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Hive....many thanks for this response. I actually think you are pretty spot on with all your observations and we are on the same page...and I very much take your point re the value point...with OTM just being some other tool for agents, it really is just an extra cost at the moment.
As Deborah Meaden would say - 'I won't be investing!'
grant...I have done a bit of research on this and I think OTMP had a chance, a really chance of making it, once upon a time…
They were initially formed by a mutual association of agents in 2015 to take on Rightmove, to break their monopoly. OTMP imposed an illegitimate 'one other portal' rule (mistake one), which they have since had to ditch, it was found at tribunal to be anti-competitive . This meant agents could initially only advertise their properties on one other portal, namely Rightmove or Zoopla. Regrettably, the agents involved rather bottled it and instead of taking on their principle target, they collectively decided to remove listings from Zoopla (mistake No. 2). All this did was to strengthen Rightmove’s position, as the only viable portal known to the public.
They spectacularly failed to achieve what they set out to do, and actually made the situation much worse for themselves. When OTMP first launched Rightmove’s SP was 207p, today it is 564p, and agents have never paid the portal more than they currently do! In fact, the best thing an investor could have done when OTM launched was buy shares in their main competitor, the one they were trying to get rid of!
This whole outcome really does render the current business as pointless, from everyone’s point of view. The last thing agents wanted was a third portal and that is exactly what they have ended up with. And, in reply to your point, no, OTM does not offer agents 'fantastic value', it only presents an extra cost to them, as they are still all on Rightmove, which they will now never ditch, otherwise they would have done so when they had the chance.
The problem is estate agency is a cottage industry with everyone running their own little business, and although some are probably very good at what they do, they generally are not business minded people. They have been lead into this like sheep, and it’s been a complete disaster from almost every angle.
Other than the lack of a real place in the market for this business, my other concern is that agents have been handed out tranches of shares for signing up (mistake No.3). The first issue with is, is the constant dilution of shares taking place, it would put any serious investor off.
The other issue is agents have had restrictions from selling these free shares imposed on them, for a period. Once this time elapses, I fear they will be selling them in the hoards. The shares owe them nothing and many will just cash in when the first opportunity presents.
Hivedoff...this is certainly one I've on the sidelines for ages with. It's just funny...some quite smart investing heads very bullish on it. Not the typical spiv institution but Chris Mills of Harwood and Andy Brough at Schroder's...usually listen quite hard at what they have to say. I was very bullish on it as although Rightmove has a network effect moat...it's also based on them being liked by the agents and it feels like OTM offers them potentially fantastic value. I'd have bought by my interpretation of last results was that they had not onboarded any new agents through H1 which really concerned me...
wish there was more debate on this board as find this a really interesting discussion...any thoughts from you?
These were trading higher two years ago than they are today...I see this potentially going the same way as Purplebricks. There just is not enough room in the market at present to sustain everyone and OTMP serves no discernible function for agents or the public. The acid test is if they were to go would anyone actually notice...I really don't think so.
Interesting that the spread remains 75 to 80.
The sold shares must have landed in safe hands.
As if by magic…the bail out appears to be on.
https://expert.onthemarket.com/software/products/
it was recently launched.
Glanty did the CRM for Hunters, which was very good according to my sources.
What is OTMP CRM package you refer to? Glanty??? Don’t even appear to have a website. Not sure many agents use it.
Rightmove have 16,000 agents, (down from over 17,000) OTM have considerably less, might be worth checking your facts before you start accusing others of being ignorant.
Bloomin spell checker on phone
Boomin was busted before it got in the left off.
Agents did not forgive the ex PB brothers
It has stopped burning cash, that should be.
"Zoopla realised this years ago, which is why they invested in agents software and websites etc. They have diversified to avoid the competition with Rightmove, OTMP simply do not have the funding to do this"
You're showing your ignorance.
Not only is OTMP making consistent profits, it has stopped burning.
With it's purchase of Glanty, it has an experienced team that has created a good software arm. It has a client base of around 16,000 agents to aim its new CRM and other solutions.
I predict a doubling of profits this time next year with a promise of dividends. Which should make the shares rocket from where they currently are.
The issue with OTM is that most agents are still getting this service for free or paying very little. It is considered a marketing extra to Rightmove and wholly unessential. If OTMP insist on charging all their agents a sensible fee they know that half of them will leave. This of coures is driven by the consumer, and the public do not look on OTM, they use Rightmove or Zoopla. OTMP will find it very difficult to increase revenue.
Furthermore, as this is totally dispensible, once the market starts to bite and agents need to cut back I fear OTMP will be one of the first overheads cut. Agents will remove listings from OTM unless the service is free, or close to free. This is exactly what has happened to Boomin, some agents signed up when it was free, but none were ever going to pay for it!
Zoopla realised this years ago, which is why they invested in agents software and websites etc. They have diversified to avoid the competition with Rightmove, OTMP simply do not have the funding to do this.
I see this company as a slow burner at best, and certainly a high risk in a recession.
When TecCRM contributes to full year earnings, I think we should get up over double eht's just been forecast for end Jan 2023 in Jan 2024.
https://total-market-solutions.com/2022/12/12-companies-to-follow-in-2023/
OTM software products are here, especially their cloud-based CRM.
https://expert.onthemarket.com/software/products/
It was connels that was sued
Interesting to note that Chancellors renewed with OTMP?
I thought they were not on with them after being sued by OTMP?
Or am I misremembering?
Need to check when I get time
Yes, a little underwhelming as you say.
Glanty will be a burden until the CRM can be released pushed.
CRM is where the future lies imo, with it being a fragmented market and good prospects.
But do I have the patience?
staff and marketing costs up by £2m !!
i do like OTMP and the CEO comes across well. However, i'm a little underwhelmed with today's figures.
Essentially revenues up £2m (good , double digit growth) but operating profit is down by £1m as costs have increased by £3m. This increase appears to be due to staff costs and marketing (c£m in total) and £500k on Glanty.
Cash is still good though and it is cash generative from operating activities.
So revenues up, cash being generated but due to acquisitions and other strategic initiatives profits are down.
Seems to be the same story we were told last year.
Ultimately it is the PBT figure that is key - not EBITDA or operating profit etc. PBT is positive at least but is very low and doesn't seem to be increasing any time soon
“…We will continue to deliver a cash genertive Business. We are very pleased with our progress. All we can do is be proud of what we do and do it differently…”
https://total-market-solutions.com/2022/06/onthemarket-plc-june-2022/
There is so much to go for in the fragmented CRM markets via Glanty and Teclet I am surprised it is taking so long to push forward with those.
As for the actual portal, it is improving albeit slowly.
Boomin was a busted flush, not going to take market share like some doom mongers were forecasting.
Adverts still lacklustre. OTMP needs to engage whoever did PB and Boomin adverts for some Ooomph.
decent results - we already knew the numbers.
My slight concerns are that the number of agents moving from free/discounted deals to fully paid contracts seems quite low. If we are c10% of RM and give these agents free shares i would have thought this should be a no-brainer. The conversion rate seems quite low IMHO.
Also marketing costs - increased 80% this year to c£10m. This is a lot of money to spend to increase revenues by 20%. RM and Zoopla are clearly market leaders and have deep pockets.