As part of the ShareBuyers’ going for growth series, we take a look into the growth prospects of OnTheMarket (OTMP), the AIM-listed property portal that has seen its share price surge by 200% in the past 6 months.
With the property sector showing strong signs of recovery and OnTheMarket increasing its ability to disrupt the online property portal market – investor sentiment has been increasing for OTMP whose market capitalisation currently stands at just a fraction of more dominant peers.
Find out why OnTheMarket acting CEO and CFO of OTMP Clive Beattie is confident that the online portal is now ready to win greater, sustainable market share and how he’d pitch the business to legendary investor Warren Buffett!
Firstly, could you please tell us a bit about OTMP and its value proposition?
OnTheMarket is a growing majority agent-owned company which operates the OnTheMarket.com property portal, a leading UK residential property portal provider. Its objective is to create value for its shareholders and property advertiser customers by delivering an agent-backed, technology enabled portal connecting estate and letting agents and new homes developers with consumers.
OnTheMarket.com was launched in 2015 as an alternative to the large property portal providers and its proposition is to offer a premier search service to consumers whilst charging sustainably fair prices to agents, which has found support among a wide group of leading independent agents across the UK. Following a period of investment for growth the portal is now one of the largest portals in the UK residential property market in terms of website visitor traffic, reaching over 27.5 million visits in August 2020 and generating >2m leads for the c.14,000 advertisers signed up to the portal.
The current climate is presenting challenge and opportunity – how has this applied to your business?
The UK property market was severely impacted by the COVID-19 pandemic and the effective shut-down of the market for residential sales and lettings in March. As we entered 2020, The market had started to show signs of recovery following a difficult 2019, impacted by a backdrop of economic and political uncertainly, and we were growing our agent base and revenues. Since March, agents have been severely impacted by the market shut down and suspension of transactions. OnTheMarket reacted quickly to provide financial support for our agents whose businesses were materially impacted, temporarily reducing our listing fees for advertisers. At the same time, we took immediate steps to conserve cash and reduce our operational costs.
Following the release of pent-up consumer demand as the market reopened, stimulated further by the stamp duty holiday and a desire amongst many to look for homes to support new lifestyles, our agents are seeing strong levels of activity once again. The COVID-19 crisis has been a catalyst for many agents to review their portal choices and examine the value delivered. We believe there is significant potential for market share gains and we will look to capitalise on this opportunity through our strong portal offering, our approach of agent alignment through ownership in OnTheMarket and our commitment to sustainably low listing fees.
Growth catalysts are crucial to business growth – what do you believe yours are?
OnTheMarket in enjoying a period of strong performance and we are benefiting from a backdrop of more positive market dynamics driven by a combination of pent-up demand and a change in lifestyle choice fueling the move to out of town properties with outdoor and office space. Since the COVID-19 pandemic we are seeing opportunities to strengthen our agent base and grow revenues, converting agents currently on free or discounted contracts to full paying contracts, as agents review their portal choices. Our continued growth in monthly leads provides a strong metric for agents looking to make the switch. This growth will enable us to continue to invest in our marketing channels to drive portal traffic, and over the medium-term to further invest in technology-enabled products and services to support agents and consumers.
What are the biggest headwinds you foresee to achieving growth in the coming months and years? How will you tackle them?
Since mid-June the UK property market has been enjoying a period of renewed activity, further stimulated by the Stamp Duty holiday. Despite these encouraging signs in the shorter term it is very difficult to predict the structural impact the COVID-19 pandemic will have on the UK economy, consumer behaviour and the financial health of our agent customers. We believe our fair pricing is a very attractive proposition for agents should they face more financial hardship. In addition, we have authority to issue shares to new agents signing up to long-term, full-tariff listing agreements.
We will continue to provide support to our agent shareholders and customers and provide significant value through our differentiated proposition and sustainably low-cost service. The recent uplift in activity, which reflects increased brand awareness, is encouraging and we remain confident that we have the right strategy to support our longer-term vision to become the portal of choice for agent customers and property-seekers alike.
Imagine you find yourself in a lift with Warren Buffett. What would be your ‘elevator pitch’ to summarise why he should invest in your business?
Following a period of investment and growth transforming OnTheMarket.com into a strong disrupter on the property portal marketplace, OnTheMarket plc is well placed to continues its growth as the UK market rebounds. OnTheMarket.com is a unique agent-backed property portal, offering a very compelling and competitive service to agents and home builders and consumers. Our revenue growth in the short term is being fueled through conversions of agents to paying contracts, and over the medium term by product diversification through tech-enabled offerings.
The portal is benefiting from the growing backlash against the dominant players and the recent surge in demand for moving in the UK. Our growing technology proposition and sustainably low pricing means we can compete and win against the dominant, higher cost players. We have a strong management team, a disciplined approach to costs and cash conservation with a track record of cash conservation during the recent COVID-19 challenges. OnTheMarket is excited about the opportunities to continue to take market share, engage new technology to expand its portal offering and grow advertiser revenues.
Please note: this discussion with Clive Beattie of OnTheMarket forms part of the ShareBuyers’ going for growth series – helping companies with high growth potential to share their story. It is not a recommendation to buy or sell shares in OTMP.