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On August 6, 2024, Rightmove PLC (LSE:RMV) announced that it will not renew its contract with OpenRent, a decision that led to a decline in its share price. This drop comes in response to the announcement that the company will lose a partner in the lettings market.
Revenue and Margin Guidance Maintained
Despite the setback, Rightmove reiterated its financial guidance for 2024. The company expects to achieve revenue growth in the range of 7% to 9% and maintain an underlying operating margin of 70%. This guidance is consistent with market expectations and reflects the company's confidence in its financial performance, even amidst current market uncertainties.
Market Dynamics and Membership Outlook
Rightmove acknowledged that market conditions, especially within the lettings sector, are "fluid." The company provided an updated estimate indicating that membership could decline by up to 3% year-on-year. However, it also projected a year-on-year increase in average revenue per account (ARPA) ranging from £90 to £100. These projections are based on the company's current understanding of market dynamics and operational adjustments.
Impact of OpenRent Contract Non-Renewal
The decision not to renew the contract with OpenRent comes as a development for Rightmove. OpenRent, which accounted for less than 8% of Rightmove’s lettings listings in July, will no longer be part of the platform starting from the beginning of September. This change could affect Rightmove’s overall market presence and its relationship with lettings agents.
Increased Competition
The competitive landscape for Rightmove has intensified following CoStar’s acquisition of OnTheMarket PLC for £99 million, which was completed in December of the previous year. This acquisition has added pressure on Rightmove as it faces increased competition in the UK property market.
Future Outlook
As Rightmove overcomes these challenges, the company remains focused on delivering its financial targets for the year. The firm is expected to adjust its strategies to accommodate the fluid market conditions and continue to monitor the impact of changes, such as the departure of OpenRent, on its overall performance and market position.
