Rightmove and their Pricing effect on estate agents, is it sustainable?
By Handzalah / Black Swan Research 23 January 2026, 6:03am MYT
Hello, today I want to talk a little about this new fund I discovered. The fund in question is Finsbury Fund. The fund has been in operation for ~100 years. Nick Train, the current fund manager looks for undervalued quality companies within the UK stock exchanges.
One investment idea which intrigued me from the financial overview was Rightmove with its +60% operating margins. If I were to name many other company with more operating margins I can only think of maybe 2. Interactive brokers and Nvidia. The point is, such margins warrants further investigation.
Firstly, who is Rightmove and what services do they provide? They are the #1 UK property portal. If you are an estate agent looking for leads to sell your property, Rightmove is quite a necessary expenditure. Rightmove offers the most eyeballs for your property listing. To put it plainly, they have ~80% of market share in property portal time spent by consumers (looking to rent or buy a property) & members (estate agents that make commission from sale of property or letting agents).
They charge members not consumers. Additionally, they provide a tiered subscription model for their membership subscriptions. This offers additional advertisement value to estate agents and letting agents that have more capacity to pay larger sums to Rightmove.
They have vast amount of data which is also published publicly (however more advanced data are charged). This amount of data is one of the central reasons why Finsbury’s fund is invested. Nick Train believes that the value of their data on property market’s demand and supply is valuable. I personally also agree, however their central business of listing properties is on its own very very attractive as an investment. They require very capital light capital expenditures. And they appear to be very sticky in terms of subscription retention, with around 90% retention rate.
Now I want to explain how they make a bulk of their growth in revenues. They have this term called ARPA, or average revenue per advertiser. This is, from my surface level understanding, their main growth driver in the recent years. Their members growth, or numbers of estate agency branches has been stagnant or slightly declining due to consolidation (which appears to be a structural trend). To sustain the growth in revenues of, say 7% to 8%, they require to upsell their existing customers, the members. Their growth in ARPA has to equal to around 7% to 8% to sustain the revenue growth. Therefore, over time assuming the growth of commission revenues received by estate agents are below 7% to 8% (normally the growth in commission is around an estimated 4% to 5% over the long-term due to increased average property prices in UK —-> Estate Agent’s revenue = Average Commission % of property sale value * Average Value of UK Properties), then the estate agents spend on Rightmove’s subscription will increase relative to their revenues. Below will be the breakdown,
- Estate agents’ average revenue across UK
- Remember, in per month basis, this is the formula, <Estate Agent’s revenue per month = Average Commission % of property sale value * Average Value of UK Properties * Average Number of Properties per Month>
- Average UK estate agent’s commission = 1.4% of property’s sale value
- Average value of UK properties = £ 358,138
- Average number of properties sold within a month = 5 properties
- (1.4% * £ 358,138 * 5) = £ 25,070 revenue per month on average
- Average ARPA (average revenue per advertiser)
- According to latest data released by Rightmove, the ARPA is £ 1,524 per month
- Average spend of estate agents to Rightmove as a percentage of estate agents’ average revenues
- Per month average estate agent revenues = £ 25,070
- Per month ARPA ( average £ spent per estate agent on Rightmove’s listing services) = £ 1,524
- Average spend of estate agents to Rightmove as a % of estate agents’ average monthly revenues = (£ 1,524 / £ 25,070) = 6.08% of estate agents average revenues
- Assume ARPA grows at 8% for the next ten years
- ARPA at year 0 = £ 1,524
- ARPA at 10th year = £ 1,524*(1.08)(10) = £ 3,290 per month
- Assume growth in estate agents’ income equals to long-term average UK properties growth in value
- Average UK property value increase CAGR = 4.5%
- Plugging the new numbers into this, <Estate Agent’s revenue per month = Average Commission % of property sale value * Average Value of UK Properties * Average Number of Properties per Month>
- Average property prices on year 0 = £ 358,138
- Average property prices on 10th year = £ 358,138 * (1.045)(10) = £ 556,177
- Average estate agents’ revenue per month at 10th year = (1.4% * £ 556,177 * 5) = £ 38,932
- Average spend of estate agents to Rightmove as a percentage of estate agents’ average revenues at the 10th year assuming previous growth rates in ARPA and estate agents’ revenues
- ARPA at 10th year = £ 1,524*(1.08)(10) = £ 3,290 per month
- Average estate agents’ revenue at 10th year = (1.4% * £ 556,177 * 5) = £ 38,932 per month
- Average spend of estate agents to Rightmove as a % of estate agents’ average monthly revenues at the 10th year = (£ 3,290 / £ 38,932) = 8.45% of estate agents average revenues
Conclusion
Therefore, the increase in spend on Rightmove as percentage of estate agents’ revenue increases from 6.08% to 8.45%. The question is if ARPA growth is sustainable at 8%. This can attract multiple lawsuits for excessive charges, due to its hold in market share. Recently, there was a lawsuit amounting to £ 1 billion if successful, which meaningfully dents the valuation of Rightmove which as of current is worth (market cap) around £ 4 billion. This is my main concern for the investment thesis within Rightmove, however there has been some saying that prior to Rightmove, listings were charged per week on the newspaper. The charge per week for listing their properties on the newspaper, exceeds today’s charges (adjusting the value of the GBP to today’s value). Therefore, in my opinion Rightmove might be an attractive research for investment purposes.
Wow, very nicee 👍