ii view: Rightmove battling tough economics and AI

Trading update from 1 July to 31 October

• Expects full-year revenue growth of 6-7%, within previous guidance of 6-8%
• Now expects growth in annual adjusted earnings per share of at least 7%, up from a previous at least 5%

Chief executive Johan Svanstrom said:

"Our core membership remains stable with strong partner retention levels. This business resilience and the debt facility we announced at the time of our interim results have allowed us to increase shareholder distributions significantly.

"This has been a quarter of strong strategic progress, in which we delivered innovation at our fastest-ever pace, compounding on top of our trusted brand and powerful data.  After a meaningful step up in capability, we have a well-invested, AI-ready platform.”

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ii round-up:

Property advertiser Rightmove (LSE:RMV) today reduced Average Revenue Per Advertiser (ARPA) estimates given slow demand from housebuilders, but raised earnings per share estimates, supported by ongoing share buybacks.

Expected annual growth in ARPA of £100-110 is down from a previous £110-120, leaving the estimated gain in 2026 revenues at 6-7%, and below a previous high end forecast of 8%. A further £80 million of share buybacks potentially assists growth in full-year earnings of around 7%, up from a previous prediction of 5%.  

Shares in the FTSE 100 company fell 1.5% in UK trading having come into this latest news up by around 5% so far in 2026. That’s similar to the FTSE 100 index over that time. Fellow online marketer Autotrader Group (LSE:AUTO) has fallen 5% year-to-date.

Property professionals, such as estate agents, lettings agents and new home builders, pay Rightmove a subscription fee to advertise their properties on its website.

Flagging a challenging and uncertain economic backdrop, Rightmove pointed to expected growth in 2027 revenues similar to that forecast for 2026.

Ongoing investment in AI is expected to support product launches and productivity gains in 2027, pushing adjusted operating profit growth of between 4% and 7%.

Current tools adding to Rightmove’s appeal with estate agents include an online valuation facility, as well as a relatively new call transcription product, which has taken over two million live conversations since launch. 

Rightmove delivered a significant jump in IT developments during the period and remains on track to announce and scale new growth initiatives in 2027 and 2028.    

Full-year results to 31 December are likely to be announced late February.  

ii view:

Rightmove benefits from four petabytes (PB) of historic and live data, all stored on its unified and cloud enabled data platform. Employee numbers total less than 1,000. Agency related services generated most sales during 2025 at 72%, followed by new home developer demand at 18%. Other businesses such as commercial property, data services, overseas listings, and third-party advertising accounted for the balance of 10%.  

For investors, interest rate uncertainty and a delay in launching the latest first-time buyer support scheme until the spring may affect demand for home developer advertising. The exact impact of AI and the benefits it could provide rivals or even new start-ups warrant consideration. Rightmove’s own AI investment is likely to drag on earnings, at least near term, while  dividend yield of under 3% compares to yields of over 5% at property owners and real estate investment trusts British Land Co (LSE:BLND) and Land Securities Group (LSE:LAND).

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To the upside, investment in AI is being made for the benefit of the medium to longer term. Total shareholder returns of more than £400 million are expected to be made between 31 July 2026 and 31 July 2027, including £80 million of share buybacks by late December. Sales in areas of growth away from its core business, such as mortgages, grew the most over its last financial year, while a takeover approach by Australian concern REA Group in 2024 is not to be forgotten.  

In all, while more cautious investors may demand evidence of AI success before dipping in, Rightmove’s dominant market position will likely keep it on investor radars.

Positives:

• Strong market position
• Diversity of customers

Negatives:

• Uncertain economic outlook
• Costs generally remain elevated

The average rating of stock market analysts:

Hold