Zoopla adds nearly 150 more estate agency branches over summer

oopla has today reported a continuing “return to growth” in estate agency membership.

City analysts at bank Jefferies, which advised Zoopla on its flotation last year, claimed that this showed that while OnTheMarket “may not be out, it is certainly on its way down”.

However, another analyst, Exane BNP Paribas, described Zoopla’s membership growth as “tepid”, at just 1% up on the first half of this year. This morning it said: “There is no sign of an acceleration in joiners back from Agents’ Mutual.”

This morning, in a post-close trading update, Zoopla told the City that it has added 146 new UK agency branches since July, giving it a total of 12,702 branches as at the end of the financial year, on September 30.

Zoopla also said it had 2,706 new home development members, 737 overseas members and 266 commercial members, taking the total number of members at the end of the financial year to 16,411.

Zoopla reported revenue and EBITDA (earnings after costs) of around £107m and £48m respectively for the financial year.

These were both up on 2014 results of £80.2m and £39.6m.

Zoopla said its management “is encouraged by the trend of gradual UK agency membership growth over the past five consecutive months”.

It added that it is confident of greater advertising spend by its members, based on demand from agents for additional products.

This morning, in an effusive note to investors, Jefferies said Zoopla’s update showed performance and results ahead of expectations.

It said that the strength of uSwitch “should silence those still questioning th logic of the acquisition and whilst OTM may not be out, it is certainly on its way down, in our view”.

Jefferies said that the uSwitch affiliate model – by which agents will be able to earn money by offering utility switching services – was a “master stroke”.

It said: “Zoopla is harnessing uSwitch to allow its agency customers to offer switching services, a value added service which we are not aware is offered either by Rightmove or OTM.

“The switch services provide revenue for the agent whilst saving money for their customers, what we call a ‘win win’.

Jefferies said of Zoopla’s new members: “This is a trend and a positive one, which suggests to us that the group is repairing the damage caused by OTM and that agents appreciate the value proposition of Zoopla”.

However, William Packer, of Exane BNP Paribas, said membership growth was “tepid”, showing 1% growth from the first half of this year, and called the financial information released by Zoopla “limited”.

He said that while revenue and EBITDA were ahead of expectations, this had been driven by uSwitch rather than the portals. He said this implied 0% organic revenue growth for the core business.

Exane said that there was no sign of an acceleration in membership growth. It reiterated an underperform rating and said: “We continue to see downside risk fro Agents’ Mutual heading into 2016.”

Originally posted here.

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