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(Alliance News) - Rightmove's failure to strike a new deal with OpenRent is disappointing, but is probably not an indicator of a harsher competitive environment, an analyst on Tuesday said.
The Milton Keynes, England-based online property portal said market conditions in the lettings market remain "fluid", as it disclosed the contract with lettings agent OpenRent will not be renewed.
Rightmove said the deal with OpenRent will end at the start of September after they failed to agree renewal terms.
Rightmove said OpenRent accounted for less than 8% of its lettings listings in July.
In response, Rightmove shares were down 5.1% to 520.00 pence in London on Tuesday morning.
Rightmove reiterated its 2024 revenue and margin guidance. It continues to anticipate revenue growth of 7% to 9% and an underlying operating margin of 70%. Rightmove said these are both in line with market expectations.
But it cautioned "market dynamics - within lettings in particular - are fluid".
"While we remain confident of delivering revenue and margin in line with the guidance above, the precise mix of membership and [average revenue per account] may vary. Our current estimate is that membership will decline by up to 3% year-on-year, with a year-on-year increase in ARPA of GBP90 to GBP100."
The firm is facing increased competition in the UK following CoStar Group Inc's acquisition of OnTheMarket PLC for GBP99 million, completed in December last year.
Panmure Liberum analyst Sean Kealey said the news will play into fears that Rightmove's pricing power is weakening.
However, he explained it is important to note that OpenRent does not list on OnTheMarket, so this is probably not an indicator of a tougher competitive environment.
He highlighted two further things important of note. First, OpenRent is not a traditional lettings agent and so actually competes with Rightmove's traditional customer base. Arguably, OpenRent's delisting is therefore a positive for Rightmove's core agent customers, Kealey said.
He also pointed out the news has been in the industry press over the past few days.
"Overall, the market knows that lettings agents need Rightmove less than others and are more likely to opt not to use their services, and although disappointing, we're not hugely concerned by this," he added.
By Jeremy Cutler, Alliance News reporter
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