development in the tough times, will reward us with a substantial share of the industry’s marketing spend as the housing market starts to return towards more normal levels of activity.
 
“As we start 2009, our objective is to communicate unequivocally to home hunters that we remain the place to look for property and to the property industry that we are the place to advertise.”

The statement added: “We wish to thank all our customers for their loyalty at a time when the dramatic fall in number of housing transactions has led them to reduce staff levels and their other marketing spend to an extent not witnessed in living memory.

“We also wish to express our thanks to the many former Rightmove employees who made such a big contribution to the growth of our business but who also lost their jobs as a result of the collapse of the UK property market.”

Initial stock market reaction to the results was positive, with the shares rising 6% in the first hour of trading.