Rightmove plc (OTCPK:RTMVF) Q2 2024 Earnings Conference Call July 26, 2024 4:30 AM ET
Company Participants
Johan Svanstrom - CEO
Alison Dolan - CFO
Ben Winstanley - Head of IR
Conference Call Participants
Jo Barnett-Lamb - UBS
Andrew Ross - Barclays
Rahul Chopra - HSBC
Jessica Pok - Peel Hunt
Gareth Davies - Deutsche Numis
Will Packer - BNP Paribas Exane
Giles Thorne - Jefferies
Pete-Veikko Kujala - Morgan Stanley
Sean Kealy - Panmure Liberum
Johan Svanstrom
All right. Good morning, and welcome to Rightmove's results for the first six months of 2024. I am joined today by Alison Dolan, our CFO; and also Ben Winstanley, our Head of IR.
So I wanted to share a couple of key messages upfront with you. Our platform and network effects remain unrivaled. We remain the place that homeovers come to in order to see virtually the entire UK property market with now ever-increasing utility, coverage and segmentation.
Overall, H1 results have been in line with our expectations strategically, operationally and financially. And our financial guidance today is unchanged from the AGM trading statement in May. And while we are in this room operational delivery and indeed innovation for our consumers and partners continue at pace back at our offices and out in the field.
The underlying markets of property starting to look more positive and supportive but as usual, the market is operating at different speed within different subsegments and we'll get back to this.
So in that context, Rightmove's platform continues to demonstrate its strength. We saw revenue growth of 7% with the letting segment going up 12% year-on-year. ARPA of almost £1,500 is tracking in line with our guidance for the full year at £75 to £85 growth.
Membership is 1% higher compared to December 2023, driven by strength in the lettings market offset by a reduction in developments as new home developers have slowed new starts. The consumer spent 8.3 billion minutes on the Rightmove platform, slightly higher than last year and very much confirming our central position in the property ecosystem.
We continue to deliver strongly in our core five business pillars for the business. Just a few examples here. In consumer, with more functionality and growing stickiness, we're accelerating our online valuation and track a property product usage. And we also now have over 40% of our e-mail leads delivered from our app.
Within core, our top packages in estate agency in new homes are both seeing very strong take-up. In particular, we have almost 1,400 branches on Optimizer Edge and we're looking to retire Optimizer 2020 towards the end of this year. We saw a record number of net new partners within our lettings business and we're progressing well on our rental operators and Lead to Keys business lines.
For the strategic growth areas, we're doing great in the first half year. With more than double the number of mortgage and principle submissions year-on-year, one-year sales growing very positively for the Lead to Keys product, which was recently launched and that's within our rental services suite of solutions.
And then first version of the new commercial landing page now gone live. The platform overall is strengthening every day. All of our tech teams are now using AI system tools for coding and seeing positive results. That really is an underpinning of future pace of innovation and efficiency. We're pleased to have welcomed over 100 new people to Rightmove, which is now is a firm accredited as a Sunday Times, Best Place to Work.
So, let's turn to an update on the underlying property market. As a reminder, our digital platform model is very resilient to many swings in the property market. We enable further digitization and make use of our data scale advantage from a very central position in that market.
But this table or slide sets out a view of the current conditions. The sliders provide a view of metrics in H1 this year within a 10-year context with the green blobs representing the current position and the arrows our expectations of how we will move from an outlook perspective.
And then, on the sides you had the period high and low years for each line within that 10-year period. So as a reminder, both the market and our business model, demonstrates some countercyclicality. So these factors, of course, do move a little bit differently.
Now just stepping through it briefly. In the first row, for consumer affordability, the backdrop is mixed. Rates remain elevated relative to recent history and the typical five-year fixed rate is just under 5% according to the latest mortgage tracker for Rightmove.
As we all know, there are further expectations for lowering of the rates from BOE. And of course, the mortgage lenders will follow with that. That will indeed stimulate transaction.
The remaining four slides for the resell market show you that there's a good buyer demand sort of in a catch-up mode from last year really and with it absolutely growing listings volumes.
Notably though from a new listings growth perspective, we're still only in the middle of the road in historical context. Sales agreed are recovering. That's helping agent confidence and of course the outlook on cash flow.
Crucially though it still takes seven months from the first listing until completion of the sale, which is at the point at which our agent partners receive their payment. On lettings, continued price growth supports the agent commission pool.
There's an ongoing increase in available stock and a tempering of demand in lettings. So, it's tilting back just a little bit. There's still very imbalanced supply and demand picture structurally -- so structurally that imbalance is very much in place.
In new homes, in this part of the rate cycle, it does exhibit the slower for longer equal to the rates with developers focusing on completing sales at existing sites over building new developments at pace and scale.
Developers now also compete with larger resale listings volumes as we can see on the platform and we hereof and expect new development builds to trend more positively over time and as the environment improves for builders.
Maybe as a general comment on the election results and what it means. We're certainly pleased that housing is high up on the agenda. And as we have been urging all along from spring time actually. But the labor government now really has sort of a proof in the pudding period from its clearly stated ambitions.
So, I'll share a little bit more detail on the three key submarkets within the core business. For resale, you can see in the top chart, we continue to expect an average year for house transactions just shy or about 1.1 million sales.
Looking at our own data, at the bottom left, you can see from an agent perspective the market is resilient, with our house price index slightly higher compared to last year, and sales agreed volumes are 13% higher. So, the outlook is improved compared to 2023 with both supply and demand indicators for the transactions on our side being higher compared to what it was last year.
However, supply today measured in available stock and new listings is only in line with 2019 the last normal year. And as I said, elevated times to completion mean that there's a lead-time from those positive agent pipelines and the home transaction agreement.
Turning to actual cash flow. In our sentiment survey, which we have on the bottom right, we can see that agent partners are decidedly more optimistic compared to the previous period. But they're also not sky high and certainly not close to 100% yet.
On to rentals. The top chart is a new way of displaying the imbalance between supply and demand that we talked about before. It shows the number of inquiries per available property in Rightmove since the start of 2019. So pre-COVID the average was eight inquiries. At the peak in 2022 this rose to over 30 on average.
Today, the level of supply/demand imbalance is somewhere in the middle with an average of 17 inquirers, still quite a lot. So, demand remains almost a third higher than pre-pandemic levels predominantly as a result of affordability constraints in the resale market.
Supply-wise we've seen a slight increase in new listings for rentals but it's nowhere near enough. Looking through our data and doing some analysis, it suggests that 50,000 properties would be required to return to pre-pandemic levels of rental stock or 120,000 additional properties to limit rental price growth to be more aligned with the inflation expectations of around 2%. To-date this year, we've seen around 7% price growth of rentals.
So, with our product suite and ongoing expansion, we cover an increasing amount of segments and needs and monetization opportunities in the large rental market. As a reminder, it generates as many or more moving events every year compared to the sales side of the market.
Now, trading conditions for developers remain challenging. A combination of affordability constraints for buyers, build cost inflation, and extended build times to put pressure on all players, but in particular the smaller and medium-sized developers.
You can see this impact in the top chart, which is the ratio of housing starts to completion, which was at its lowest ever level in Q4 2023 based on ONS data.
Now, there are grounds for cautious optimism with a mentioned new government ambitions. No doubt, better affordability is another key parameter for activity to start happening. All the large corporate builders, all partners of Rightmove maintain their public completion commitments which while in aggregate are lower than the previous financial year, they are sort of expected to now be in trough levels and looking to recover into calendar 2025. So we set this out at the bottom left on this slide.
Now in terms of Rightmove products, we saw a good recovery in the number of developments using our coming Soon product which is on the bottom right. Coming Soon is a no cap product for when Boards first go up around the future site. So it's kind of a lead indicator for fuller development spend. The quarterly trend is positive, but I would note that there was a bit of leveling off around the election and in the early weeks of July perhaps also influenced by football. So it feels early to call it a wholesome recovery for sure.
So just summarizing market backdrop. Continued strength in consumer willingness to transact should be supported as rates hopefully start falling. And the overall market including pricing remains stable. We think that resale agents will see an average year transaction-wise with a notable bounce up from last, but cash flow effects still lagging as a result of the lengthy completion timetables. Rental agents continue to benefit from a relatively elevated supply-demand imbalance and therefore pricing strength. New homes absolutely slower for longer, but grounds for optimism reflected in completion projections in the initial political commentary that we just had.
And with that over to Alison.
Alison Dolan
Thank you everyone. Good morning, everyone. Lovely to see you all. Right on to the results. So revenue has increased by 7% on the first half of 2023 with growth across all areas of the business. Now in this slide, we've kept the same presentation format as in our full year results, which includes rental services within the lettings part of core, which is where it sits operationally. But for this audience it also split it out as one of our strategic growth areas.
So agency revenues increased by 7% to £138.5 million. The increase was delivered through a mix of package upgrades, particularly to the top package, continued use of our digital products and good outcomes from our annual price increase process which is now largely complete. In the letting side of agency, revenue has increased by 12% year-on-year. As Johan set out the supply demand imbalance has reduced somewhat, but it does still remain despite being down on peak levels. So as a result, we have seen an increase in membership and product spend within this letting segment as well as good uptake of our lead-to-keys product which provides enhanced lead qualification and efficiency benefits for lettings agents.
New Homes revenues have reflected the underlying market with growth of 4% after a record performance in 2023. New Homes growth was driven by ARPU growth of 9% with developers continuing to favor our advanced top package and compelling products particularly native search adverts. The headwind however was a reduction in developments in the market, and therefore on our site and we'll come back to that shortly.
Revenue growth in our strategic growth areas has increased by 31% to £8.7 million. Within that commercial real estate revenues have increased by 11% to £6.5 million. Growth was driven by increased membership numbers, now just under 1,000 and up 8% on the first half of 2023 with ARPU broadly flat at about £1,100. We have soft launched as Johan said V1 of the landing page and we expect a more significant upgrade to that during the second half.
Mortgages revenue was 176% year-on-year with revenues of £2.2 million for the first six months of 2024 ahead of the whole of last year. As Johan mentioned, we generated more than double the number of mortgage and principle submissions than during the comparable period and good broker lead volumes for our broker partner. And we have also just recently launched a second agency owned broker to the platform and we've also started working on a remortgage product proposition, which will launch a little later.
Rental services revenues are up 29% with good early take-up from lead-to-keys, which launched in the second half of last year. And then other revenues, which include data services overseas and third-party advertising grew by 2% in the first half and we do expect a slight recovery in the second half.
So the chart on this slide breaks out the drivers of revenue growth between ARPA and membership for a state agency and new homes. And for the first time we're also setting out the split between sales agents and lettings only agents.
Within resale and dual sales agents, good ARPA growth as a result of ongoing uptake of our products and packages along with BAU contract discussions as expected has more than offset the slight headwind from a market decline in branch numbers.
In lettings, you can see a different dynamic to the other two sub-segments as around 70% of growth in this sector came from net membership growth. ARPA contributes as well but to a lesser extent as our new lettings joiners do tend to be lower ARPA partners.
And then within new homes, the drag from lower development number is clear on the chart, offsetting over half of the revenue growth from the ARPA uplift. Meanwhile, new homes ARPA growth has remained consistently strong.
Pausing on ARPA. Overall it has grown by 86% year-on-year to £1,497. As ever discretionary spend on product remains a more important feature than pricing with 53% of ARPA growth due to that product spend.
Agency added £76 of ARPA, up 6% on the first half of 2023 to £1,417. And we saw notable growth in vendor lead products Local Valuation Alert and Rightmove Discover as partners continue to see the most crucial to winning new vendor instructions. These products delivered a further 8% increase in leads relative to the first half of 2023.
Our contract renewal discussions have all proceeded as expected and are materially complete for the year with no change to our long-standing pricing policy. New Homes ARPA has grown by £164, or 9% year-on-year, and we see this as a really good result in the context of a tough housing market and following two record years where new homes ARPA increased by £450, which was 34% across 2022 and 2023.
We've seen successful contract renewals across all partner segment with ongoing uptake of our top-tier advanced package, which now accounts for 56% of subscriptions. ARPA growth was also supported by increased spend on discretionary products particularly display products such as native search adverts, which grew by 5% in revenue terms versus the first half of last year.
And finally the launch of the access package has helped us to welcome more developments onto the platform with a 32% growth in housing associations on the site in the first half but again with a slight trade-off in ARPA.
Total membership at the period end was just over 19,000 partners 16,193 in agency and 2,868 in new homes. As we set out in our May trading update, agency numbers have grown by 2% on December. And the chart on the bottom left highlights our really strong agency retention at 95% with consistent joiner numbers and a significant reduction in the number of levers.
The chart bottom right examines this further showing how materially membership growth has been supported by the letting segment. We added more or less in partners in the first half of 2024 than in any previous first half in the past 10 years. We now have around 290 partners on Lead to Keys, of which around 90 are completely new to Rightmove attracted by the efficiency gains from this software.
Within new homes, the chart on the top right focuses on our largest corporate partners to give a consistent view over time. The orange line shows that we continue to retain all of the large developers on the site. And you can see from the green bars, how the number of developments has reduced every month since January. With development numbers at the end of June the lowest they have been since December 2021.
We heard from Johan earlier, how the large developers do have public unit completion targets and the new government support for house building has been well flagged. So as a result, we are confident that as activity levels pick up again, Rightmove will remain the place to view virtually the whole of the UK property market in one place.
Operating costs increased by 15%, £7.1 million year-on-year, of which the majority was an increase in people costs. We increased our headcount by 12% from December. And by the end of the year, over 80% of our staff will be in either tech or partner-facing roles. Total operating costs were £53.4 million with an associated adjusted underlying operating margin of 72%. This measure excludes the share-based payments as usual and now also excludes the cover due charge of £3.6 million and this is the metric we will continue to use for the full year '24 and for the first half of 2025.
As in every year, we expect the margin in the second half to be lower than in the first, as a result of the full year effect of payroll increases and our usual ramp up in marketing activity leading up to Christmas. So as a result, we are reiterating guidance of a 70% adjusted underlying margin for the full year.
So looking at the income statement, without the cover due charge and without the share-based payments charge, adjusted underlying operating profit was £138.7 million. A few points on the items below operating profit. Share-based payments and finance income were both broadly in line with prior years. And our income tax reflects the UK corporate rate of 25%, but with some nondeductible capital items leading to an effective rate very slightly higher than that. As in every period, we have continued to buy back shares. Our weighted average share count is now below 800 million and full details of that are in the appendix.
We remain highly cash generative with £143.8 million of cash generated in the half and an adjusted cash conversion ratio of 106% of operating profit compared to 102% in the first half of '23, largely driven by improved working capital metrics. A total of £100 million was returned to shareholders, £55 million via the buyback and £45 million via the final 2023 dividend. Cash tax was £32.9 million, higher than in the first half of '23, reflecting both increased profitability and the full impact of the UK corporate tax increase from 19% to 25%. And we ended the period with £23 million of cash on the balance sheet.
So our capital allocation policy and guidance for 2024 are unchanged. We will continue to prioritize investment in the business, including remaining open to inorganic investment to accelerate our strategic delivery. After investment for growth, we will continue to return all excess cash to shareholders via a progressive dividend and the buyback thereafter. We reiterate all guidance given in our May trading update. We continue to expect membership numbers to be up on the prior year by up to 2%. We reiterate the ARPA growth range £75 to £85 and total revenue growth in the year of between 7% and 9% all at an operating margin of 70%.
Thanks everyone. I'll now hand back to Johan.
Johan Svanstrom
Thank you, Alison. All right. So I'll continue with some of our operational and strategic main points. Now this diagram, I really hope is familiar, but it's worth repeating for two seconds. These are the high-level building blocks that we have on our powerful platform on both of the sites. They provide a very strong network effect and combined with a strong and very salient brand it's real for Rightmove as a company. Now we are decidedly accelerating product development on both consumer and partner side of this network and actually many more subsegments of it which you see here.
Finally, we are powered by our vision to give everyone the belief they can make their move. There is still more opportunity. So I'll give you a few examples of how this works out. If we start with focusing on the partner side of the network. As a reminder on the left, we increased our throughput of product development and innovation ongoingly. Combining the largest data signal universe in the UK property market with consumer research and partner feedback, we can deliver tailored products, increasing segmentation and we can indeed get into substantial scale faster.
In the middle of the slide a reminder, what it should lead to and it does, that as our platform realizes the outcomes that our professional partners most value to grow their businesses. So a few examples here. Three out of four agents say that we are the most effective at driving leads. We deliver five times the sales outcomes and eight times the lettings outcomes compared to our nearest competitor.
On the right, I just want to point out that for well over a year now, since spring 2023, we've been working to pool together research data and feedback from agents to launch a refreshed partnering framework that we call building success together. I'll come back to that a little bit later.
Rightmove remains by far the largest and most instinctive place that home hunters turn to and return to. So regardless of various comparison sources, you can look at, and there are quite a few out there, Rightmove is displaying solidly over 80% share of time spent across portals on Comscore and Ipsos and above 70% for Similarweb. Our own data bottom left shows a slight uplift in both visits and time compared to last year and both of these metrics are significantly above their pre-pandemic levels as a reminder.
Now we focus on the quality of the traffic as well as the volume. And in that light it's important to remember that over 85% of our traffic comes organically to us with consumers actively seeking out the Rightmove brand. And as I mentioned before, our app users deliver well over 40% of our e-mail leads. And for our partners, the leads that we deliver are 6% higher in the resale segment year-on-year. And in aggregate almost 40% higher than pre-pandemic.
So the accelerating rate of product and innovation. Here is just a graphic and some examples. So we're delivering over 130 features and enhancements just in the first six months of this year. We're doing it with now 24 product teams compared to 16 this time last year. All of our over 300 technologists at Rightmove are now coding with assistance from an AI Co-pilot, and over 80% of our engineers have reported early on feeling more productive about it.
Now pausing on AI just a little bit more broadly. We have around 10 applications or so at an advanced or deployed stage across all various parts of the business. A small example with a big impact is that with a vertical AI tool, we're now saving 500-person day's equivalent work for so-called DSARs or Data Subject Access Request, which were illegally required to support.
Now overall, we see AI is a big enabler for the future, especially for someone with our data on scale. We're building momentum with dedicated AI tech squads who are co-working with various teams out in the business and there's a lot more coming in the pipeline here.
Now all of that existing activity and innovation has to happen as we maintain a very, very high quadruple nine site uptime and the best-in-class app score. So the main diagram here it's fuzzy on purpose, because it actually contains the real details of a ton of different products that we're working on. But each color bar here is one of the 130 features in the first half of the year more coming of course.
Just calling out a few examples. Consumers, they now benefit from clear access to UPC information, great pickup of that, list sharing, collaboration tools, material property information enhancements, enhanced filtering, moving journey assistant tools in my Rightmove, same return on mortgage applications and plenty more.
Within core, we rolled out enhanced multi-branch company reports, which really drives better agency network management and visibility. We're also enhancing partners' ability to self-serve on various tasks like user management in Rightmove Plus, which actually just crossed 50% uptake just from starting last year. We've enabled to sell amendments to the creative assets for campaigns that partners put on our site. And that’s another area we are now experimenting with AI tooling.
In the strategic growth areas, as I said, they're all delivering really well against our operational milestones. And for the enhanced former tenancy manager within lead-to-keys we've seen a good pickup. And we also have now the first iteration of the commercial homepage.
So we continue the strategic model push, digitizing more of this industry. There is absolutely more to do. We're delivering effective and truly useful tools, not gimmicks for our partners and for ourselves.
The cloud migration and unified data platform also continued to progress. There really are non-trivial undertakes, but they will provide a super strong foundation once we get through them for many more years of even faster innovation than today.
And within the consumer domain, I'll just give you an example of what we would call Connected Innovation. We think about this logically. We are building increasingly beyond the fine segment, sometimes within the fine segment, but also beyond it at the same time.
And we try to really reinforce consumer utility and consumer frequency with our product platform. So within the domain of affordability, if you remember that's the second step in our strategic model below find. We launched TAP or Track-a-Property last year. And we're already seeing roughly 80,000 new tracks being done every single month, thanks to our large reach.
So a user will get an online valuation estimation range on an owned or other property of interest, out of all the properties that we have historic valuations on. The user can then opt valuation updates regularly from us.
So we see a super high 80% e-mail engagement for trackers and 9% of the track properties are soon coming to market on Rightmove which again, is another indication from a vendor perspective. So we get enriched data signals from the serious home mounting audiences particularly and that contains value to our agent partners, beyond a row lead click.
You can see in the middle of this slide, how Rightmove now also credentializes agents as the local and ultimate experts in valuation. And then, logically, we're trying to think okay, what's the next building block here.
So we innovate on the back-to-TAP and renovation calculator is a good example. It's an upcoming consumer product launching in the second half potentially, already in Q3. And we use a ton of our own data and external planning data to create this.
Now the stat is that 20% of owner occupiers out there, they carry out a meaningful extension of their home at some point. And for them, it's extremely important to feel assured that that gets reflected in property evaluation.
So it's a good example of how we see more granular. We build products for segments. And naturally this particular tool can be used for someone conserving to sell, down the road, get a better valuation for it, but equally someone who's looking to buy and then, want to upgrade which is often the case.
And the third element of this connected innovation module or a way of looking at it, within the affordable domain is how both TAP and the Renovation Calculator really gets reinforced by the expanding suite of mortgage products.
So today mortgage in principle is mostly for purchase, which is obviously connected to for example valuation interest. But in the future, we'll also start building out and offer re-mortgages and loan extensions for green and retrofit purposes. So again, three building blocks that will really drive and actually enforce each other over time.
So we drive functionality, utility, frequency. We are building a larger digital ecosystem connected to the platform. And we are becoming increase really a consumer moving assistant, when it comes to home transactions. That opens up more value for agent partners. And of course, it also increased monetization opportunities for us as a company.
So next, a number of you have asked about our approach to consumer marketing and I'm sure we'll get back to the marketing, so just a few thoughts and to outline how we think about this.
We approach the consumer of today with a big advantage, which is important. Rightmove, is a much-loved brand. It's been reinforced through almost 25 years of investment and credentials. And of course all the data on product-driven platform benefits we operate.
So we have a comprehensive marketing platform we call it, "believe it" and it builds on those advantages. It evolves them, logically and very much in sync with how we grow our product features in the business overall.
There are four key pillars. From left, we continue to build a brand leadership. It's deep. It's salient. We play international set pieces like the Euros, Paralympics on TV, et cetera. We recently actually used our brand leadership during the election to call for a change in the approach to housing in the U.K. And it culminated an exclusive interview for both Sunak and Starmer on their respective housing policies. Society leaders respond to leadership brands, and we have one.
In two and three, we then credentialize and expand our utility to homeowners at both personal and national aggregate levels. Our scale enables us to segment the consumer base raising efficiency allowing us to personalize both products and communications, an example, which I showed on the previous slide. We combine this really with industry expertise and so much historic and ongoing real streaming data. And through news, regular reports, and moving stories, in the first half we were seen over 4 million times out in the press.
Finally, in four, we are indeed thinking about the future building for the next 25 years, engaging the next generation through adaptive activities, showing up where they digitally live on channels like YouTube, Pinterest, TikTok. And on TikTok, we're actually one of the fastest-growing brands overall in the U.K.
Now, just touching on one of our strategic growth areas. We have seen 29% of our rental services operation, which is now built out with the Lead to Keys suite. And as a reminder why do we do this? Because it's a little bit of a different product than we've had in the past.
Well, rentals, as mentioned, is over half of the moving events in the U.K. market. More and more people actually rent due to affordability or choice. Probably about there are two times more renters in the U.K. market compared to 15, 20 years ago.
So our advertising revenue in lettings on the listing side really had stalled. We're now bringing new and promising solutions against that opportunity to be able to grow it into the future.
Lead to Keys is the U.K.'s only digital end-to-end connected solution. Starting at the very top of the consumer funnel, leveraging an asset that we have, very important. And that's, of course, a core strength. We monetize all those aspects of this Lead to Key partners on the letting subscriptions for access to the platform, paying an additional subscription for Lead to Keys including a set level of free references and then they can pay for variable references on top of that.
More revenues as a broker, us a broker here, for rent guarantee insurance, tenant insurance, tenant utilities, such as broadband and media, and we continue to actually develop. Right now we're experiencing a couple of more consumer ancillary services. There is a substantial total revenue pool of hundreds of millions of pounds as we look at this entire category and that's illustrated in the bottom right graph. But also, we are very, very early stage in terms of this opportunity. But it will be an exciting journey and we're try to build it to its full potential over years to come.
Bottom left you can see early, but clear evidence of beneficial outcomes for our partners. Really, really strong scaling and uptake from a year-on-year perspective across several important metrics. The top chart right just shows how Lead to Keys revenues have grown on a monthly basis since we launched not that long ago. And I think what's notable here is that we're bringing new lettings partners to the Rightmove platform. and we're not there before, as well seeing a good uptake among our existing base of letting partners.
Speaking of our partners and another piece of marketing, also important to remember the position that we have out there, the Building the Success Together program. So, for long, we have offered all of our partners significant resources, consultation, expertise, et cetera, as part of the Rightmove subscription. In 2023 alone, we ran 64,000 business partner meetings. We participated and shared insights in 30 or so national conferences, and we had over 44,000 people registered on the online training hub.
Now, there's a spectrum of free tools and data insights on Rightmove Plus and also within that Rightmove Hub. Now most of our partners, specifically the vast majority, which are SMEs, they are still very, very busy. So the sheer scale sometimes of our support data, different tool links, it can be overwhelming. So we started thinking about this and really consulting with partners already in the spring of 2023. This is not a recent construct on how we could actually improve how we deliver business value to them.
So the result is this program, which we launched in Q2 this year. It contains these four pillars of insight, training, control and advocacy. And it's a little bit like I described with our consumer marketing. It's a comprehensive strategic well research program. Of course, we'll continue to evolve a little bit. We don't throw stupendous data points as a selling act. We throw serious effort into bettering our services, with partners. Much of it is continuing to optimize what we've done before, but now we're taking it to the next level for this program.
And in conclusion, I want to say, two things here. So just some reflections of our business at a higher level. Well, there we go. I think it is a summary. We've heard it all before, but I think it's hopefully, also been clear in this presentation and through the results. We have an optimistic outlook on our business. We're aware though that the market as of now, needs further pickup. And it will at any point in time, always have a certain set of dynamics and again different speeds in different parts of the market.
Now, we're convinced that there's a clear line of sight opportunity for further digital transformation. We are starting that from a fantastic and resilient platform. So, I also extend a thank you to the hard work and Rightmovers team, delivering against this opportunity.
And finally, the overall case. We operate in an attractive large liquid market UK property. We've successfully built a central position, for over 25 years. We have a uniquely powerful brand, with 96% awareness among home movers. It's an incredibly powerful position. We're convinced that we can strengthen our already powerful network effects. We're data-driven. And the B2B model obviously, at the core enables us to drive the business forward in all market conditions basically.
We actually do think, even with 24 years in the back, that we're just in the beginning of a new journey that we set out eight months ago. And we're attacking that through our strategic model that we have outlined previously. We are not complacent. We're restless to innovate. We are scaling the core business. We are building new adjacencies. We are connecting them logically to the platform, and our aim is to deliver double-digit growth over the medium term.
So thank you for listening. And with that, we'll go over to questions. And Ben, will have to emcee that.
Question-and-Answer Session
A - Ben Winstanley
Great. Should we start with Joe – near the cross?
Jo Barnett-Lamb
It's Jo Barnett-Lamb from UBS. Three, from me. So firstly just in regards to the evolution of competition. I think I'm right in saying that your share of time spent year-to-date is about the same as last year. Your retention of agents is what seems to be the highest, you've had for a long time. And in underlying terms, I think your agency ARPA growth excluding lettings and in pound terms, is about the highest it's been as well. Is all of that correct? And is there anything you did or saw that was different in H1, as a result of competition? That's question one.
Question two, it feels a little bit like your sort of caught between cycles. We're starting to see the property market up, but not enough that we see new agent formation or new home developers breaking ground on new developments. Is there anything more that needs to happen for those things to happen? Or is it literally just a matter of time?
And then thirdly, at the CMD, I think you guided to £120 to £130 of ARPA in 2025 and 2026. Now obviously, the shape of the business has changed a little bit, with the push into lettings that you've had thus far this year. Does that guidance still hold? Is there anything you can say, about that guidance? That would be helpful. Thank you.
Johan Svanstrom
Right. Yes, I'll start with the first two. Yes, I can confirm, what you said. Positions generally remain very intact across all different metrics and we try to lay them out. Actually, what we did here, we did on purpose, we laid out three different sources of information as I mentioned, right? And the one that we've used in the past and still Comscore showed exactly the position being in a super intact position and that's an important aspect. It is not the only aspect, but we know, it takes interest.
Generally, -- so we're happy about that. We continue to be very focused on executing our plans, with an eye tours obviously always near term, but certainly also long term. And from a competitive perspective, I really don't think there's that much additional new news or commentary. It's sort of in the public what the state team about the UK and what kind of activities they are undertaking, and we continue to plug along with our business and accelerate it at the same time.
Secondly, the cycle point. Yes, I think that's a good way of phrasing a joke between cycles a little bit or being in somewhat of a transitionary period, right? So the catch-up effect on the resale side with listings volumes pent-up demand et cetera, positive sentiment and statements on agent pipelines has absolutely built pretty solidly throughout the year. Again, with the delay until cash flow come in.
While on new homes that's again slower for longer, right? It's -- there are bigger tankers to turn around. There's a little bit more uncertainty in terms of how that sort of hold cost versus sales and therefore benefits come around for them. But again, generally, you can read that they definitely start calling out development numbers to go up, but in a cautious way, right?
ASPs are pretty firm. Sales ratios are firm to even starting to go up a little bit discount levels they were also quite firm on. And they're clearly now not just relying right, but really, hoping and working with the government to make sure something happens out of the ambition statement. But it does take time, right? So this is not a -- all of a sudden it's going to explode in the second half of 2024, absolutely not the case, but calls for optimism.
I think the pain largely or to a larger extent is in the sort of mid and tail end of developers. And again, some of that is reflected in these numbers as well, right? Same thing there, it's not easy to pin down exactly when all the positive will come back, but it will at some point.
Alison Dolan
I'd just add two data points on competition as well. I mean, we've particularly zoomed in on consumer engagement and agent retention. But also, if you look at the strength of upgrades, to optimize our edge and our ability in this first half to have put through our normal pattern of price increases. Those two also really go to emphasize the value that they see in the products and in the subscription, and there has been absolutely no change to behavior there. If anything we're ahead on the optimizer edge curve and we can certainly talk a bit more about that.
On the CMD mix guidance and revenue guidance, clearly, the mix in the first half of this year has changed the route to the revenue numbers. So we absolutely stand behind the revenue numbers that we set out at the CMD. But the way that we'll get to them as things stand right now is with higher customer numbers on the agency side and slightly lower ARPA.
Ultimately, leading to the same revenue numbers, I think the levers always for revenue drivers are customer numbers and ARPA. The lettings the volume of lettings adds are diluted ARPA. If we were to see a mix shift back towards the more traditional mix, you would see a pickup in ARPA, and therefore, I think all roads will lead to the same revenue number.
Jo Barnett-Lamb
Just one follow-up, if I can. With regards to the coming soon tag for new home, what's the lead time between that and seeing the new home developers sign up the developments in full?
Johan Svanstrom
It's a good question. I actually don't know precise answer. So I don't know, if you have that Ben or someone in the team. Otherwise, we'll follow up.
Andrew Ross
It's Andrew here from Barclays. I've got three as well, if that's okay. First one, just to clarify the ARPA guidance for this year 75 to 85. It was a bit higher than that in the first half. What are the drivers of it slowing in the second half? Or is it just you being a bit conservative? That's the first one. The second one is just to follow-up on Joe's question on the 2025 guidance. So fully understand the mix dynamics. But just to be clear, you are still guiding to slightly accelerating revenue growth compared to the 2024 range and the 70% margin on a clean basis to be clear?
And then the third question is on the supply side of the market coming back to competition. Obviously, because I gave some numbers this week in terms of where a hill on the market is in terms of branch numbers. Is that kind of consistent with your tracking? And why do you think on the market is relative to Zoopla? What do you think is happening on the supply side of the market? Thanks.
Johan Svanstrom
Got it. I can start with three Alison and we can pick up on the others. So I think as with some other numbers that are not coming from a third-party or independent source. It's hard to comment on it. And therefore, I won't specifically, the activity of course that they're undertaking is trying to build the supply. But what we focus on is very high principles around the methodology, obviously, being quite granular and having a lot of history specifically in this market. And those are numbers that we report. I think the further question on the two other brands, again not really for us to comment specifically on those two. You'll see commentary out in the news and I think that's readable for everybody and also up for interpretation I would say.
Alison Dolan
So on the first question on ARPA it's the reduction in the second half is largely just year-on-year comps. On the new home side in particular where growth in 2022, 2023 was so strong and continued into the second half of 2023. So it is just simply that movement from one year to the next.
In terms of the mix dynamics and 2025 so we're not giving out specific 2025 guidance today, but having said that everything that I just said about the mix and how we get to the CMD revenue numbers and those revenue projections we continue to stand by it. So I would point the fact that this year we put through the same level of agency price increases as we typically do. That has all gone very well. The strength of optimizer edge upgrades combined with the withdrawal of the Optimizer 2020 package. Those will all continue to drive acceleration in agency ARPA particularly among the resell and dual agents into 2025. And then on the lettings ARPA side despite the fact that their advertising subscription ARPA is lower than the resale agents. They are absolutely our pipeline customers for lead to keys and we will drive it in a lead-to-keys into that base. So all pointing to good ARPA growth into next year.
Andrew Ross
So just to follow up on that so the medium-term ambition of getting the group into double-digit growth has clearly not changed, but you're not being specific in terms of whether we're thinking 2025 is going to show a slight acceleration or not in terms of that trajectory to the medium-term?
Alison Dolan
Not today. We're not setting out 2025 guidance today. We will do later in the year but there's still six months of the year left to play out and movement in the underlying market. So you'll hear from us later in the year with regard to specifics for next year. But everything I just said of outstanding mind the CMD growth numbers remains – working over.
Rahul Chopra
Hello. Rahul from HSBC. I have two questions. In terms of investments in product growth I think last time you said you're investing in 200 headcount, three-fourth in product growth. So just wanted to understand where we are in that investment process? And in terms of margin obviously we -- I mean can you just give us basically a step-up in R&D -- sorry step-up in capitalized expense in the cash flow. So I just want to understand how you're accounting for in terms of incremental product R&D it is expensed or capitalized? And basically what's your thought process there first.
Secondly, in terms of again coming back to Optimiser Edge. Could you just give us a sense of where we are in terms of product spending? Are you saying basically with higher discounts from the number three portal in the UK? Are you seeing some more product incremental spend at Rightmove at this stage? Probably just want to understand the dynamics there? Thank you.
Alison Dolan
Sure. So on headcount I mean we're completely on track where we expected and wanted to be. We had about 100 heads in the first half. We'll probably do the same in the second half. As always with us costs are -- tend to be weighted towards the second half of the year which is why you will you see that slight dip in margin from 72% to 70% for the full year.
Yes, you're right Rahul we have slightly increased the capitalization of headcount as we invest in behind the strategic growth areas. It's not particularly material. We're going from 2023 where we capitalized costs in relation to our new ERP system and we capitalize the product development team for mortgages. We are now -- so that was a total of about £2 million. That too has now become £8 million for the full year and you've seen about £4.5 million of that in the first half.
Johan Svanstrom
And on the last point around Optimiser Edge. So, we obviously, launched this last year. That's also when we started talking about it. We've given some updates on where we're tracking on it. And we're giving the normal sort of initial 12-month period getting to roughly 1,000. Now, given the numbers that we're at, we're obviously seeing very good pace with this package on the back of what it contains interest and benefits to customers.
So, we're quite pleased with that acceleration, not at least in a market that is yes recovering, but still has some ways to go and so forth. And of course at least theoretically or potentially a new competitive dynamic. But importantly, that has not made any changes to the success actually more than the historical success in terms of rolling out the top-end package and the usual contract renewal phases that we do throughout the that Alison mentioned before.
So, we're quite pleased with that. And obviously the work on product generally continues, right? We still not we still we see an over 50% spend on product versus core listings, right? As we said before that balance tilts a little bit from time to time but that's where we are. So, a good product uptake overall.
Rahul Chopra
And in terms of -- I think you last time you guided to slightly greater than 1,200 take or edge. Are we still on track? Or probably you think that you could exceed that guidance or just in terms of that number of 1,200 uptakes?
Alison Dolan
Yes. So what we said when we launched the package was that our target was to have 1,200 agents on it by the end of 2024. At the end of June we already have 1,400 agents subscribing to it. And as I said we will aim to withdraw the Optimiser 2020 product. So, ultimately over time our target will be to have 3,500 to 4,000 agents on that.
Ben Winstanley
Okay. Jess?
Jessica Pok
Thank you. Jessica Pok from Peel Hunt. I've just got three please. When you set out your kind of outlook, financial outlook during the Capital Markets Day, had you anticipated kind of some of the efficiencies that you're getting from AI? I guess what I'm getting at is looking at you need for developers of personnel and into the next couple of years do we have potential upside because you're getting more efficiency out of your people?
The second question is that we're seeing a lot of consolidation in the agency markets. And do you expect any impact from that and more so on pricing and various things?
And then the final question is just on the letting partners which have come on to lead-for-keys and then just onto the platform. I'm assuming your penetration rate is pretty high. So, I mean do you expect a good number of -- is there more of these letting partners which can come on to the platform in the near-term?
Johan Svanstrom
Yes, I can start. With AI yes. So, the short answer is no we have not made any precise estimates of the benefits of AI or in a business opportunity to commerce or to partners nor from an internal speed of delivery or efficiency. There's always an ongoing productivity measurement and of course improvements.
AI does hold quite a lot of promise within that. We're exploring that. That's how we're thinking about it now. We're business casing it out. But it's too soon to say or communicate any specific sort of impact of it, right? Remember lots of interest in it. We're on it right now but it's early sort of in terms of full potential.
Second one on consolidation. So, consolidation obviously can have an impact of some rate alignment across our partner base. And that's -- there's a difference in a way or it might be worth calling slightly differently on agency versus new homes, right? So, in agency it's always been going on to some extent. It will continue to go on. to some extent, right?
And in some ways it's another reason for us to continue to segment further our products cater to very large, medium and small in the agents as well, which is exactly what we're doing.
On the new home side, just because that might become a question specifically anyway, I think there are about three processes ongoing right now. Two of them expecting some kind of answer here early August, right? And the general piece there again, there might be some alignments between contracts in go in different directions.
But I think what's important to remember is that, first of all, as we said, there's weakness in the long tail of developers. And between the developer stopping to build altogether or even go out of business, it's much better to see them become part of something else. Somehow their business will continue, right?
And among some of these larger potential M&As, the positive -- one of the positive outcomes of it will be that, obviously, they're going to generally speaking be stronger have a bigger balance sheet. And when they actually look at a site, they now say, hey, we have one or two brands already in this site. Now we can complement that with one or even two other brands on that same site.
That provides real scale in terms of the production of that development. We have them as partners per brand and development, right? So if that makes them a stronger business and therefore, release more developments and build more, fantastic for our business. So I think that's one aspect to actually keep in mind.
Alison Dolan
And then on the lettings question, Jess, so we have just under 2,800 lettings only branches on the site right now, of which less than 300 are Lead to Keys partners as things stand. And you've seen in the CMD materials the way that we intend to grow the volume of Lead to Keys's take-up. I think it's also really gratifying to see letting only agents come to the advertising side of the site just in order to access the Lead to Keys software. I think previously, we would not have had those lettings agents as customers. So, of course, we welcome them and we will probably see more of that. But within the existing things only base, clearly there's lots of opportunity to go after there with Lead to Keys as well.
Jessica Pok
I guess I was referring more to the fact that the lettings agents, which have come to the advertising side, are there more of the -- a lot more of these lettings only agents, which are on Rightmove, which can come on assume, because your penetration is already quite high in the market already?
Alison Dolan
Yes. Well, there are a couple of things. So, there are small lettings agents who historically have not been on Rightmove or indeed been on any of the portals. They have low stock and they're quite happy to just advertise in their local area. So we will and are seeing some of those come on to the site now.
And then the other thing that's going on is a slight shift in the demand and supply imbalance. And that was really what was the blockage when the only product that we had to offer was the advertising product, those agents if they're getting 30, 35 leads per available rental property, it's a cost to them to have people managing those leads.
They didn't need more leads from any portal and so they didn't advertise the portal. That demand and supply imbalance is now reducing somewhat as I said. It's still there, but it's quite dramatically less than it had been. So there is more of a need for leads and of course, for lead qualification, which is exactly what Lead to Keys is.
Jessica Pok
Great.
Ben Winstanley
Now go forward to Gareth.
Gareth Davies
Good morning. Gareth Davies, Deutsche Numis. Two on the strategic initiatives. So, on commercial you said you sort of -- it sounds like you sorted the front-end man in terms of standalone commercial. Is that an important catalyst in terms of getting the sales team out more aggressively looking to win new customers? And how much kind of product is still to be built to get to where you want to be to sort of have that properly salable product. And relating to that, are you seeing any difference in terms of what the competition is doing in that market?
And then, really a similar question on mortgages, really just can you give us a little more color on sort of the investment and the product that you've got there now? And sort of how far through that journey we are before you get to that end product that you can get out properly into the market with?
Johan Svanstrom
Yes. I'll start. So on commercial, it's great. We follow the V1, there's actually a new landing page built as we speak and launched. It is not a massive catalyst for sales doing something different. We have a sales team operating there on the business. But, of course, they're a tad more proud being able to talk about the landing page that we have today. And it's not just a landing page. Yes, there's visuals around it but it's obviously has some better division segmentation logic behind it.
So it's good that we have it. It's a necessary piece to be full to serious let's say and show that we stand behind our investment in this area and help partners. But sales work continues as before.
And then there's more work underneath going on in terms of data feeds, the data that we can take in how we obviously then do display that back up on the site catering as usual to okay to order specific needs of commercial real estate partners in the quite different segments in that industry right, which we literally didn't do anything of before. And that's a little bit more of the sophisticated build that happens underneath right?
All of those pieces combined. And as we release them we'll obviously put the product in a much better space. And from that we will grow volumes and we can penetrate the segments deeper, and of course look at also our own spectrum of products and different pricing components and packages, which is quite basic today.
So therein lies the opportunity. But as we said 2024, 2025 basically to be seen as investment years from that perspective, while we continue to track along with sales out in the market.
And on mortgages, yes, I mean look we're -- it's a small base, but we're phenomenally happy with the pace of that right now. We, I think mentioned here that we've just added a second broker agent to the mix, continue to work with our main lending partner.
And there's simply two things happening from our perspective. We are constantly but in a very logical way adding exposure to our users where we think it makes sense. But there's a lot of interest in this area. In spite of or maybe even helped by the external environment doesn't matter. So that's one thing that is going on this to drive exposure awareness and users love the fact that we have this product right?
Remember, the MIP itself is obviously not tied to collateral. So it's a great way to get an indication of where am I, or where am I and my spouse. It's now with the volume starting to build very interesting information also from us, not just the direct commercial opportunity from these leads for us, but the enriched data signal again.
Someone who has an approval for 400,000 mortgage, for example, that's a more interesting lead more qualified lead for one of our partners than someone simply clicking on the website. So with that volume comes more opportunity obviously.
And then generally speaking the other part of it is optimization of the product itself how we gather data, we run quite a lot of ML and now starting to do GenAI as well on this connected up to our different marketing programs and so forth. One example and it was mentioned here of just one of those optimizations, but this is how we build online consumer products is to save and return function.
So while we have made this the form filling quite more efficient than many other sources or places you do it, it's still quite a lengthy process and particularly if we joint applicant. There's a number of complementary information that you need to do. And before that was a little bit like, oh, I don't have this.
Now I can't get a hold of the information people drop out. And now we basically put some additional security around this and functionality, so that people can partially do this and then come back. So it becomes almost a self nurtured way of completing the form. And the more completions, the more chances obviously at the certificates and actual lending happening down the road. So again just an example right but that work continues.
And along those lines though we continue to do the job, and specifically we're also now looking at the remortgage product right and how we try to connect that back up to some of the other things that we do at Rightmove. That, obviously, opens up a new pretty meaningful category of TAM, but it's quite different in purchase mortgage as well. So early days.
Will Packer
Hi. It's Will Packer from BNP Paribas Exane. Three questions for me please. Firstly, the traffic statistics are impressive. But is it fair to characterize the current situations pony wall where your new competitor hasn't really started to spend at scale. Is that fair? And so we've got a bit of time to wait for that to come through.
Secondly, could you help us think through how the cyclical recovery in the UK property market will impact your state agency business? Is the right way to think of it that on a bit of a lag we get a bit more agent formation and a bit more product uptake and it's more of a 2025 story?
And then finally, you're a bit further along with mortgages now. You sound pretty excited. There's a big graveyard in classified land and mortgages Australia, Europe, the US where things have gone less well. What do you think is different? Is it the technology is a bit better, the UK market structure execution? Just help us frame it for you why you're excited in the context of some of those challenges elsewhere? Thank you.
Johan Svanstrom
Okay. I can take the first and go to the second. So yes, it is great given all the calamity noise and some of the working in the orchard of data chair picking as I call it out there during the spring. But the -- we simply don't know exactly what plans are in the future. We assume that more marketing will be done in different types of marketing including brand advertising. And that's the premise under which we operate. And as we said before, we obviously monitor a lot of metrics.
We now monitor some additional metrics because of that. And we sort of -- we have our marketing plan. It's very strategic. It's very connected to what we do. We are thinking in a way of okay there might be dynamics from time to time, specific ways of doing it, specific messages to be out with and spend levels, right? That might change around a little bit in the future. But we're very glad to see that our position stands very strong in spite of quite some spend actually to date albeit in a pure digital format.
Alison Dolan
On the cyclical recovery piece, Will. We haven't seen much new agent information in the first half. If you think about the drivers of it transaction numbers is obviously a very big part of that. And I mean, really when we say it's been a tentative recovery in the first half, we do mean it. And that combines with the seven months from listing to transaction close which is a long time for a new agent to have to market themselves and try to win mandates with no revenue coming in. So that would discourage formation. I mean, you would expect to see a bit more if transaction numbers pick up, but they have not picked up sufficiently for us to see anything meaningful there really at all.
Johan Svanstrom
Right. And on mortgages, I don't know graveyard might be a harsh word, Will. But you're right, you're obviously deeply aware and knowledgeable about many situations around the world. But as we said before, for sure our approach seems to be a little bit different to some of the others in that we are going with a pretty strong principle about only digital right now focused on actually building awareness for this product within the right context, but sticking to a digital model.
And I think in many other cases, it's been the case of acquiring Mortgage Broker to start working with them which operates at a very different economics. And I can't really comment on whether that's good, bad somewhere in between. Obviously, there's digitation progress in those as well, right? But we've taken this principle and we believe in that one. And that's the one that we nurture.
We're also not saying that this business will all of a sudden become half of Rightmove, right? We think it's a phenomenal monetization opportunity that shouldn't be touched by us. It's a very, very good complement to quite a few other things that we do. And it is a more direct or different monetization opportunity, right, than the rest of the business. Those are the components that I like.
And I think again the optionality over some years, in terms of exactly how we monetize this between the different partners on the platform, can look different, as we penetrated. I think new technologies like Gen AI will impact this industry is one of lots of information gathering lots of process steps and manual intervention, right? So that's another angle that we might keep in mind, given who we are purely focused on technology.
Giles Thorne
It's Giles Thorne from Jefferies. The first question is back on Lead to Keys. And I wanted to get a bit of color about what happened basically between March and the 10th of May. Because Lead to Keys is a product first phase rollout was over a year ago. You obviously had all the learnings from that that fed into your Capital Markets Day and to your 2024, 2028 guidance. And then we get to the 10th of May and suddenly there's been I don't know accelerated uptick in customers. So is something happened on the commercial front in those two months a bit of color there.
Secondly, back on mortgages from 35,000 feet down into the very specifics. If I remember correctly, the traffic for the agent broker panel was being directed only after a failed met. I'd be interested to see how that's evolved? And what feedback you've had from your agent partners? And then lastly, two bits of M&A after a bit of a drought some comments on what's in your M&A pipeline right now?
Johan Svanstrom
Yes. Great. So – sorry, if you want to start with M&A, please go ahead.
Alison Dolan
Well, one small acquisition and one even smaller investment. So home views I think you know what it is agent reviews £8 million. I mean it was a very good complement to our rental operators offering. And we have now focused on integrating that and integrating that business and we'll continue to grow it from there. Code use [ph] was slightly different. It was us taking a stake alongside three of the biggest mortgage lenders into a business whose technology is aimed at helping to digitize the sales process.
We back it. We think that of the operators in that space, they have the best technology but it is very, very early days. And the sales journey is so fragmented with so many different parties involved between local authorities, banks, conveyancing lawyers, the land registry, agents, buyers and sellers, that this will take quite a bit of time. So it's – this is a long-term investment for us and obviously, a very small stake, which we have now written down.
We said in the presentation, we will look at investments that could help us to go faster on something we're already doing or to bring capability into the business that we don't have but that does point to a small and bolt-on. And there's nothing that we are when you say a pipeline, there's a lot of air in that pipe. And obviously, all of the plans that we have set out are based on organic growth. They don't rely on M&A.
Johan Svanstrom
Okay. So Lead to Keys. So the product which is Lead to Keys, which is really a suite of different steps had been worked on for quite a while. And we got it readied during mid last year. We had it out as usual in a path-finding mode with real partners and potential partners including very important feedback that we perhaps needed to adjust before we go into official launch.
Obviously, also figuring out pricing and packaging model of it. As you know, it's actually a subscription model, under which an agent gets x number of free references per month, et cetera, et cetera. The official launch really started only in Q4, not even in the very beginning of Q4 last year. So the pickup has simply and I actually think the graph actually shows a fairly steady curve, given there's still relatively small scale there – the bars might look a little bit different in height. But there's nothing particular in the more recent period.
And remember, it's still at small levels, but it's quite exciting, right? It gets very, very positive feedback from agents. And as much of that great feedback and inefficiency it provides and we also showed you some of these stats in terms of year-on-year comparisons on for example, enquiries.
It is still not -- it's not like the best things since slice bread. Meaning, it probably is, but it's still a process of reaching out explaining this getting people to try. As we said before, agents might sit with a point or a part of the value chain solution with something else, right?
But the exciting thing here is we're connecting it back up to again, building success together, obviously trade marketing, addressing both our own base as well as new lettings partners. So it's going to -- it's now on a continuous rollout track. And we're quite happy about that.
Second one on mortgages, so yes, just to confirm that the current broker setup is on the decline of the main MIP with the Main Lender Partner. The feedback from our first partner and more recently the second one, it's been very strong. It's very collaborative. It's a new way for them to get leads.
It's quite rich in information which is very positive, but that's also where it needs to get connected to their process. I mean these partners are generally speaking tech savvy amongst aging brokers. And that's the reason for the partnership, right? So we're learning and the volumes are building. And that's quite exciting.
Exactly, as I said again, how this setup between lead generation and various ways of advertising against that opportunity that might evolve in the future, but this is what we have right now.
Giles Thorne
And just a follow-up, do you have any visibility into conversion for nationwide of a MIP lead?
Johan Svanstrom
We do, but that's part of our commercial relationship with them. So we're not talking about that.
Pete-Veikko Kujala
Hey, it's Pete from Morgan Stanley. Three questions, first one on 3D modeled listings and what is the consumer appeal in the UK. And whether like if there is what would be the cost to produce these types of listings? You probably know where the question is coming from. So cost the acquisition as a matter of part.
Secondly, you showed this graph on inquiries per rental listing. So whether you want to talk about rentals or for sale but on an inquiry per listing basis how do you compare against Zoopla and on the market?
And then, lastly, about your product packages actually both for agents and new homes, so what do you see as the optimal balance? Because right now you're approaching quite high penetration levels on the top package which kind of then makes it like a hygiene factor. So would it make sense to at some point have top package that is actually priced in a way that it's not going to penetrate 60% of agents? Thanks.
Johan Svanstrom
Okay. I'll start with one for sure. So on the 3D listings or virtual tours and the known still pending acquisition in the U.K., there are virtual tours to less than a single-digit percent of all listings. It's been very stable for a long time.
It typically gets to be on more premium valued properties, because it does cost significantly more to set it up like that. It is not showing radically different sort of interest or traffic metrics in other ways right? It's absolutely a useful tool to some extent. But let's remember that those are the penetration levels.
There are also quite a few other providers of that technology and ways to do it. Some agents even have some of that capability in-house. The absolutely most important thing is really good detailed information generally speaking and photos, right, so across those three.
Now, could this evolve overtime? Yes. But I think the promise of virtual tours or video showing has been around for a long time I might amend before. I spent 15 years in online travel. We debated this a lot. We tested it a lot. We invest quite a bit in it. And somehow photos in these kind of classifieds or comparison or property seems to be quite prevalent. But it's one of those, again, where we're testing we're pathfinding with partners. And we'll see where that goes in the future right, but there's nothing particular to report on it.
And by the way that it's a very similar story across most of Europe. We talked to all of our peers, let's say, a little bit specifically on this topic, given the acquisition that was announced and everyone is seeing quite a similar situation. Do you want to take the second one?
Alison Dolan
Sure. I mean, we put the chart in mostly to emphasize the continuity of those outcomes for agents and for landlords relative to our competitors. And I think the point is really that the stats have not particularly moved if anything particularly in terms of vendor mandates won on our platform. We're talking about 9 times, 10 times a number of vendor mandates won for agents from Rightmove relative to in this case Zoopla, but also to OnTheMarket.
We start with the 86% or so of engagement. And we know there is lots of browsing and just property surfing at that level. But the reason it's important is, of course, it funnels down into the really high quality, high propensity to move buyers, sellers and renters. And that is where really the quality of the leads from Rightmove shows up relative to the other platforms.
So outcomes are the thing to focus on. The primary input into those outcomes is the quality of the leads. But we're talking high single-digit, multiples, whether that's vendor mandates one, lender mandates one, and sales and lettings outcomes. And we will really continue to push that message, because that is where our very big consumer advantage leads our customers.
And then on the third point on the distribution of packages. Yes, we're at a bit of a funny distribution curve at the moment. We have, if you take combined optimizer packages so Edge 20 and 15. We're over -- we're about 35% of agents are on that top level. And meanwhile, of course, down at the lower end at the Essential and Essential Extra, there's about 47%, 48% of agents are down at the bottom. And so the middle package the enhanced level is being squeezed.
Having the idea, I mean, the ideal distribution is you'd have pretty even spread across all of those packages. We would certainly like to see more agents using our products which would mean less than 50% in race.
Okay. So our focus is as much on getting those agents to engage with products and moving them up the package curve. We're broadly happy with the number of agents on the top back.
Johan Svanstrom
Maybe to chime in a bit on the new home side right, because that's obviously where we do have a higher above 50% penetration. And that's totally fine, because the amount of listings coming from new homes is such a small portion of overall listings, right? So generally speaking, you've got to remember from a consumer eyeball perspective, it competes with all the listings, right? It's not just within that category. So we're happy with that level and it can be higher as well, should that be the case.
Ben Winstanley
I got one more from Sean if that's okay and then we'll wrap it on there.
Sean Kealy
Good morning, everybody. Sean Kealy from Panmure Liberum for the first time. I'd like to ask sort of one question but it might be a three parts but I hope that's all right. Mostly sort of tacking close to M&A again. So if I think about the investment in Coadjute. You own about seven -- a little over 7% of that right now. So you're a little bit over 7% of that right now. Have you got any visibility on whether or not Coadjute might need to follow on investment and sort on would you be willing to make that investment? And would you -- is 7% the right ownership number for you? Or would you look to increase that stake over time is sort of number one.
Secondly, Johan I think you've commented previously Rightmove looked to make acquisitions or investments in companies which can benefit from its scale. Are there specific doors you're pushing on in support of Coadjute? I'd just like to hear a little bit about the strategy you're operating there?
And then thirdly if I can ask about the cost of integration of I guess home views at the moment and if there are any for Coadjute in terms of the product yet. Roughly how much that's what spend is? And any comments you can make on that as well.
Johan Svanstrom
I can take the first two. So we're a minority investor in Coadjute. We think it's an extremely interesting and potential technology platform for the future. It connects very well with our strategy and our ambition to make the business or the industry more effective and directly support agents cash flow operations. But it's early stage. We are joined by which is extremely exciting three of the largest lenders in the country in this investment. They're also minority investors in it with one of them being the lead. So that's where we are right now. There's obviously a lot of good thinking where this is going to go and quite a lot of action in starting to build as well in terms of what these different parties do together with Coadjute. So no further comment really on sort of ownership. That's where we are right now.
The second question which you probably started to allude to. Generally speaking well first generally speaking yes there's a lot of protect out there. And hypothetically what some of them will need at some point like all companies is obviously scale of some kind right? And that's one potential angle for us. Again though that doesn't mean that oh all of a sudden there are so many pick up because there are a lot of small projects out there right? Alison alluded to our general policy and that absolutely holds true. So it's just one of the reasons why it could be interesting. And that kind of cooperation around a specific case with Coadjute is exactly what's happening. So one of our most senior team members is under Coadjute Board. And we're laying out plans for how we obviously can collaborate and how we indeed can support them, right? But they are working as a standalone company. Again we're a minority investor. We actually learned from this ourselves informs our path finding of where we want to take this domain let's say and obviously vice versa as well.
Alison Dolan
And then on Home Views, Sean. We took costs of about 700,000 in relation to Home Views in the first half. So that was a mix of payroll of the members of the Home Views team that we retained and integration costs of their platform onto ours. Okay.
Alison Dolan
Thank you all.
Johan Svanstrom
Great. Thank you.
Alison Dolan
Very good. Thanks, everyone.
Johan Svanstrom
Appreciate you coming. Enjoy.