A big hike in the dividend, increased profitability and a solid outlook combine to send Zoopla (ZPLA) 2.5% higher to 244.7p. The online property portal just nudged ahead of consensus forecasts with its prelims despite losing more than a fifth of its clients to new entrant OnTheMarket.com since the latter’s launch at the start of 2015.
Revenue of £107.6 million in the year to 30 September was 34% higher year-on-year and earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 23% to £48.7 million, slightly ahead of a forecast £107 million and £48 million respectively. The dividend is more than doubled to 2.5p per share.
Shaking off the competitive threat posed by estate agent-owned OnTheMarket, Zoopla started adding to its agency numbers again in May and over the 12 month period average revenue per advertiser (ARPA) was lifted by 10%.
uSwitch - the utilities price comparison site acquired for £160 million in June - contributed strongly, with revenues of £27.7 million and EBITDA of £7.8 million.
Canaccord Genuity reiterates its ‘hold’ recommendation and 244p price target. It comments: ‘This is a broadly reassuring result from the company, and shows the quality of the management team - which has been able to keep the business on a steady keel and grow ARPA despite losing a significant number of agents to rival OTM.
‘In our view the contribution from uSwitch is encouraging, and we think there are material revenue synergies to be extracted over the medium term. The competitive landscape in the Property Services division, and the risk to earnings from competition, are likely to remain the focus of investors in the short term; but Zoopla has now recorded seven consecutive months of agency membership growth.’
