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2017 Global Real Estate Portal Report

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An evidence-based, 100+ slide presentation looking at the top real estate portals from around the globe. It gives an illuminating view of best practices, emerging trends, growth strategies, and common insights and challenges.

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2017 Global Real Estate Portal Report

  1. 1. 2017 Global Real Estate Portal Report September 2017 Prepared by Mike DelPrete
  2. 2. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  3. 3. A global snapshot This report looks at over a dozen of the top real estate portals from around the globe. This work requires data, so the analysis naturally focuses on portals where data is available (typically public companies). Looking at the best in the world gives us a clear window into best practices, emerging trends, growth strategies, and common insights and challenges. I am the former head of strategy at a top portal, and have spent the past two years independently focused on the world of real estate portals.
  4. 4. Real estate classifieds are big businesses around the globe, in terms of revenue and profit (EBITDA). Zillow ZILLOW Rightmove RIGHT MOVE SeLoger Trade Me REA IS24 SELOGER IS24 REA TMP Move Domain Hemnet Immoweb DOMAIN HEMNET IMMOWEB iProperty iPROPERTY MOVE IS24 MoveLEGEND REVENUE EBITDA
  5. 5. There are clear leaders in terms of overall revenue and profitability. $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 REA Group Immobilien Scout24 Rightmove SeLoger Domain Zoopla Property Services Zillow Group Immoweb Trade Me Property Hemnet Move Millions(USD) Full Year Financial Comparison Revenues EBITDA www.mikedp.com
  6. 6. Yearly revenue growth varies significantly, with impressive upside even in mature markets. 6.7% 7.3% 8.5% 9.0% 10.3% 14.0% 14.5% 15.9% 18.8% 31.3% 39.0% 45.0% 55.0% 0% 10% 20% 30% 40% 50% 60% Immobilien Scout24 Trade Me Property Zoopla Property Services Domain SeLoger REA Group Rightmove Immoweb Move Zillow Group Hemnet Ingatlan Otodom Year on Year Revenue Growth Struggling #2’s in their markets Global leaders U.S. Under new management Small base
  7. 7. 0% 10% 20% 30% 40% 50% 60% 70% 80% Zillow Group iProperty Hemnet Domain Zoopla Property Services SeLoger Immobilien Scout24 REA Group Trade Me Property Immoweb Rightmove EBITDA Profit Margins Dominant, well-run portals are incredibly profitable. Zillow is the outlier, investing to grow.
  8. 8. Another way to look at profitability is how much revenue each portal collects per $100 spent. Breakeven $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 Zillow Group Hemnet Domain Zoopla Property Services SeLoger Immobilien Scout24 REA Group Trade Me Property Immoweb Rightmove Revenue Collected per $100 Spent
  9. 9. Organizational efficiency is variable, as measured by revenue per employee. $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 Zoopla Property Services Zillow Group Trade Me Property REA Group Move Domain Hemnet Immoweb Immobilien Scout24 Rightmove Revenue per Employee Nearly double the lower end of the spectrum.
  10. 10. $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 Rightmove Zillow IS24 Revenue per Employee 2013 2014 2015 2016 www.mikedp.com The growth of revenue per employee is varied, with some slowing while others accelerate. Flat Slowing Accelerating Rightmove saw a big jump in employees during FY16, while IS24’s employee count has been dropping since 2015 (from 681 to 631 in Q2 2017).
  11. 11. Revenue per capita for the major global portals varies based on market maturity and structure. $0 $5 $10 $15 $20 $25 iProperty Otodom Ingatlan Move Zoopla Property Services Hemnet SeLoger Zillow Group Immoweb Immobilien Scout24 Rightmove Trade Me Property Domain REA Group Revenue (USD) per person Revenue per Capita $21.60 $0.08
  12. 12. Revenue per capita is much higher in some markets due to structural differences. $0 $5 $10 $15 $20 $25 iProperty Otodom Ingatlan Move Zoopla Property Services Hemnet SeLoger Zillow Group Immoweb Immobilien Scout24 Rightmove Trade Me Property Domain REA Group Revenue (USD) per person Revenue per Capita In Australia and New Zealand, home sellers pay their own marketing expenses, resulting in much higher revenues per listing relative to total population.
  13. 13. Revenue per capita in emerging and developing markets is well below more mature markets. $0 $5 $10 $15 $20 $25 iProperty Otodom Ingatlan Move Zoopla Property Services Hemnet SeLoger Zillow Group Immoweb Immobilien Scout24 Rightmove Trade Me Property Domain REA Group Revenue (USD) per person Revenue per Capita $0.08 – Southeast Asia $0.29 – Poland $0.80 – Hungary
  14. 14. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  15. 15. Generally, market-leading portals have between 1.5x – 3x the traffic of the runner-up portal. 3.0x 3.0x 2.7x 2.5x 2.4x 2.2x 1.7x 0.0x 1.0x 2.0x 3.0x 4.0x US Poland Belgium NZ AU UK GER Global Portal Traffic Leads www.mikedp.com
  16. 16. The larger the traffic multiple, the stronger the competitive position (with more pricing power). Yearly revenue growth of the leading portal is roughly correlated to having a larger traffic lead. 3.0x 3.0x 2.7x 2.5x 2.4x 2.2x 1.7x 0% 10% 20% 30% 40% 50% 60% 0.0x 1.0x 2.0x 3.0x 4.0x US Poland Belgium NZ AU UK GER Global Portal Traffic Leads Traffic Lead Yearly Revenue Growth www.mikedp.com
  17. 17. Globally, runner-up portals collect about 40% of the revenue of the leading portals in each market. 0% 10% 20% 30% 40% 50% $0 $100 $200 $300 $400 $500 $600 Australia (FY17) U.K. (FY16) U.S. (Q2 17) Ger (Q1 17) Millions(USD) Relative Revenues for Runner-up Portals Top Portal Runner-up Portal Revenue Ratio www.mikedp.com
  18. 18. Growth across three of Europe’s leading portals has been predictable and steady. 156 80 108 285 128 244 0 € 80 € 160 € 240 € 320 € IS24 SeLoger Rightmove Revenue Growth Across Europe 2011 2012 2013 2014 2015 2016 www.mikedp.com
  19. 19. And when we throw Zillow into the mix, we see what a growth monster it is! 156 80 108 99 285 128 244 720 0 € 200 € 400 € 600 € 800 € IS24 SeLoger Rightmove Zillow Revenue Growth Across Europe 2011 2012 2013 2014 2015 2016 www.mikedp.com Wow!
  20. 20. ARPA growth is consistent between portals, driven from price rises and premium offerings. $0 $200 $400 $600 $800 $1,000 $1,200 2012 2013 2014 2015 2016 Average Monthly Revenue per Advertiser (USD) Zoopla Rightmove Zillow Group Immobilien Scout24 SeLoger Immoweb www.mikedp.com Up around 12%-15% each year
  21. 21. But REA Group in Australia is a world-leader, effectively in a league of its own. $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2012 2013 2014 2015 2016 Average Monthly Revenue per Advertiser (USD) Zoopla Rightmove Zillow Group REA Group Immobilien Scout24 SeLoger Immoweb www.mikedp.com
  22. 22. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  23. 23. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Rightmove REA Group Trade Me Property Zillow Scout24 Zoopla % Revenue from Agents www.mikedp.com Major portals generate most of their revenue through real estate agents. Other revenue sources include direct listings, display ads, new construction, data sales, and ancillary revenue streams.
  24. 24. The more revenue that comes from agents, the more difficult it is for the portal to disrupt them. 0% 20% 40% 60% 80% 100% Zillow's Revenue Sources Premier Agent Mortgages Other RE Display 0% 20% 40% 60% 80% 100% Zoopla's Revenue Sources Agents New Homes Other Property Comparisons 0% 20% 40% 60% 80% 100% REA Groups's Revenue Sources (AU) Agents Media display & other
  25. 25. Many agents in the U.S. are worried Zillow will disrupt them, but it’s clearly not diversifying. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Zillow's % Revenue from Agents www.mikedp.com It is exceedingly unlikely that Zillow would put 70 percent of its revenue at risk.
  26. 26. However, Zoopla in the U.K. is has clearly diversified its revenue sources. 0% 10% 20% 30% 40% 50% 60% 70% 80% FY14 FY15 FY16 H1 17 Zoopla's % Revenue from Agents www.mikedp.com While Zoopla is better positioned in terms of revenue diversification, agents are still a big customer.
  27. 27. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  28. 28. Driving premium revenues Premium = agents paying more for enhanced exposure. They typically compete against each other for enhanced placement of their listings and agent branding. Premium revenues are above and beyond subscription revenues for listings.
  29. 29. Revenue from premium features varies wildly at different portals. 0% 20% 40% 60% 80% 100% REA Group Domain Rightmove Trade Me IS24 Percentage of Revenues from Premium www.mikedp.com Just starting
  30. 30. Rightmove shows a steady drive towards higher customer spend each month. Driven by price rises and premium feature adoption.
  31. 31. $55 $56 $93 $95 $407 $482 $0 $100 $200 $300 $400 $500 $600 $700 FY2016 FY2017 Millions(AUD) REA Group's Australian Revenue Subscription revenue Media display & other Listing depth revenue www.mikedp.com All of REA Group’s revenue growth is coming from premium and depth products. Flat
  32. 32. REA has mastered the art of the upsell, pushing customers to more expensive premium products.
  33. 33. Premium products include bigger photos, better placement, and prominent agent branding.
  34. 34. Pricing for REA’s premium products in Australia’s major cities can be…quite expensive. Remember, the average revenue per advertiser is upwards of $3,000 AUD.
  35. 35. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  36. 36. Ancillary revenue streams: Lead generation and mortgages Lead generation is one of the largest ancillary revenue streams for real estate portals. This is especially the case with world leaders in mature markets. #1 in U.S. #2 in U.K. #1 in Australia
  37. 37. A leader in the space, Zillow has consistently grown its mortgage lead gen revenues. 2016 Revenue contribution Mortgages revenue
  38. 38. Mortgage revenues grew while the number of leads dropped, the result of an improved product. Higher quality leads = more valuable leads $44 $71 46.8 29.9 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 0 20 40 60 80 FY15 FY16 Millions Zillow's Mortgage Business Revenue Leads ARPL www.mikedp.com Average Revenue Per Lead (ARPL)
  39. 39. Zoopla’s comparison business continues to grow both revenues and leads, while driving ARPL up. £80 £111 24.8 30.3 £0.00 £1.00 £2.00 £3.00 £4.00 £5.00 0 30 60 90 120 FY15 FY16 Millions Zoopla's Comparison Business Revenue Leads ARPL www.mikedp.com
  40. 40. $2.37 $4.76 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 FY15 FY16 HY17 Average Revenue per Lead (USD) Zillow Zoopla www.mikedp.com Both businesses are improving the average revenue per lead, but it’s still a volume game. Up 152% Up 14%
  41. 41. In Australia, REA Group acquired a majority stake in mortgage broking business Smartline. REA Group announced in June 2017 that it had taken an 80% stake in mortgage broking business Smartline for $67 million AUD.
  42. 42. Zillow REA Group REA Group is projecting mortgage revenues as a percent of total on par with that of Zillow. 8% 5% $71 million in FY 2016 $26-$30 million in FY 2018 (Company estimates)
  43. 43. The leaders in the field offer deep integrations across their sites, critical to their success.
  44. 44. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  45. 45. Zillow’s expenses have consistently outstripped revenues. It’s investing for growth. $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2012 2013 2014 2015 2016 2017F Millions Zillow's Yearly Revenue and Expenses Revenue Expenses
  46. 46. $0 $50 $100 $150 $200 $250 $300 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Millions Zillow's Quarterly Revenue and Expenses Revenue Expenses Expenses came in line with revenues for three quarters, but are back up in Q2 2017.
  47. 47. After some bumps, quarterly revenues are consistently rising. 12.0% 1.3% 8.6% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% $0 $50 $100 $150 $200 $250 $300 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Millions Quarterly Revenue Growth Revenue Quarterly Growth www.mikedp.com
  48. 48. Zillow’s growth is being driven by its premier agent program. $0 $100 $200 $300 $400 $500 $600 $700 FY12 FY13 FY15 FY16 Millions Zillow's Revenue Sources Premier Agent Other Mortgages Display www.mikedp.com
  49. 49. The premier agent program pits agent against agent, delivering leads to the highest bidders.
  50. 50. Zillow’s ancillary revenue lines are seeing mortgages gain while display falls away. $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 FY12 FY13 FY15 FY16 Millions Zillow's Ancillary Revenue Growth Mortgages Display www.mikedp.com Mortgages product = deeper integration.
  51. 51. Zillow’s Adjusted EBITDA does not paint an accurate picture of the business’s performance. Zillow’s Adjusted EBITDA excludes stock-based compensation (SBC) expense. Excluding this cost paints an inaccurate picture of the business’s performance and profitability; my analysis adds it back in. “If compensation isn't an expense, what is it? And, if real and recurring expenses don't belong in the calculation of earnings, where in the world do they belong?” – Warren Buffett Tech giants like Amazon and Facebook started including stock-based compensation in their results. For more, check out: Amazon, Facebook Admit Stock Compensation Is A Normal Cost.
  52. 52. To arrive at a true EBITDA figure for FY16, I’ve backed out litigation expense and included SBC. $14.8 $130.0 $106.9 $37.9 $0 $40 $80 $120 $160 Adjusted EBITDA Back out litigation expense Stock-based compensation EBITDA Adjusted EBITDA -> EBITDA
  53. 53. Zillow has a high SBC component compared to global peers (but not unusual for U.S. firms). 0% 2% 4% 6% 8% 10% 12% 14% Zillow Group Zoopla Rightmove Immobilien Scout24 REA Group Stock-based Compensation as % of Revenue www.mikedp.com Down from 16% in FY15
  54. 54. How big can Zillow become? It likes to use the following chart in investor presentations. The value of a business shouldn’t be tied to the overall commission pool, but rather how well the business is able to provide value and monetize its customers.
  55. 55. Zillow’s revenue as a percentage of the total commission pool is indeed small… 10.6% 6.0% 5.5% 4.3% 2.9% 1.4% 0% 2% 4% 6% 8% 10% 12% REA Group Rightmove Zoopla Immobilien Scout24 Trade Me Zillow Revenue as % of Commission Pool www.mikedp.com
  56. 56. …but its enterprise value is a whopping 161 times greater than its non-adjusted EBITDA. 13x 18x 8x 7x 21x 24x 21x 161x 0x 40x 80x 120x 160x 200x REA Group Rightmove Zoopla Zillow Enterprise Value Multiples EV/Revenue EV/EBITDA www.mikedp.com
  57. 57. $0 $5 $10 $15 $20 $25 iProperty Otodom Ingatlan Move Zoopla Property Services Hemnet SeLoger Zillow Group Immoweb Immobilien Scout24 Rightmove Trade Me Property Domain REA Group Revenue (USD) per person Revenue per Capita Zillow’s revenue per capita is in line with global peers, with modest upside. How big can it get? Peer group excludes Australia and New Zealand, where home sellers pay their own marketing (resulting in overly high ARPA), and emerging markets. If Zillow’s revenue per capita increased to $4, its revenues would be $1.25 billion.
  58. 58. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  59. 59. $0 $50 $100 $150 $200 $250 $300 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Millions U.S. Portal Revenue Growth Zillow Realtor.com www.mikedp.com Both U.S. portals are growing revenues, but Zillow is growing faster (and from a larger base). Up 58% Up 24%
  60. 60. Move revealed adjusted EBITDA in January-March 2017, showing the exact same margin as Zillow. $100 $246 $22 $55 $0 $100 $200 $300 Move Zillow Millions Q1 2017 Results Revenue Adjusted EBITDA 22% margin 22% margin
  61. 61. Zillow is maintaining a strong lead in traffic over Realtor.com, and it’s not budging. 3.1x 3.2x 3.1x 3.2x 3.1x 3.2x 3.0x 3.1x 0x 1x 2x 3x 4x 0 40 80 120 160 200 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 AverageMonthlyUniques(millions) Top Portal Traffic Lead in U.S. Traffic Lead Zillow Realtor.com www.mikedp.com
  62. 62. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  63. 63. Competing strategies in the U.K.: Rightmove and Zoopla More than any other real estate portals in the world, Rightmove and Zoopla have adopted divergent strategies in the U.K. Rightmove is narrowly focused and Zoopla is broadly diversified. But both are succeeding in different ways.
  64. 64. Zoopla’s strategy is geared towards diversification and creating a “huge cross-sell opportunity.”
  65. 65. While Rightmove is solely focused on being the best marketplace to advertise property.
  66. 66. Rightmove has delivered consistent revenue growth, but Zoopla is making impressive gains. £0 £50 £100 £150 £200 £250 £300 2013 2014 2015 2016 2017F Millions Rightmove vs. Zoopla Revenue Rightmove Zoopla www.mikedp.com
  67. 67. Rightmove is growing revenue through high- margin portal advertising products. 0% 10% 20% 30% 40% 50% 60% 70% 80% £0 £50 £100 £150 £200 £250 2013 2014 2015 2016 Millions Rightmove's Revenue Growth Portal New Homes Other EBITDA % www.mikedp.com
  68. 68. While Zoopla’s growth is coming from ancillary revenue streams with lower profit margins. 0% 10% 20% 30% 40% 50% 60% £0 £40 £80 £120 £160 £200 £240 2013 2014 2015 2016 Millions Zoopla's Revenue Growth Portal Other Property Comparison EBITDA % www.mikedp.comwww.mikedp.com
  69. 69. 52 13 28 57 30 111 £0 £40 £80 £120 £160 £200 Portal Other Property Comparison Millions Zoopla Revenue 2013 2014 2015 2016 www.mikedp.com Zoopla’s property portal revenue is effectively flat. The core portal business is barely growing. New revenue streams Ancillary Flat
  70. 70. Partially a result of inventory levels never fully recovering since OnTheMarket’s entry in 2015. Used with permission from Exane BNP Paribas Research Zoopla’s Inventory Levels
  71. 71. Zoopla diversified by spending approximately £450 million on acquisitions since 2015. Company Purchase Price Acquisition Date Products & Services uSwitch £160 million April 2015 Comparison services Property Software Group £75 million April 2016 Estate agency back office systems Technicweb £7 million (estimated) November 2016 Designing websites for the property sector Hometrack £120 million January 2017 Data provider to lenders, investors and home buyers Expert Agent £7 million (estimated) March 2017 Estate and letting agency software provider Ravensworth unknown September 2017 Print marketing Money.co.uk £80 million September 2017 Financial products comparison.
  72. 72. Zoopla’s seven acquisitions will generate around 75% of total group revenues in 2017. These seven acquisitions will generate around £185 million in annualized revenue in 2017, compared to their aggregated purchase price of around £450 million. Annualized estimates based on HY17 results. Zoopla’s strategy–born of necessity–is paying dividends. uSwitch PSG Technicweb Expert Agent Hometrack Money.co.uk Portal Zoopla's Revenue Breakdown
  73. 73. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  74. 74. Portal homepage analysis A portal’s homepage is a reflection of its strategy. Reviewing the designs of each— what they include, exclude, and where the focus lies—gives us insight into what each portal deems important. These interfaces are the result of years of research, learning, and iteration around creating the ideal visitor experience.
  75. 75. Rightmove’s homepage—like its strategy—is simple and focused.
  76. 76. Zoopla stays focused on property search, despite having a wealth of related services.
  77. 77. Realestate.com.au keeps it simple, but also features home design content.
  78. 78. Domain offers the most simple search experience across the major portals.
  79. 79. Zillow keeps it simple with a straight-forward home search.
  80. 80. Trulia highlights adjacent property data through its map overlays.
  81. 81. Realtor.com highlights its mortgage lead generation product.
  82. 82. ImmobilienScout24 stays focused on search, with a call-out to potential listing customers.
  83. 83. Like the other global leaders, SeLoger is focused on a straightforward search experience.
  84. 84. Visually cluttered, Trade Me Property attempts to highlight home valuations amongst banner ads.
  85. 85. Like Trade Me, Schibsted’s leboncoin is a horizontal with a strong real estate section.
  86. 86. Another leading horizontal, the Russian portal Avito, also has a strong real estate section.
  87. 87. Avito, the horizontal, runs a real estate vertical, Domofond, to provide a tailored experience.
  88. 88. A review of the portal homepages reveals several common trends. • Almost all of the portals are laser-focused on a simple search experience. • All of the portals have links to find agents. • Only the U.S. portals include mortgage links. • Only the U.K. portals include overseas property links. • U.K., Australia, and New Zealand have links to commercial property. • All portals include links to home valuations • Several portals include links to home design, inspiration or real estate news.
  89. 89. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  90. 90. Rightmove is launching data-driven products to agents that drive efficiency and transparency.
  91. 91. Trade Me has launched an agent hub and property insights (valuation and sales history).
  92. 92. REA is innovating in emerging technologies and launching products across all customer groups.
  93. 93. Zoopla is launching new products across the property value stream.
  94. 94. In France, SeLoger is focused on products and services underpinned with data.
  95. 95. Zillow is launching products to help its agent customers manage leads through the platform.
  96. 96. Move has recently launched ”My Home”–a data- driven home portal–and a mobile AR app.
  97. 97. Mobile usage continues to rise, leading to a mobile-first product development strategy. 0% 20% 40% 60% 80% 100% Trade Me Property Rightmove Zoopla Immobilien Scout24 Zillow Proportion of Mobile Visits www.mikedp.com
  98. 98. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  99. 99. Five years of M&A activity This M&A analysis covers investments and acquisitions made by seven of the top global portals between 2012 and 2017. The data sources are public records and financial reports. In some cases, deal size estimates have been made. Twenty-nine deals are included in this analysis, excluding Zillow’s 2015 acquisition on Trulia for $2.5 billion.
  100. 100. The largest M&A activity occurred in 2015. $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 2012 2013 2014 2015 2016 2017 Millions Total M&A Over Time www.mikedp.com
  101. 101. For the scope of this analysis, I’ve defined the following categories… Category Description Domestic Building domestic market share. International Expansion beyond the home country. Ancillary New revenue streams related to property advertising (ex: utility switching, mortgages, rental applications). Data Data collection, management, and presentation tools, and monetization thereof. Agents Tools and products for real estate agents (that they pay for). Consumer Products and technologies designed to directly improve the consumer experience on the real estate portal (ex: improved search, virtual home decorating).
  102. 102. Here we have the total number of investments and acquisitions between 2012-2017. Company Domestic International Ancillary Data Agents Consumer Zillow 4 1 2 1 1 REA Group 3 3 Zoopla 2 1 4 Rightmove 1 Move 2 1 Immobilien Scout24 3 2 1 Domain 3 1
  103. 103. Total deal flow (where known) from investments and acquisitions between 2012-2017. Company Domestic Inter- national Ancillary Data Agents Consumer Total Zillow $85M $17M $7M $108M $10M $227M REA Group $749M $32M $781M Zoopla $317M $159M $118M $594M Rightmove $3M $3M Move $22M $28M Immobilien Scout24 $3M $66M $37M $105M Domain $12M $24M $44M
  104. 104. Zillow has a varied approach to M&A, focused on building domestic market share and agent tools. 0 1 2 3 4 $0 $30 $60 $90 $120 Domestic International Ancillary Data Agents Consumer Numberofdeals Millions Zillow's 5-year M&A Activity Investment total Number of deals www.mikedp.com
  105. 105. REA Group has invested massively in international expansion (India, U.S. and Southeast Asia). 0 1 2 3 4 $0 $200 $400 $600 $800 Domestic International Ancillary Data Agents Consumer Numberofdeals Millions REA Group's 5-year M&A Activity Investment total Number of deals www.mikedp.com
  106. 106. Zoopla has been focused on ancillary and value- added services for estate agents. 0 1 2 3 4 $0 $90 $180 $270 $360 Domestic International Ancillary Data Agents Consumer Numberofdeals Millions Zoopla's 5-year M&A Activity Investment total Number of deals www.mikedp.com
  107. 107. Rightmove made its first acquisition in 2016 in support of its agent-focused strategy. 0 1 2 3 4 $0 $10 $20 $30 $40 Domestic International Ancillary Data Agents Consumer Numberofdeals Millions Rightmove's 5-year M&A Activity Investment total Number of deals www.mikedp.com
  108. 108. Move has spent modestly in support of additional products and services for agents. 0 1 2 3 4 $0 $10 $20 $30 $40 Domestic International Ancillary Data Agents Consumer Numberofdeals Millions Move's 5-year M&A Activity Investment total Number of deals www.mikedp.com
  109. 109. IS24 has invested internationally, built domestic market share, and supported its agent customers. 0 1 2 3 4 $0 $20 $40 $60 $80 Domestic International Ancillary Data Agents Consumer Numberofdeals Millions IS24's 5-year M&A Activity Investment total Number of deals www.mikedp.com
  110. 110. Domain has invested in ancillary revenue streams and data acquisition. 0 1 2 3 4 $0 $10 $20 $30 $40 Domestic International Ancillary Data Agents Consumer Numberofdeals Millions Domain's 5-year M&A Activity Investment total Number of deals www.mikedp.com
  111. 111. Looking at total M&A expenditure as a percentage of revenue shows relative activity levels. 1% 7% 27% 28% 37% 172% 227% 0% 50% 100% 150% 200% 250% Rightmove Move Zillow Domain ImmobilienScout24 REA Group Zoopla M&A as a % of FY16 Revenue www.mikedp.com Remember: this excludes the massive Trulia merger.
  112. 112. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  113. 113. Exec team structures A lot can be said for how a company is organized, especially at the top. The composition of the exec team gives us a window inside a company’s strategy, and is where the rubber hits the road when it comes to execution and responsibility.
  114. 114. 11 10 9 9 9 8 4 0 2 4 6 8 10 12 REA Group Zoopla Trade Me Zillow Move Domain Rightmove Executive Team Sizes www.mikedp.com In general, exec team sizes are quite large and reflective of growth strategy complexity. Most active in M&A = biggest exec teams to support.
  115. 115. REA is structured along functional and divisional lines, and has roles focused on innovation & int’l. REA Group’s Organizational Structure • CEO • CFO • Chief Executive Officer, REA Group Asia • Chief Inventor • Chief Engineer • CMO • Executive General Manager, Commercial & Developer • Executive General Manager, Residential • Executive General Manager, Media • Executive General Manager, Consumer Experiences • General Counsel and Company Secretary Domain Group’s Organizational Structure • CEO • CFO • COO • Chief Commercial Officer • Chief Editorial & Marketing Officer • Group Director, Domain Media • CTO • Managing Director, Domain Victoria The only portal with an innovation-focused role on the exec team. Divisional structure International
  116. 116. Rightmove keeps it simple, while Zoopla’s structure supports its diversification strategy. Zoopla’s Organizational Structure • CEO • CFO • Managing Director, Comparison • Managing Director, Property • Managing Director, Data • CMO • CPO • CTO • Chief Talent Officer • Chief Strategy Officer Rightmove’s Organizational Structure • CEO • Finance Director • Head of Agency • Head of Customer Experience Data is quite important. Super simple, and focused on customers. Reflective of Zoopla’s focus on M&A activity.
  117. 117. In the U.S., Zillow and Move keep relatively straightforward structures (with a data focus). Move’s Organizational Structure • CEO • CFO • CPO • CMO • Executive Vice President, Industry Platforms • Executive Vice President, Sales • Executive Vice President, General Counsel and Secretary • Senior Vice President, Business Development and Strategy • Chief Economist Zillow Group’s Organizational Structure • CEO • CTO • COO • Chief Analytics Officer • CFO • Chief Industry Development Officer • Chief Business Officer • Chief People Officer • CMO Reflective of the importance of data (for Zestimate valuations). Industry outreach is critical in the U.S. Data
  118. 118. Global Real Estate Portal Report 2017 A global snapshot Growth and competition Portal revenue streams Driving premium revenues Ancillary revenue streams: Lead generation and mortgages A deeper look at Zillow The U.S. market: Zillow vs. Move Competing strategies in the U.K.: Rightmove and Zoopla Portal homepage analysis Themes in product development Five years of M&A activity Exec team structures
  119. 119. Mike is a strategic advisor and global expert in real estate tech. He is a former tech entrepreneur and head of strategy at a major real estate portal. He has travelled the world talking to and working with leading property portals and real estate tech startups, gathering first-hand knowledge and insights on industry trends and themes. He advises corporates, works with startups, mentors founders and executives, and works on challenging entrepreneurial projects. • www.mikedp.com • Mailing list • mdelprete@gmail.com About the author: Mike DelPrete
  120. 120. Mike is internationally recognized as an expert and thought-leader in real estate tech. His evidence-based analysis is widely read by global leaders, and he is a sought-after strategy and new ventures consultant. He also brings deep operational experience as the founder and CEO of a 40-person tech company and head of strategy for a $2 billion online marketplace and classifieds business. Consulting and advisory services Strategy Consulting Market Scans Workshops & Presentations Investment Advising Read more about the services I offer or drop me a line at mdelprete@gmail.com to tell me about what you're doing and how we might work together.
  121. 121. Some of my other analysis and writing
  122. 122. A note on data sources The data sources primarily include company reports, investor presentations, earnings calls (and transcripts), and supporting documentation. All information used is in the public domain. No confidential information has been used in this report. Some data has been estimated from financial statements and known data points. Copyright © Mike DelPrete

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