Rightmove plc

Good morning everyone and welcome to the presentation of Rightmove's results for 2021. My name is Peter Brooks-Johnson and I'm joined by Alison Dolan, our CFO. I'm going to talk through the highlights of the year. Alison is going to go through some more detailed financials and then I'm going to spend some time giving you a little more colour on the housing market and our strategic developments. 2021 was Rightmove's 21st birthday and much has changed in the property market in the last 21 years. One thing which hasn't changed is our constant innovation. In the last five years, we've invested over £35 million in innovation, which, amongst other things, has increased the amount of time home hunters spend on Rightmove by over 50%. The last time we met, there was much questioning about how Rightmove would fare in a very busy market and a market where stock was constrained. To demonstrate how we've emerged from the shadow of 2020 and the robustness of the model, regardless of the anti-market, I've compared our performance versus 2019. Site traffic last year was again a record, with an average of 1.5 billion minutes per month being spent on the platform. That's up over 15% on the previous highs set last year. The busy property market has created very different dynamics in our agency and new homes customer bases. Agency customers are very busy and focused on winning the right to sell properties efficiently. Our agency business continued back from a year ago with nearly 200 branches added during the year many of our new homes customers are forward sold until the middle of 2022 and therefore we saw a drop in new homes developments over 2021 and developers easing back on their marketing as they've less to sell although this fall did stabilize in the second half of last year arpa is up 101 pounds on december 2019 the growth in arpa from december 2020 to december 2021 is the largest we've had in a year This has been driven by a record agency ARPA growth of £120 from a mix of price and product upgrades. The ARPA uplift and product upgrades have given us real revenue momentum at the start of 2022, which Alison will discuss later. In the second half of 2021, we caught up some of the first half one-off cost savings, and we've got a little more to do in the first half of this year. And as promised last year, we've been returning the extra built up in 2020 with nearly £239 million returned, and consistent with our long-established policy, we're increasing our dividend to 7.8p in total for the year. But beyond our KPIs, we've made much strategic progress this year. Rightmove's purpose is to make home moving easier in the UK. We'll satisfy our purpose and drive growth through innovation. Our strategy has three reinforcing segments. Firstly, we're the place home hunters turn to and return to first. This in turn makes us the UK's property platform, which delivers an unparalleled return on investment for our customers. And then we were in a unique position to help both customers and home hunters by making this process more digital and create new revenue opportunities for us. This slide gives you some examples of our strategic delivery this year. I don't often talk about the underpinning segment of our strategy, place consumers turn to and return to first, but I thought it is worth highlighting how our continual innovation and brand investment yield dividends. Our unwillingness to accept the status quo, with things like the ground-up refresh of drawer search and keyword sort on mobile, has led to a 22% increase in active app users. That's not just home hunters who download the app, that's people who use the app time and again. Our investment in our brand continues to ensure we're top of mind when people are looking for property. 84% of our traffic comes from people using the app or typing Rightmove into their browser, on their phone or on desktop. The brand lead has real strategic value. But also, of course, it means the traffic is free. We continue to innovate in our heartland of advertising and tools for property professionals. For example, the Secure Video Viewings platform we launched in 2020 delivered over 400,000 video viewings in 2021. And tenants requested over 300,000 physical viewing appointments via our appointment booking platform which went live last year. Real innovations in the real world delivering real time savings for our customers. We continue to innovate and deliver new efficient marketing products to our customers. We launched three new next generation products last year, which I'll talk about more later. On top of this, we believe there's much opportunity in making the home moving process more efficient by being more digital. Come back and talk about progress in this segment later. There's much excitement for the future, but this is all built on our strong position today. Before I give a little more colour on our strategic position, I'll hand over to Alison to talk about the numbers in more detail.

thanks peter good morning everyone as peter explained and as we did with the half year results we are using 2019 as the comparative year as all the disruption of 2020 makes direct year-on-year comparisons more difficult relative to 2019 therefore revenue has grown by 15.6 million pounds five percent exceeding 300 million for the first time that net growth number however hides a number of interesting underlying dynamics And there are a couple of key points to understand about the drivers of that net growth. The first is the scale of the growth in product purchases and package upgrades, particularly in agency. And the second is the impact of the drop in customer numbers in the year 2020 for agency and in 2021 in new homes. In a state agency, revenue growth was £15.3 million. That is the net of two numbers. The first of which is ARPA growth. where pricing actions and customers paying for additional products and upgrading their packages drove a record increase in ARPA and an increase in revenues of 23.6 million. The quality of our vendor lead products driver of this product growth, as was an uplift in the number of agents subscribing to our premium optimizer package, up from 9% of our independent agent base in December 2020 to 21% a year later. As with the first half of the year, we continue to see agents increasing their discretionary spend on products. Partly offsetting this ARPA driven growth, however, was a drop in the number of agent subscribers in 2020, which reduced revenue 8.2 million and meant that net revenue growth is 15.3 million. Customer numbers did start to recover in 2021, And we expect 2022 to see further new agencies and an expansion of existing branch networks. Within new homes, these dynamics are even more pronounced. We spoke at the half year about developments being very forward sold, resulting in developments being marketed for a shorter period of time and fewer developments stood on site. Two new products for new homes developers launched during the year, however, Advanced Development Listing and Native Search Advertising. And they helped to drive strong product adoption, the result of which was revenue growth from product purchase of 4.3 million. The fall in the number of developments being listed, however, had a negative revenue impact of 6.6 million pounds. And that was pretty much all in 2021. And as would be some of our developers also reduced their transactional marketing spend, which reduced revenues by a further 3.2 million. the net of all three of these elements was that new homes revenue fell on 2019 by 5.5 million but again the product the power of the new products is evident and their value will continue to grow even as the demand supply imbalance starts to write itself later this year other revenues what we do as our breath businesses have generally all shown strong and encouraging growth delivering a combined 5.8 million pounds of increased revenues on 2019 with over half of that from our commercial real estate and data services businesses each of which grew revenues by about 20 percent over that period top of the funnel branding products such as featured agent and local home page remain our strongest selling products but the mix of production has also changed to address some of the opportunities from the buoyant market as agents compete to win their next vendor instructions vendor lead generation products such as local valuation alert right move discover and usage of the opportunity manager product increased strongly as you can see here and bottom of the funnel closing products like featured property and premium listing were particularly effective for agents during the year sold by me our newest branding product exclusive to optimizer was a key driver of so many of our agent customers upgrading to Optimizer 2020 during the year. Overall, the proportion of revenue attributable to products rather than to core listings is now close to 60%, an increase of over 5% over the last three years. The effectiveness of these products for agents is clearly demonstrated in what has been a healthy but testing market environment for them where the stock supply issue increased competition for each instruction. For us, seeing agents' increased usage of our products to help them to win new vendors is very rewarding. And as I've spoken about before, product revenue is sticky, as the majority of agents retain our digital products once they start to use them and experience their effectiveness. For this reason, the discretionary purchase of products beyond those in an agent's subscription package remains strong, Beyond committed symbols, the revenue from discretionary product purchase is now approximately £600,000 per month. All of this has led to record ARPA growth, which has grown by £101.9% since December 2019, to close 2021 at £1,189. Within that, the growth in agency ARPA was even greater. Agency ARPA increased by £120 or 12% since December 2019, driven by those optimizer upgrades and product purchase, as well as the pricing actions we took both during the year and in the second half of 2020. 40% of the uplift came through pricing, with the remaining 60% from the combination of product purchase and package upgrades. In new homes, ARPA increased by £24 or 2% on December 2019, reversing the decline that we reported at the half year and building on the agency momentum going into the year. As I mentioned in the revenue slide, product growth and pricing delivered strong ARPA growth, £107, but this uplift was partially offset by a fall of £83 from reduced transactional marketing in much the same way that I spoke about at the half year results, with the net ARPA uplift in new homes being £24. But it was the growth in the second half of 2021 which is particularly impressive and worth some detail. In agency, the £26 increase between July and December is the single highest ARPA uplift in a second half reporting period that we have ever had. It is over double our typical ARPA growth rate in a second half year period. Second half growth in new homes ARPA was even more impressive. At the half year, we reported that New Homes ARPA was £14 down on December 2019, but we end the year £24 up. £38 of ARPA was added in the second half of the year 2021 in New Homes. This obviously gives us great momentum in ARPA heading into 2022. The continuous growth can be seen here in the bottom chart in slide 9. And January has seen us maintain that momentum and continue to add to the December closing ARPA levels. Cost inflation since 2019 has been relatively limited at 6.7 million. The only significance in that really is in headcount, which now represents 42 million of our total costs of 76.3 million. That's 55% of the cost base. People costs increased by a total of 5.6 million. of which 4 million is due to a mix of new heads and salary increases in our product development teams. The movements in other cost items are all consistent with increased traffic to our sites and increased investment in training and recruitment set by ongoing savings from staff continuing to work from home for the majority of the year 2021. Costs overall are consistent with our first half results at 25% of revenues And margin therefore remains at 75% in line with the guidance that we gave at the half year. For 2022, while we will continue to invest in our product and customer facing teams, we will also maintain our disciplined approach to costs and our focus on revenue growth for anticipate that our margin will be broadly the same as 2021 at that 74 to 75% level. Operational cash generation remains strong at 105% of operating profit, a level similar to last year. All of the cash generated in the year, along with £50 million of cash generated in 2020, was returned to shareholders with £176 million returned via the share buyback programme and £64.5 million via dividend in May and in October. We ended the year with £48 million of surplus cash, We may reduce that a little further this year, but not materially, and we aim to continue to manage the balance sheet cash position to broadly this level now going forward. As Peter mentioned earlier, we are also announcing a 2021 final dividend of 4.8p, which will amount to about £40 million and will be paid in May. We reiterate our policy of delivering growth in line with underlying EPS growth. Having paused our share buyback programme for the closed period, we will resume it in March. And our policy of returning substantially all cash to shareholders post-organic investment remains unchanged, as does the allocation within that of broadly one-thirds dividend, two-thirds buyback. We have made two adjustments to operating profit in order to increase the transparency of the underlying business performance, consistent with the way in which we reported our first half results. We have excluded the cost of share-based payments, given the volatility in the share price over the pandemic. Those charges amounted to 4.9 million in 2021, and excluding that, underlying operating profit amounted to 231 million. We also reported in our first half results that we had not paid out a contingent consideration to previous owners of the Van Mildred business, which had been set at 2.4 million pounds. and which was released in the first half of this year, keeping costs lower than they otherwise would have been. Backing that release out therefore increases operating costs to the 76.3 million I discussed earlier, with an associated underlying adjusted operating profit of 228.6 million and an adjusted underlying margin of 75%. On ESG, we've made some real progress on our environmental targets during the year, Firstly, as you'll be able to see from the slide here, we have achieved and in some cases materially overachieved all of the three year emissions reduction targets we set ourselves in 2019. Secondly, we have worked with the science based targets initiative to set targets going forward that will be consistent with the 1.5 degrees warming agenda. The commitment that we are making today is a 42% reduction in all of our Scope 1, Scope 2, Scope 3 emissions by the year 2030 and a 90% reduction in all of our emissions by 2040, at which point we will become a net zero emitter. As we make progress towards those targets, we hope and expect to be able to bring that 2040 date forward as it is largely only our indirect emissions that are preventing us from setting a net zero target year of 2035. The SBTI has a provisional date of September this year to validate these targets and we look forward to making some real progress towards those now. We have also adopted the TCFD framework for inclusion in our 2021 environmental reporting. It can be accessed via our sustainability report, which is live on our investor website from today. Unsurprisingly, our modelling shows that our exposure to climate change related risk events is relatively low. and that we expect an opportunity as we continue to educate consumers and suppliers on ways of increasing the energy efficiency of people's homes. That's it for me. Thank you all for listening.

I'll now hand you back to Peter. Thank you, Alison. I'll start off by briefly covering what happened in the housing market in 2021. The frenetic activity, in part spurred by the stamp duty holiday, led to the most transactions we've seen in a year since 2007. The continued lack of stock market, coupled with the insatiable desire of people to change their lives following the pandemic, has driven prices higher, with average asking prices up 14% since 2019. The higher number of transactions, a slightly higher commission rate and record prices meant that the agency commission pools increased by over 15% in the last two years, even if one takes into account the catch-up transactions last year from 2020. January 2022's transaction numbers were 3% more than 2020 and 9% more transactions than 2019. The big question many have been asking is what will happen this year with the looming interest rate rise and inflation? We can look forward using our unique leading indicators, which I've updated to the start of this week. Looking at the top graph, the orange line is our forward-looking measure of demand. this is the number of people actively looking to buy in the market and looking at our most up-to-date data despite the concerns over inflation and interest rates we're running with demand at around thirty percent higher than early twenty twenty the teal line is the number of sales we believe are being agreed at the moment that's typically three to six months ahead of completion Perhaps reflecting the lack of choice on the market, this isn't ahead of 2020, but we are still seeing the same number of deals being agreed as we did in that early month of 2020. The dark green line is perhaps the best measure of how the market feels. It's the length of time a property is advertised as being for sale, i.e. before the deal is agreed. It's running at getting close to twice as fast as early 2020. I spoke last year about the lack of new stock coming to market. In 2022, we've seen over 10% more people sending valuation requests for our vendor lead tools than a year ago. And after a slow start, there are some signs that the position is climbing. It would certainly seem that the supply and demand imbalance is going to be with us for at least the remainder of the first half. And it's impacting the market in a few ways. The market is becoming more efficient. Typically, only around half of properties listed will sell. This has risen to over 75%, which is supporting that increased rate of sales being agreed. New agent formation is slower than one would expect at this point in the cycle, as of course, a new agent win all of their stock before they begin trading. And new homes developers are also experiencing that record demand, with developments continuing to sell out well before delivery. I'm sure we'll have much more to hear about interest rates and inflation during the year, and I have no doubt that the cost of living will significantly impact many people. However, at the moment, the data suggests that amongst home buyers, the availability of low mortgage rates and larger deposits from lockdown savings, bind with the desire to change their lives, is driving strong demand. Given that, and the January transaction numbers, I think 1.1 to 1.3 million transactions this year is not unreasonable. Turning to Rightmove, I'll look at each of the following in turn. Our lead with home hunters, our customer numbers, and package and product sales. I'll then wrap up by looking at some of the innovation we're delivering to digitise more of the transaction. So starting with our lead with home hunters. Time spent on Rightmove was up 15% on last year. and if you needed a demonstration of the instinctive place that home hunters turn to we recorded our busiest day ever on the seventh of april with over seventy million minutes spent on the platform in a single day and you can see from the comscore chart that our market share of chart time is stable despite quite a lot of activity from our competitors and also comscore have now begun tracking booming all of this adds one way we deliver value to our customers quality leads which were up over 25% year-on-year. Demonstrating the underlying value of our proposition to agents in both slower and stronger markets, we've had the lowest number of agency levers since 2014, which has driven our retention rate to the highest it's ever been. However, as I just mentioned, new agent formation has been slower than might have been expected as the lack of new stock coming to market making it very difficult for new agents to start up. Nearly 40% of the leavers in 2021 were businesses which had existed for less than a year and sadly failed. I don't expect this pattern to change in the first half of 2022 unless we see a sustained growth in new listing numbers. A question which a number of people have asked me over the last few months is what has the pandemic done to right news market share of agents listing? The graph at the bottom right shows Rightmove's proportion of all stock listed on the internet. You can see from the chart that the proportion of stock listed has stayed broadly flat in the mid 90s. As you can see from the data, the small number of agents who don't list with Rightmove tend to have very low stock levels, quite often because they're startup businesses. At the moment our proposition doesn't always work for them. It's an area I think we can do better with over the next few years. In new homes, as you will have heard many times already, developers are forward sold well into this year. It's simply a storage supply and increased demand having to work through the system. In terms of the number of large new homes developer companies advertising with us, that hasn't changed. So I fully expect the number of developments will rise when we move out of this particular supply and demand imbalance. We saw the rate of decline slow towards the end of last year, so the indicators suggest we should see the trend slow and reverse in H2. I know you're all familiar with our overall strategy, but I thought it might be useful to talk about revenue growth within that strategy. Firstly, we see an opportunity in helping agents and developers get buyers for property, the core property listing. For agents, this is where our like-for-like pricing actions happen. These tend to be focused on our essential and enhanced customers. There's a lot of detail in here, but despite having executed this part of the strategy for 17 of the last 21 years, there's more sophistication in our execution than ever before. And this is where our products for new homes developers fit, as described earlier. The next segment is where our agency product suite focuses. All our products are designed to help agents find and win vendors. these products help them at various stages of the marketing funnel from initial brand awareness through vendor leads to closing and retention i'll talk more about how effective those products are and the direction we're headed in in a moment we think there's a lot of headroom in this category as winning vendors is the lifeblood of an agent's business and rightmove is still less than half an agent's marketing spend despite the breadth and depth of the value we deliver the dotted line is very important We know we can help customers reduce their operating costs with tools, services and data. By doing this, we can increase the agent's marketing budget. So not only can we win more of the pie, we can and are making the pie bigger. On top of that growth, we can see that by digitizing more of the rental and sales transaction, we can add more revenue from new revenue sources. And the super thing about this segment is that by making the transaction easier, we can not only increase our revenue, but we can help agents be more efficient by removing admin, and we can make our home hunter offer even more compelling. So that's the concept. Let's dig into some realities. I thought we'd start with an example of how we're helping our customers become more efficient. As I just noted, this is one of the ways we're ensuring our growth runway is long. training is notoriously expensive to purchase and of variable quality we will be launching a more formal education program for our customers as part of their membership at the end of the training agents will be able to take an exam which leads to an NVQ level 3 certificate and I'd like to stress that the mix of on-demand learning and virtual tutorials will be free to customers as part of their membership this is about helping them reduce their costs and prepare for the future That enlarged segment of our growth strategy, digital solutions, which agents use to find and win vendors, only works if our products deliver value to our customers. That might sound obvious, but it's of critical importance to us. We have products which work across the consideration to instruction steps of the marketing funnel. We introduced our first vendor lead product in 2012, Local Valuation Alert. and added Rightmove Discover, the predictive product, in 2018, and we've continued to develop their efficiency and effectiveness ever since. As the middle chart shows, that ongoing evolution yields results for our customers and increases the available inventory for us, with the number of vendor leads sent in 2021 40% higher than 2019. Perhaps the simplest expression of whether our products work is the chart at the bottom. It shows the number of product units a customer purchases versus the number of instructions they win in a year. Our spending optimizer customers purchase over 25 product units a month, and as you can see, they win over four times as many instructions as a customer who just takes the course subscription. Of course, we don't win those instructions for the agent. We create the opportunities and give them the tools. The process still requires their skill to convert that into an instruction. However, if one assumes the average agent commission is around £2,500 per sale, it's very easy to see the value delivered. I think it's a pretty reasonable question following that to ask why I think we can keep generating products which deliver incremental value to our customers. So I thought it worthwhile to share some of our thinking behind our next gen products, which began rolling out at the end of 2019 with Sold By Me. Rather than talk about the features of the products, I'd like to talk about the attributes which make them perform for our customers and leverage our unique position in the marketplace. Most importantly, you'll see that our next gen products are actually implemented as useful consumer features. I know a lot of companies talk about adverts being integrated, but we take that a step further. If the product answers a home hunter's need as a feature, it creates significantly greater engagement and therefore performance. I think Sold By Me is a great example. It's helping a potential vendor think about agents through the lens of who sells properties like mine, which we know from our research is a key criteria in deciding which agents to engage with. Smart targeting is probably self-evident. Using our significant first-party data, we can help our customers talk to more of the right consumers at the right time. Equally, customer need centricity is pretty obvious, but we can now go deeper and answer the needs of a specific customer group. We are well beyond one size fits all. The £4 million run rate for our Built for Renters product introduced in Q3 last year is testament to what happens when we get that right. First party attribution is about us building for the future. You'll all know that data privacy rules are becoming tougher. And this is an area where our scale and audience gives us a significant advantage over other platforms which rely on third party attribution. And if I take the last two together, this is really about making it as easy and fast as possible to solve customers' problems with as little effort from them as we can manage. You can see from the list of products we've delivered on the right hand side, we've cut ground over the last two years. And we're not stopping. Our new agent promotion product is currently in design and due to launch in Q3. So more about that as the year unfolds. There's one thing I'd like you to take from this slide. It's that our product development is thoughtful and guided by a strategy. Looking to the future, the changes in the data privacy environment place us in an even better position. We're building a platform of components which allows us to produce product variants which are specific to customer type and needs. By doing this, we're able to rapidly deploy new products which have a very high chance of success and generate significant revenue growth. So how do you see that manifest itself in ARPA? As many of you know, the main revenue mechanic for our product is via our flexible packages. First up, I wanted to update you on where we are with the upsell of customers towards our optimizer 2020 package. As you can see, we continued with upgrade success in the second half, ending the year with just over 1,400 upgrades to Optimizer 2020 and an average uplift of just over £300. Two thirds of the upgrades came from the older Optimizer 2015 package, but I'm very pleased that we're seeing a significant number of upgrades from the Essential and Enhanced packages. We've taken the decision to retire Optimizer 2015, and we started working with customers to upgrade them at the end of last year. We expect the majority of that process to be complete in the first half of this year. To hopefully answer the question which is now forming, what next? I'd like to talk a little bit about the graph on the left of the slide. As a reminder, our packages are actually a minimum spend within which customers can choose their own product mix. Customers can also choose to add products to their package as time goes on. The chart shows that after 12 months, optimizer customers have, on average, added £93 to their product spend. Customers are taking themselves off the top ladder. Perhaps none of us should be surprised given the value charts I showed earlier. As agents start to experience the value our products can add to their business, they buy more. So together, these form the first of our near-term growth opportunities. Move more customers onto the optimizer package and work with those customers who've taken the package in the last 12 months to see more value and therefore buy more units. And the graph on the bottom left also leads to our second opportunity. The behavior of sampling the value and then investing more to win more is not limited to our optimizer customers. Two thirds of our customers upgrade to the next package on the ladder after investing in product. What's interesting is the trigger spend, i.e. the amount customers spend while trying a product before upgrading to the next package, is surprisingly low, on average around £80. I think this is exactly the same behaviour as one sees in optimiser customers. Try a little before seeing the value and then commit more. It's a very rational customer behaviour and one which, given the success of our products, works well. As you can see from the bottom left, our largest single group of agency customers is the essential base. This frames our second near-term opportunity, encouraging our essential customers to try a little more product to enable them to see the value and then join the package ladder. I think this is going to be a multi-year focus and we've already got some trials running to home in on how that. And it's worth reiterating these opportunities are all on top of the like-for-like pricing growth focused on listings. We've already communicated the pricing changes to 20% of the customers in this year's plan, and the results are in line with previous years. That's quite a lot of information on what we're doing to harness the significant opportunity in our core marketing business. I'll finish up this segment with an update on how our work to digitise more of the transaction is going, which will layer growth on top of this. We see opportunity in helping home hunters get financial certainty earlier in their search journey. The current process is inefficient and upsetting for buyers and sellers, and wasteful for agents. When we are successful, this will also become a notable revenue stream for us. In 2021, we focused at the top of the mortgage conversion funnel. You can see from the funnel at the bottom of the page that work has borne fruit, with significant conversion increases in the steps we focused on, tangible increases in leads to our lender partner. For 2022, our next step is to focus on the mortgage in principle conversion rate. The mortgage in principle is a big and complex step, and we believe by providing a more integrated experience on Rightmove, we can significantly impact the conversion rate. Hence, we aim to have our first iteration of a lender-backed MIP on site by the end of the first half of this year, which will be a first. this will be a baseline for us to be patient against but will be a big step towards providing that certainty to more consumers we're further ahead on our digital renting journey with good progress in the second half of the year and exciting deliveries lined up for h1 as i talked about in previous presentations we've been focusing on improving the process of renting a property for the last few years we believe that because of our unique position in the market with more people searching for rental properties than anyone else the only company to be able to truly change the rental process for the better from end to end in 2021 we enabled one-click reference ordering from rightmove plus the streamlined flow from lead to keys is where our innovation for rentals is currently focused The first phase of the digital tenancy workflow will launch in H1. For tenants who apply via Rightmove, an agent will be able to take a holding deposit via open banking, offer referencing, a fully compliant digital rental contract, deliver the legally mandated tenancy documents electronically, or via a managed workflow from within Rightmove Plus. In its own right, this will yield many benefits for agents and tenants alike. When combined with the new open banking based reference, which we're rolling out at the end of Q1, the benefits will be further enhanced. The use of open banking reduces the information we need to collect for the reference and will reduce the turnaround time as more of the employment details will be checked electronically. Building this on top of our existing high quality referencing process, we can ensure that agents and landlords can rely on a Rightmove reference regardless of the tenant's situation. In tests, the new system will reduce the time taken for a tenant to complete the referencing application form by around a third and reduce turnaround time by around 20%. The reference itself is profitable, but we also see opportunity in landlord and tenant insurances. Our scale and the quality of reference to launch two new to market landlord insurance products at the end of 2021, both of which are showing promise at the start of this year. We've much to do and much ambition. Bringing it back to 2021, let's wrap up with the outlook. The network effects at the heart of our business are stronger than ever with record traffic and leads. At the moment, the property market is busier than it's been for a long time. Whilst the level of impact of interest rates and inflows is hard to predict, the indicators we have give cause for optimism that the strong demand will continue. Agents continue to recognise the value of our unrivalled audience and products, with strong ARPA growth being driven by a combination of pricing changes and the agents upgrading package to grow their business. Looking forward, we see the momentum from the second half of 2021 continuing this year and will benefit from the price changes we implemented in the last quarter of 2021. Mindful of the lack of new stock, I think it's prudent to assume we'll see a small growth in agency branches over the year. And equally, I think the good conditions will continue for new homes developers. So for the rest of the year, I'd expect the number of developments on site to fall as they sell out and then flatten in H2. And as you can see, there's no slowdown in our ambition to make home moving easier or our long-term outlook. Thank you for your time.

Thank you, Nadia. Morning, everyone. I'm joined by Alison Dolan, our CFO. Hopefully, you've had a chance to see the presentation which we posted this morning. I thought before we kick off, I would take a couple of minutes just to give you a quick summary of all those words. I think it's 40 minutes long, so I'll try and do it justice in three minutes. Firstly, having the network effects in the heart of our business are really stronger than ever. We've had record traffic and leads in 2021. Traffic was up 15% on the already record number in 2020, and leads were up over 27%. In terms of customer numbers, I think we saw a continuation of the trend from H1, with estate agent numbers building back and new home developments continuing to sell out due to the imbalance in supply and demand. I think our performance in 2021 really underlines the strength of the business model, both in weaker and stronger property markets. So our ARPA growth of £101 compared to that in 2019 really shows that we can build back strongly. I think it's worth drawing out the momentum in 2021, which will carry forward into 2022. The December to December ARPA growth, so taking 2020's ARPA, December 2020 ARPA, and comparing it to December 2021's ARPA, was actually the highest we've ever achieved in a 12-month period. And another great demonstration of that, which Alison refers to in the presentation, is if one looks at the second half agency ARPA growth. was actually double that we usually see in the second half of the year and obviously that momentum because the second half really really helps us into 22. opera itself was driven by healthy upgrades to optimizer 2020 we had 1400 in the year and an average uplift of over 300 pounds so again a continuation of that story we spoke about six months ago and our product delivery in the year was really strong we had four product launches during the year customer product launches all of which as you will see in the presentation are achieving good revenue rates run rates already we've also made significant progress with digitizing the property market through our mortgage and tenant services ambitions and there as we've discussed previously what we're really doing is we're sort of investing in the momentum of the future So looking forward, I know there are worries about interest rates and inflation and what the impact will be on the property market. And I've got no doubt actually that, of course, that cost of living rises will really impact a number of people. But if one looks at the data, home movers themselves, I think their appetite to move has not been dimmed. So looking at our most up-to-date data, which runs until the start of this week, the market's still strong, demand's up 16% on last year. and sales are being agreed at about a similar rate as this time last year and again just reminding you that this time last year we all thought we were approaching the stamp duty deadline so it was an elevated rate of sales agreed in terms of transactions so things that are just coming through the pipe now according to hmrc transactions in january were about the same as 2020 and nine percent ahead of 2019 So I think it's not unreasonable looking forward to think that transactions will perhaps be at a more normal run rate, probably somewhere between 1.1 and 1.3 million. Given the lack of supply, we're also predicting that house prices will probably rise by about 5% this year. There is still a lack of new stock coming to market. There are a few rays of sunshine. We've seen valuation requests through our lead tools up about 10% on this time last year. and some of that now is just starting to come through in terms of new stock to market so that's positive and agents are certainly reporting a lot more valuation activity than they saw this time last year so looking at right move I think 2022 we'll see further small gains in agency numbers but I don't see that the supply and demand imbalance for new homes is really going to change in the next six months so I think overall as I say we'll see a slightly small gain in agent numbers but that will be offset by a further small fall in new home samplers and given all that momentum from last year i think before someone asked me the question i think arpa growth will be somewhere between sort of 95 and 105 pounds in the year so really positive and in terms of innovation our innovation for for next year or for this year we'll continue our pace as detailed in the presentation so we've got a plan for another three new products in 2022 we're also pushing hard on our efforts to make the transaction more digital so a real focus in mortgages to bring the mortgage in principle onto right move in the first half of this year which will be a big step it's a complex part of the process and one that confuses and frustrates consumers so we think we can make a real difference as I say hoping to get that on site will be the first place to bring together search and mortgages We're hoping to do that by the first half of the year and give us a baseline to optimize from. In terms of the rental transaction flow, lots of really interesting progress in 2021. The first half of this year, we're going to see some really exciting new deliveries with our process flow that will enable agents and tenants to communicate entirely electronically all the way from leads to keys. So that's really exciting. We'll see that launch towards the end of the first half. along with our new open banking reference in quarter one which will provide real efficiency for tenants so it's about a third quicker to apply and about 20 quicker to process so that that's exciting um rather than me babbling on further i'm sure you've got lots of questions for us so perhaps i'll stop there and we can we can take some questions

thank you dear participants we will now begin the question and answer session as a reminder if you wish to ask a question please press star and one on your telephone keypad the first question comes from land of william packard from bnp paribas please ask your question um hi peter thanks for taking my questions free from me please um

uh thanks for providing the arpa growth range in the membership guidance 95 to 105 and flat i think um could you just help us think through what the um kind of upside and downside risks are there how do you go to the top of the range how do you go to the bottom is it primarily the performance of new home that drives that any kind of that would be helpful and secondly um on cost guidance i suppose in the release the kind of key outlook um item was that you were now thinking of a range of 25 to 27 percent of of costs as potential revenue versus 25 percent for fy 22 as you commented i think it was at the half year results you know what's changed is that phasing because you beat on costs in 2021 or is that more product investment obviously the the market's pretty focused on that right now um in the wider classified space And then I suppose related to that, finally, could you kind of give us a little bit of an update on where you are in your product development in areas like mortgages and lettings and when we should start to see monetization and perhaps any view on commission sharing, which some of your peers are exploring as a revenue model and whether that works for you. Thank you.

Thanks, Will. Right. I'll talk about sort of the upside risk. Perhaps Alison can talk a little bit more about cost guidance and then I'll come back and talk about that transaction product stuff. so what would push us towards the top side of that guidance it's probably not new homes i think yeah what one can see already as i say with new homes it's a supply and demand imbalance it takes a while to build a house so given what we see already i don't think that really turns around in the first half of this year so i wouldn't think that's what drives us i think what the upside risk comes from you know these new products that we launched last year If you've seen the presentation, there's some numbers in there. I think they're generating a run rate of about 13 million already. So actually, how do they grow? I'm really optimistic. I think the guys have done a cracking job and shared a little bit more about how we think about product, which I think we've got a really thoughtful strategy in there. So I think if that, will we see more adoption of those products? I'm pretty optimistic, but wouldn't want to promise it just yet.

that does that get your upside risk yes so there's a key driver going to 105 as well the success of the new products which has been which has gone pretty well in 21. yeah so you see that come out you see that come out through agency arthur um maybe have someone you want to talk about costs sure hi well so we're continuing to guide to margin for 22 of 74 to 75 so slightly narrower than the 25 to 27 percent of costs within the release

um so that's the first thing i would say um no structural change at all in the cost base uh and slide 10 in the presentation gives you a very good guide as to the categories of cost it's it's pretty much a mirror image of what we're expecting for 22. so a bit of an increase in people costs and that's from new heads in the product development teams bit of salary inflation bit of growth in gna as covet savings unwind so the bridge shows that they decreased in in 2021 we don't expect to see that this coming year um and you know broadly no change in in the rest of the cost base so we'll see some increase but reiterate margin guidance of 74 to 75. um actually on that just that will i sort of understand your concern i think there's two things to think about

there's the sort of operational margin, there's the developing product margin, and there's the operational margin. We still, if you look at our products that we talk about in the release, everything we deliver is digital, so they still have very high operational margins, which I know is not exactly the same as all our peers are talking about, but rest assured, we really care about the profitability of our products, and as Alison said, it's a bit of timing and a bit of headcount. In terms of the sort of slightly more transaction, work in mortgages and rental services i think i think as i said before we're slightly further ahead in transaction services in that journey so we are we are now monetizing i think we've got lots more to do and we're still focusing on building a really strong platform super excited about the the transaction flow which which we can talk more about perhaps at the half year which will launch which will launch in the first half but also quite interestingly for us right at the end of last year we we launched two new landlord insurance products so just to remind you we are we are effectively an insurance broker for landlord insurance so we don't take the risk but we work we work with the underwriters to create insurance products and this is a first for us and we've seen really sort of heartening uptake uh six weeks into the new year because what those products do is they leverage the quality of our references so we've we've been able to one product is now has got unlimited cover for another for a landlord which is new to market and the other product at a lower price point sort of covers the basics if you will so really excited by that and we are starting to see the monetization but absolutely focused right now is let's build a strong platform and it's exactly the same story with with mortgages this big push is let's build a strong platform let's really take some of the mystery out of what you can afford with the MIP super excited again if you look at the numbers in the deck the difference we've made to the conversion rate to the top of the funnel I think it'd be real hard that we're on to something but we're very fortunate that we can continue to work through that through the MIP through the mortgage in principle and actually we can take our time to get it right rather than sort of slightly going off, frankly, half-cocked and just chasing revenue. So we're really trying to up those conversion rates before we push on the monetization. Still, I think, as both Alison and I said last year in various forms, still believe that both of those opportunities are sort of 20 million profit opportunities in four years' time. Nothing to change my view on that. So we're working to a plan. In terms of commission share, Yeah, absolutely. You know, some of our peers are doing that in other markets where perhaps the market structure is slightly different. It's fascinating when we talk to our customers, commission share is sort of, it becomes a really negative conversation. And I know probably for all of us, we think, particularly if you're small and don't do many transactions, commission share sounds super logical. You only pay when you transact. They find it sort of, it impinges on their good work and it suggests it suggests something quite negative to their ego. So I'd never say never on commission share. I think it's just got a slightly uncomfortable sentiment side. So I don't think it's particularly likely in the UK. And interestingly, when talking to peers in some other markets, they've done the same sort of research and got the same feedback. Maybe it's a particularly sort of Anglo-Saxon view on the world as opposed to a slightly more European view.

But thanks for the call.

Welcome.

thank you the next question comes from the line of kieran donnelly from liberum please ask a question hi thanks for taking my question just one from me actually you talk about retiring optimizer 15 quite simply kind of if you could give us some insight into your views on the package structure going forward will it remain a three-tier structure or would you look to kind of

make any changes to perhaps increase the yield of the agency base thanks I'll try and be brief because this is a topic I can talk about for about four hours so someone might have to stop me probably worth starting actually I'll come back to Opti15 but it's worth remembering that our package structure is quite different to many package structures so they're sort of often thresholds and within them and I think in the presentation we show some of the numbers customers can buy more products and put them into a package the package is flexible so we don't need sort of five to ten package levels to optimize unlike some different package structures in other industries so that's worth remembering in terms of long term I think again what we've seen in the past is Typically, our package structure we renew sort of probably every five to seven years. We're about year five of the current package structure, so I think we've got a few more years to go before we give it an overhaul, sort of soup to nuts overhaul. In terms of optimizing, I think we've shared in the presentation some really fascinating data, which is after a year, an Optimizer 2020 customer, on average, has spent another 93 pounds so if you took the the amount they were spending when they upgraded to optimize 2020 at about 300 pounds uplift 12 months later they then decided to spend another 93 pounds so that really sort of shows the power of our products and the power of package structure we don't have to keep revising the package structure to get people to move up the ladder so our opportunities um for now are get more people into optimizer 2020 show them the value of the products and then they'll they'll grow up with themselves which is a i would say it's a brilliant conversation but it's almost not a conversation it's even more brilliant than that and then the other opportunity is the essential customers is now with our independent customers is our largest customer group helping them see the value getting them to sort of to try sample and then getting them to upgrade because the other number which i think is quite interesting to me at least is the trigger spend, so that the amount the customer spends before then making a big product spend uplift is about £80. So if we can help essential customers spend £80, see the value, I'm fairly confident Audata would suggest they would upgrade. So we need to work on that. That's a bit of a longer thing. We're currently trialling a few ways of helping them see that value. In terms of your first part of your question, often times 2015, it's really following the great upsell success we've had in 2021 it's now a case of we're tidying up our package structure i am very excited to stop saying optimizer 2020 and be able to just call it optimizer again so it was sort of always in the plan that what we would do is we'd wait until we had the majority of customers upgraded and then and then we would retire 15 So it really is a tidy up to go back to a three-package structure rather than a sort of three and a half structure that we've had in the intro. Does that make sense, Kieran?

Yeah, that's brilliant. Thank you.

If you want the other three hours of the conversation, give me a call. I'll call you later.

That wasn't convincing.

Thank you very much. The next question comes from Michelle Yao from Goldman Sachs. Please ask your question.

Hi, good morning. I'm from Goldman. I have a couple of questions. So firstly, on your alpha guidance, thanks very much for giving that. I'm just wondering, given what you achieved in 2021, and if I look at the, I think that slide in your presentation, slide nine, it shows really an improved momentum and a very strong XT rate. Do you think that could be a bit conservative? I'm just wondering, you know, why there would be a bit of a slowdown in that improvement momentum in into 2022 um and and related to that i'm just wondering like how much of that output growth that you're expecting is sort of already secured um the second question is on on the pricing strategy for 2022 uh i think last year you talked about um increasing prices across a certain percentage of your customer base i'm just wondering how that has pan out and how you're thinking about uh you know raising your prices you know what percentage of agents should see a price increase and what's the magnitude of that um and the third question is uh again on the apple growth historically you've been growing more around 80 90 pounds um and obviously you're guiding now to to 95 105 do you think that's the new normal or is there anything specific to 2022 which means you know from 2023 onwards we should go back to more the historical uh rate or on the country we should expect 100 pounds per year going forward thank you

you're welcome right let me try and work through those three so maybe our guidance are we being conservative I think I'd let you decide that we have a habit perhaps I'll defer and not really comment but yeah I'll let you decide whether we're being conservative how much of it is secure well a lot of it well some of it comes from obviously that momentum in the second half so that's really positive for us Some of it will come from product upsell. We're only a few months into the year, so not much of that has happened, but one-sixth, I guess. The other thing, there is an element which is about 40% of it will come from price. And we've communicated to about 20% of people on the plan so far. And that's going entirely as we would expect, given our 17 years of history at raising prices. So that looks pretty much on norm. so uh yes a chunk is secure but there's still there's still quite a lot of work for us to do uh in terms of the price rise broadly the price rise plan actually looks not dissimilar to 2021 both in terms of number of customers final number of customers uh the lay down through the year which again a reminder for some of you who've known us for a long time is even now different it's slightly more spread through the year than it used to be um given the the price rises we pulled forward into 2021 so they will um they will occur again at the end of 20 towards the end of 22. in terms of magnitude price yeah about about 10 again so that it's pretty similar actually um from a planning perspective and and again as i say the the 20 that we've already communicated feels feels really encouraging feels very similar to the success we had in 21.

Now you have a third question about Harper and I've written it down, I can't remember it.

80 to 90. Is 95 to 105 the new 80 to 90 or if you're as old as me, the new 60? Yeah, I think so. We'd like to move forward. Does that answer it?

Thanks, that's really helpful. Yeah, that's great. Thank you.

You're welcome.

Thank you. The next question comes from Miriam from Morgan Stanley. Please ask your question.

great morning everyone thanks for the opportunity to ask questions firstly just on the the margin of the new digital products i think you said that you're still expecting them to deliver a high margin but could you sort of run through any additional ongoing costs you may have on some of these products once you've passed the development stage just to get a sense of what the margin differential might be versus the core advertising products and then secondly i guess it seems like there's a lot of product development going on just thinking wondering how you're thinking about how much of the agent commission pool longer term you'll be able to capture as these new products start to come through and then on the vendor lead side clearly there's a lot of popularity there so how are you thinking about product development in the lead generation business and how are you thinking about pricing that and the opportunity to really accelerate pricing growth there thanks

right uh where should we start so uh margin of new products so so most of the new products so the the four we launched last year the four we're going to launch this year they are digital advertising products um so so fundamentally they're they're 100 margin at the margin because to operate they're purely digital uh so i don't know if that i'm sort of hesitating i'm not quite sure that was your question was that your question miriam yeah so all of the new products i guess some of them are just advertising but then i guess with the mortgage and tenant products oh right yeah so mortgage and tenant services yeah so mortgages fundamentally we are heading down a digital route so it it will be it will be similar um we're not we're not intending to be a mortgage broker we're not intending to have room full rooms full of mortgage brokers so that will be very similar to the marketing products Tender services, we're on a sort of development path. Currently performing a reference involves human input. It's one of the benefits, actually, of the new open banking reference is it will require less human input. So one of the reasons, I think I've spoken about probably a while ago now, one of the reasons for choosing Van Mildert to purchase Van Mildert is it didn't have a massive market share. So therefore, we haven't got a business with hundreds and hundreds of people in it. so as we digitize it we can increase our volume without increasing the number of people so that that will increase margin the insurance products which is a big part of the opportunity i think in um in rental those those are because we're acting effectively as a broker again so digitally they're they're very high margin um so that's that's those things um edge of commission pool so i probably might i might have to whisper apologies because i'm slightly embarrassed that i think our share of agent commission pools have gone down because the commission pool's gone up and and we haven't gone up quite as fast so we're probably now about six percent of agent revenue um and and again i think one of the things hopefully that comes through in the presentation and all feedback offline is welcome one of the things that comes through is We believe we can capture more of their marketing spend so typically an agent spends about 15% of revenue on marketing and we're so we're less than half But also we think we can help them expand the amount they spend on marketing So both by the efficiency tools that that we deliver have always delivered things like the best price guide Which was run a record 14 million times last year by agents things like the tenancy flow actually not only does it create great opportunities for us it creates a load of efficiency and for agents so hopefully that will come through and they can then spend more on marketing and also as we put in the deck we're going to launch some more training options that will lead to an mbq level 3 for them by the end of this year which will save them some money so I guess simplistically I believe we can win more of the marketing pie and we can make the marketing pie bigger for agents so that's I think where we are and got a long road to go there vendor lead products yeah it's sort of amusing to me because suddenly vendor lead products are trendy but uh we we launched our first vendor lead product in in 2012 i think and then our second one in 2018 so they're not new to us they're they're really good and again we think slightly differently to some others we they're wholly digital products we put quite a lot of uh underpinning work in there last year to increase the inventory to increase their performance and therefore increase inventory and you'll see from the deck that vendor leads increased by 40% since 2019 so real sort of testament to the work that's gone in there all of our products are about generating vendor opportunities for agents whether that be the top of funnel consideration stuff that the brand marketing that agents do which is probably a UK specific thing so I understand it's quite difficult to draw parallels with continental peers because it doesn't happen so much that behaviour doesn't happen so much in continental Europe it happens in Australia So I think we've got lots more to do interesting You've got an interesting product launching probably q3 this year for agents, which is further towards the top of funnel But it's still fundamentally about generating vendor opportunities for agents And I think if you have time in the deck There's a there's a graph that shows the number of instructions that agents win versus the number of units of products agents buy and you can really see the impact of that so

hopefully that's covered all yours that covered everything Mary yeah that has thank you you're thank you the next question comes from land of Joe Barnett lamb from Credit Suisse please ask a question excellent Thank You Peter and Allison just a couple left from me the first one's just on on optimizer and you're obviously very excited to just be able to refer to it as optimizer rather than optimize the 2020 what is the price differential between optimizer 20 and optimizer 15 and as such how material is migrating across bin for arpa and fy 21 and will it be for fy 22 and then my second one is just with regards to the balance sheet given where the share price is and your positivity on the future would you consider being more aggressive on the buyback at current levels thank you

okay so optimizer yeah i am i you know i love simplicity joe so yes just being able to call it optimizer again is a delight um the the price differential on average it depends where you are because again back to the first point that our packages are threshold so you can have not every optimized 15 spending the same amount of money some are well beyond threshold on average that steps about 300 pounds To give you a sense so so that that's built into our sort of upper prediction No, I'm not going to call it prediction. Am I? I'll buy you guys our guidance for this year. Is that is that what you were you? Can do the math on that, thank you and Balance sheet that sounds like an awesome question.

Hi Joe morning So look the policy on the buyback is that the buyback really is the balancing number to return all surplus cash to shareholders so the policy is to grow the dividend firstly in line with underlying eps the priority always is organic investment in the business and then we will use the buyback as a way of returning the remainder of surplus cash And because we do that and manage to a very low balance sheet cash number, the only way for us really to ramp up the buyback program would be to gear up in order to do that. It's something we've looked at before. There are clearly pros and cons to it, but we have no plans to do it, certainly in the short term. I think we're pretty happy with not being a geared business. There are definitely operational advantages to it, so no plans right now.

Excellent. Thank you very much. Thanks, Joe.

Thank you. The next question comes from William Packer from BNP Paribas. Please ask your question.

Hi, Peter. Just one clarification to Lisa's question earlier. Just to make sure I heard correctly, it's right to think of 95 to 105 as the new normal for ARPA growth for the medium term, not just for 2022. Thanks.

yeah thanks for confirming that's it from me thank you thank you the participants as a reminder if you wish to ask a question please press star and one on your telephone keypad the next question comes from land of child stone from jeffries please ask your question thank you my first question is on total memberships and

loopers out there suggesting that they've now got a higher level of total memberships than right move um and given whole market listings has been a big part of your consumer value proposition for forever really uh is this a metric that you recognize and is it something that particularly concerns you any thoughts that would be useful second question um yes i recognize there is a lot of talk in the market around vendor leads um and some of the other products out there are suggesting astronomic returns on investment for agents um so i'd be curious and it was a question that was asked earlier but i'd be curious again to know what you're intending to do to invest in opportunity manager or the optimizer package to increase roi or basically better predict um potential sellers and then lastly um mortgage in principle being offered on site um is is evidently um a bonus for consumers on their journey but in the uk to say the obvious you have a pretty well cultivated price comparison website sector um that's incredibly well entrenched not going anywhere so i'm just curious how you you interplay against the consumer's awareness of those sites that i'm presuming will have a better, more varied mortgage panel than yourself. Any thoughts there? Thanks.

Thanks, Charles. So total membership, I don't know if you've got the presentation in front of you. On slide 19, I've included a stop penetration chart because there are a number of different ways of counting a branch, which might sound slightly bemusing but really happy to take you through it one day there's lots of different ways of counting it and i would suggest that we're not counting it the same way so rather than get into all of that the thing that really matters as you point out is how much of total available stock is listed on your portfolio that's the real consumer measure because again if we are totally straight with each other having one customer who lists five properties a year is very different to having one customer who lists 10 000 properties a year so i thought rather than sort of get into all of that take that away and just show you total stock penetration so if you look at the the slide uh the chart bottom right slide 19 it broadly says we're at mid 95 and we're still at mid 95 which is i think the number it's been almost for as long as i've been at rightmove which is 16 years so it's it's pretty much stable uh so that's the answer the first question but you're right having the stock is important secondly vendor lead investment we're investing in all sorts of things and as I say it's across the spectrum I think it's very beguiling to get head up about the final final mile delivery if you like of the vendor lead but you do have to concentrate on the whole marketing funnel in the UK so on average I think it's 2.8 a vendor will invite 2.8 people out to value their home if you're not in that 2.8 everything else becomes somewhat irrelevant and what we do and that's driven by brand is pure consideration do does the agent sell properties like mine is the key question which if you remember is exactly what sold by me is sort of the product was launched in 2019 is driving at because what we do see from our vendor lead products is it's all very well offering a great product but agents get de-selected if their brand isn't prevalent so you have to be a bit careful and we can generate it's really easy our tech guys are really smart we can generate lots of leads we can turn them to more and more and more agents it reduces the quality so what we're focusing on is sort of all the things that make us unique as a platform which is about our scale about things like thinking about products as features so on slide 23 there's a collection of neat words which effectively describe our vendor opportunity strategy. So really fascinating, I'll give you a little anecdote about Sold By Me. So Sold By Me is the feature that lists properties that an agent has sold near where a potential vendor lives. But it exists within the search channel, but it shows them properties that are near where they live, because people share that with us. but don't share that with anyone else. So that's really powerful, firstly. That smart targeting is really powerful. And we had some feedback. The guys were doing some consumer research on a different feature on the page. And the consumer said, I really like that feature at the bottom of the page. It really helps me understand what's going on. And the guys were a bit confused, frankly, Giles, because they didn't know what we were talking about. What feature is that? But it was sold by me they were talking about. And, of course, what that does is it means you just get real engagement because it doesn't feel like a hard sell to people. It feels like a really useful feature. So, yeah, products as a feature is a really, really important part of our strategy. You mentioned opportunity manager. So that, again, I think leverages what we know about consumers. The first-party data we have, it's just so helpful. We don't have to make... really radical predictions and all the difficulty and rightly in my view dangers that come with that in terms of data privacy, we're sharing some things people tell us about themselves. So our strategy is really to work across the funnel and think about vendor opportunities or which vendor leads to one part. And the return on investment, again, I sort of refer you back to that chart that just shows the number of leads versus the number of products people buy. I mean, it's pretty remarkable. um ah myth why are we different to price comparison so well firstly i think there uh i think there's only one that is doing a full margin principle on site so price comparison you have to be a bit careful with with mortgages because um any anybody can offer a headline great mortgage rate and then actually you find that most consumers can't access the rate because they don't have the loans of value or they don't have credit score So first of all, mortgage is a bit more complicated than perhaps other products. I think the real advantage we've got is you have to think about different mindsets. Mortgage is a part of the purchase journey. So how much can I afford?

Now can I get the mortgage?

Now can I move in? Whereas price comparison is how do I optimize my outgoings? So it's a very different intent. And it's actually, we see exactly the same in rentals. so where we offer insurance to tenants we don't offer them price comparison insurance because that's not what it's about we offer them we offer them certainty and speed so by bringing we think by bringing together search and the detail that the mortgage in principle will give and it will be a full lender backed mortgage in principle which might have up to 118 questions it's not a it's not a sort of guesstimate uh... then i think that will put us in a really different position to the mindset of price comparison and price comparison is really about remortgage not about house purchase first time buyer mortgage uh... and if you look at the conversion rates yeah i think i think we're showing that we've got a really interesting consumer base and it's up to us to deliver them a really great service does that get there for you?

just one follow up on the on the point around social membership and the chart on slide 19. Has there been a closing of the gap on all the market listings?

Sorry, you broke up. Has there been a closing gap?

Yeah, that's right. Sorry, I was leaning back and I'm speaking through my laptop speaker. I should...

should get a headset but anyway yes has there been a closing of the gap in total market listings if you put membership numbers to one side and listings has there been a closing of the gap closing of the gap yeah so what we're seeing actually which I think I talked about before but what we're seeing is a slow migration back from those sort of two and a half thousand branches that led to go to on the market when on the market had the one other portal rule Since that was dropped, we're seeing very slowly those branches migrate back to Zoopla. So, yeah, Zoopla are returning towards the position that they might have had in 2014 in terms of market share.

Thank you very much.

Thank you. The next question comes from Garrett Davis from Numis. Please ask your question.

Hi, morning, guys. Just two questions. follow-ups for me first going back to optimizer 15 is that is that a switch off a h1 or h2 event um and in terms of the tail of people you wouldn't have expected to have moved across is that tool meaningful and as such on past experience do they all then move when you switch it off to and that should be a decent step up in penetration for one of the the optimizer 2020 product um just a little more color on that and then second one The commercial market, I suppose the mindset in the market has always felt like the biggest hindrance to that being a kind of real success and just a desire for market participants to move online. Can you talk about how that shifted through the pandemic and sort of any optimism you've got there for a pretty strong performance, relatively small, still in the context of the group? Thank you.

Thanks Gareth. So I'll talk about optimizer because I love it and Alison's going to talk about commercial. So optimizer 15, switch off. Yeah, the majority will be first half. There'll be some that go into the second half. We've got some customers who are on contracts, which we will respect. So that will get tidied up in the second half, most of the first half. Previous experience would suggest, what we're doing is we're saying to customers, you know, we're retiring this package. We would suggest you move up to Optic 20. here's why it's awesome opportunity to manage things like that maybe we'll get Giles out selling it so that's what we do there but we do of course we say there is an option you can go to essential if that's your thing history would suggest that probably when faced with a choice about 90% of agents will move up and 10% will go to enhanced so I don't think we'd see anything particularly different this time around

And is that meaningful in terms of penetration, in terms of the number of people left on it? Is it 90% of an exceptionally small number, so it's irrelevant? Or is it kind of a couple of percent onto 2020 penetration?

Does that make sense? Effectively, actually, there'll be a slide. I can't do the math in my head because I can't fast enough. There's a slide where you can work it out because we show you how many are on 15 and how many are on 20.

So, Gareth, the 2020 number had about 10% of independent agents on Opti 15. I'm sorry, 10% of independent agents on Opti 20, 21% on 15. That has now, that will reverse. So, 30% once we get everybody migrated.

Perfect, thank you.

Yeah, slide 25, Gareth.

Thank you, dear participants.

Sorry, Nadia, just the second part of that question on the commercial sector, Gareth. Yes, you're absolutely right. It is less digital really as a sector than residential has become. It's probably about seven or eight years behind residential in terms of the move to digital. The pandemic has helped, I think, to accelerate some of the move to digital. Behaviours have undoubtedly changed and the supply and the demand dynamics have also changed as well. If you think about where demand increased, which we saw a huge increase in the demand for industrial space, warehouse space, for example, as everybody was ordering from home, clearly a big drop in the demand for offices and for retail space. and as the changing demand dynamics move around I think the old kind of networks of contracts and the way in which things had operated before have also started to change and certainly for us we have seen an uplift in the number of listings on the site both by property owners and usage of our site to look for commercial property by occupiers So I would expect to see, for example, search for office space and office listings carry on becoming more digital in the way that it did both during 20 and 21 and similarly with industrial space. You know, we now are the largest portal for commercial property listings. And so, again, you know, big plans for growth in that revenue line. that answer the question?

Yeah, fantastic. Thank you.

Thank you. Dear participants, as a last reminder, if you wish to ask a question, please press star and one on your telephone keypad.

Well, Claudia, I think we've exhausted questions.

because there are no further questions at this time. I would like to hand over back to yourself for closing remarks.

Well, thank you, everyone. Thanks for making time. Actually, thanks for giving us more of your morning than usual. I hope you have a good rest of the day. And as ever, if you've got follow-up questions, please just get in touch with Alison or myself. Thank you.