UK’s Rightmove cuts 2024 ad revenue forecast on tough market conditions

Rightmove cut its annual average advertising revenue forecast as still high mortgage rates weighed on residential sales while the lettings market remains tight, sending shares in the UK’s largest property portal down 5% on Friday. The company, which charges estate agents and homebuilders a fee to list their properties on its website, pointed to a strong lettings market which typically has lower average revenue per advertiser (ARPA). “They (lettings agents) have needed us less for quite a long time because there is just a shortage of lettings properties and so our pricing leverage on the lettings-only space is less than it is in resale,” CFO Alison Dolan told Reuters in an interview. The London-headquartered firm cut its ARPA growth forecast for 2024 to 75-85 pounds from 100-110 pounds ($125-$138). The shares were down 4.7% at 546 pence by 0808 GMT and were the top loser on London’s bluechip index. Higher mortgage rates continued to impact affordability for home buyers but there were some positive signs, the company said in a statement. “The main recovery that is being seen here is resale. Second hand homes changing hands and there demand has picked up,” Dolan added. The British housing market has seen green shoots of stability after battling subdued demand for most of last year, but a delay in the central bank’s monetary policy loosening and remaining macro-economic concerns have tempered hopes of a better-paced recovery. The company kept its annual revenue and profit expectations unchanged, but raised its customer numbers forecast. Rightmove said it expected its customers to grow by 2%, compared to an earlier forecast of a “slight decrease”. ($1 = 0.7980 pounds)Reporting by Prerna Bedi, Aby Jose Koilparambil and Yamini Kalia in Bengaluru; Editing by Rashmi Aich and Varun H K and Elaine Hardcastle