OnTheMarket plc (LON:OTMP) full year results to January 2022 are in line with the February trading update:
¨ 32% rise in revenue to £30.4m (FY21: £23.0m);
¨ 12% rise in Group adjusted operating profit to £2.7m (FY21: £2.4m);
¨ Net cash on 31 January 2022 of £8.4m.
Revenue growth was driven by 32% rise in monthly Average Revenue Per Advertiser “ARPA” to £188 (FY21: £142). The average number of advertisers (i.e. Estate Agents, New Home developments) was flat at 13.3k; total number of advertisers at year end rose 8% to 13.7k.
OnTheMarket provided its agents with 58% more valuation leads (e.g. email requests for sales or lettings valuation) and 6% rise in visits (i.e. individual sessions on OnTheMarket.com’s web-based portal or mobile applications by users, as measured by Google Analytics) to 283m visits.
Glanty, acquired via a step-acquisition, contributed £0.6m to revenue and £0.6m loss after tax. If Glanty had been owned for the full year, it would have contributed £0.8m revenue and £1.2m loss after tax. Goodwill of £1.5m assumes 5 year revenue CAGR of 44% and EBITDA margins increase to 40% in perpetuity and a 14% discount rate.
Outlook: Jason Tebb, CEO, reports: “our strategy is working. Having listened and engaged with thousands of agents we are more convinced than ever in our strategy of building a differentiated, tech-enabled property business.” OTM is set to deliver profitable growth.
Zeus view: We expect OTM to deliver combined revenue growth and EBITDA margin of 40% (i.e. “rule of 40”), with 23% EBITDA margin and revenue growth of 17%, driven by:
¨ 6.3% rise in advertisers by Jan 2023, growing average number of advertisers by 6.5%.
¨ 9.0% rise in ARPA to £205, with reported Estate Agent ARPA rising c. 3% from £204 to £211, and New Homes developers ARPA rising 33% to £133 (n.b. in 2H New Homes ARPA rose 17% to £108 from £92 in 1H).
We expect Glanty to contribute to revenue growth and reach cash breakeven in 2023 calendar year. Our forecasts are consistent with an earnout of £4m in 2024 (based on revenue to 12 months to May 2024; capped at £12m), which could be settled in cash or shares.
We leave our forecasts materially unchanged: 2% cut to revenue and 1% increase to EBITDA. We take this opportunity to set forecast for the years to January 2024 and 2025.
Soon OTM will have “flexibility to pay dividends and/or introduce a share buyback programme”.
Valuation: At 86.5p, with 10p of cash, OTM is trading on 2.0x historic EV/Revenue and 1.7x current year (P/Revenue of 2.3x and 2.0x respectively). Investors confident OnTheMarket will operate to the “rule of 40”, should expect OTMP to trade on over 6x prospective revenue (i.e. c. £216m, which is 263p a share).
Summary financials
| Price | 86.5p |
| Market Cap | £64.8m |
| Shares in issue | 75.0m |
| 12m Trading Range | 75p– 129.0p |
| Free float | 95% |
| Next Event | Late July AGM |
Financial forecasts
| Yr end Jan (£’m) | 2022A | 2023E | 2024E | 2025E |
| Revenue | 30.4 | 35.5 | 39.4 | 43.7 |
| yoy growth (%) | 32 | 17 | 11 | 10 |
| EBITDA | 5.1 | 8.3 | 11.2 | 13.7 |
| EBITDA margin (%) | 17 | 23 | 28 | 31 |
| Adj. PBT # | 1.7 | 3.9 | 6.1 | 7.9 |
| Adj. PAT # † | 1.9 | 5 | 6.6 | 7.9 |
| Avg FD shares (m) | 81 | 82 | 83 | 84 |
| EPS (p) fd. Adj # † | 3.1 | 6.1 | 7.9 | 9.5 |
| DPS (p) | – | – | – | – |
| Net cash | 8.4 | 11.6 | 17.7 | 24.2 |
| P/E | 27.6 | 14.1 | 10.9 | 9.1 |
| EV/EBITDA | 12.1 | 7.1 | 4.8 | 3.5 |
| EV/sales | 2 | 1.7 | 1.4 | 1.1 |
# including share based compensation & MIP
† tax credits are included in PAT
Source: Audited Accounts and Zeus estimates
