OnTheMarket plc (OTMP) , operator of the OnTheMarket.com property portal, announced unaudited interim results for the 6 months ended July 31 2023, as well as its acquisition by US-based CoStar Group.
In H1, OnTheMarket's revenues increased by 1% while average revenue per account (ARPA) was down 2%. New Homes saw strong growth, up 26% boosted by increases in advertiser numbers and average revenue per advertiser. Adjusted EBITDA was £3.1m, in line with the prior year, and adjusted operating profit was £1.1m, down 15% year-on-year. Profit after tax dipped into the negative with a £0.1m loss from a £0.4m profit last year. The company ended the period with a strong balance sheet, including net cash of £11.5m and no debt.
OnTheMarket noted that average monthly advertisers listed on its platform increased by 2% to 13,323, with agency branches up 1% at period-end to 10,414. Also, new homes developments listed increased 4% at period-end to 2,949, and there was a 12% increase in traffic, reflecting continued investment in the portal.
"We are pleased with our performance in the first half, despite the difficult market conditions. Throughout this we have stayed true to our commitment to agents by continuing to offer value at a time when they need it most." commented Jason Tebb, CEO of OnTheMarket.
Separately, OnTheMarket announced it has agreed the terms of a cash offer made by CoStar UK (Bidco), a wholly-owned subsidiary of US-based CoStar Group, for the entire issued share capital of OnTheMarket.
Under the terms of the acquisition, OnTheMarket shareholders will receive 110p/share, establishing a valuation for the company of £99m, representing a premium of 56% over yesterday's closing price of 70.50p. OTMP shares jumped 52% today as a result to 107.50p as of time of writing.
"From a position of strength, partnering with CoStar will significantly accelerate our strategy with the clear target of becoming the market leader, whilst staying committed to fair and sustainable pricing. CoStar will bring industry-leading global expertise and significant financial firepower to invest in OnTheMarket, allowing us to accelerate our transformation of the sector. We have strong shared values in our commitment to agents who we believe will benefit from unparalleled value and greater opportunities to enhance their businesses." commented Jason Tebb, CEO of OnTheMarket.
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Two major news items from OnTheMarket today. The interim results announcement was largely eclipsed by the news that the company will be acquired by CoStar UK/Bidco, a wholly-owned subsidiary of Nasdaq-listed CoStar Group.
However, it is worth noting regarding the results, that OTMP showed remarkable resilience in H1 despite a difficult macroeconomic backdrop for the UK property market, keeping a strong balance sheet with a comfortable cash balance, and maintaining revenues and profitability broadly unchanged. The OnTheMarket platform also saw a 12% increase in traffic during the period, reflecting continued development and improvement of the portal and related customer experience.
OnTheMarket said it would focus on opportunities to grow advertiser numbers via packages and short-term incentives to stimulate trial and demand, as well as focus on customer retention, hoping to achieve accelerated revenue growth when housing market conditions improve. However, in light of lackluster transaction volumes, stubborn inflation, and the cost of living crisis, OTMP said it may not be able to grow both revenue and profits for the full year as previously hoped.
Partially as a result of its resilience during difficult times for the UK housing market, and historical strong performance, the company was made an offer by CoStar UK (Bidco), owned by US-based giant CoStar Group, for its entire issued share capital at a 56% premium to yesterday's closing price. Upon today's announcement by OTMP that the offer had been accepted, shares predictably soared 52% to 107.5p, almost matching the offer price.
Washington, DC-based CoStar Group has invested billions into the world's leading online property marketplaces, generating millions of commercial transactions. Its websites generated 280 million visits in September 2023, including Homes.com, the 2nd largest and fastest-growing residential marketplace in the US. CoStar saw an opportunity in OnTheMarket to enter the £8 trillion UK residential property market at a time when AIM-listed companies are trading at a discount.
Investors are betting that with its US$33 billion market cap, CoStar can give OnTheMarket the firepower to dominate the UK property portals space and take on rivals like Rightmove and Zoopla. The move is part of CoStar's larger strategy to expand not only in the UK but across Europe.
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