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2017 Global Real Estate
Portal Report
September 2017
Prepared by Mike DelPrete
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
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.
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
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
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
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.
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
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.
$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).
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
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.
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
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
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
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
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
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
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!
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
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
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
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.
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
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.
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.
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
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.
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
Rightmove shows a steady drive towards higher
customer spend each month.
Driven by price rises and
premium feature adoption.
$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
REA has mastered the art of the upsell, pushing
customers to more expensive premium products.
Premium products include bigger photos, better
placement, and prominent agent branding.
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.
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
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
A leader in the space, Zillow has consistently
grown its mortgage lead gen revenues.
2016 Revenue
contribution
Mortgages revenue
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)
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
$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%
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.
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)
The leaders in the field offer deep integrations
across their sites, critical to their success.
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
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
$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.
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
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
The premier agent program pits agent against
agent, delivering leads to the highest bidders.
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.
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.
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
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
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.
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
…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
$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.
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
$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%
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
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
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
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.
Zoopla’s strategy is geared towards diversification
and creating a “huge cross-sell opportunity.”
While Rightmove is solely focused on being the
best marketplace to advertise property.
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
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
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
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
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
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.
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
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
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.
Rightmove’s homepage—like its strategy—is
simple and focused.
Zoopla stays focused on property search, despite
having a wealth of related services.
Realestate.com.au keeps it simple, but also
features home design content.
Domain offers the most simple search experience
across the major portals.
Zillow keeps it simple with a straight-forward
home search.
Trulia highlights adjacent property data through
its map overlays.
Realtor.com highlights its mortgage lead
generation product.
ImmobilienScout24 stays focused on search, with
a call-out to potential listing customers.
Like the other global leaders, SeLoger is focused
on a straightforward search experience.
Visually cluttered, Trade Me Property attempts to
highlight home valuations amongst banner ads.
Like Trade Me, Schibsted’s leboncoin is a
horizontal with a strong real estate section.
Another leading horizontal, the Russian portal
Avito, also has a strong real estate section.
Avito, the horizontal, runs a real estate vertical,
Domofond, to provide a tailored experience.
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.
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
Rightmove is launching data-driven products to
agents that drive efficiency and transparency.
Trade Me has launched an agent hub and
property insights (valuation and sales history).
REA is innovating in emerging technologies and
launching products across all customer groups.
Zoopla is launching new products across the
property value stream.
In France, SeLoger is focused on products and
services underpinned with data.
Zillow is launching products to help its agent
customers manage leads through the platform.
Move has recently launched ”My Home”–a data-
driven home portal–and a mobile AR app.
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
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
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.
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
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).
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
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
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
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
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
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
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
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
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
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.
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
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.
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.
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
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.
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
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
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
• mdelprete@gmail.com
About the author: Mike DelPrete
Hungry for more? The AIM Group’s Real Estate
Annual is coming soon.
The global battles raging in the real estate classifieds space have never been as dynamic and
exciting than today. In the U.S., Zillow Group is in a pitched fight against the industry; in
France, the top horizontal player is fighting against a reinforced vertical; in the U.K.,
competing growth strategies are center stage; and in Australia, a spun-out Domain relishes
the challenge to take on the dominant market leader.
Some of the stories in this year’s real estate annual:
• The battle for New York: Zillow’s StreetEasy vs. the industry
• Rightmove and Zoopla in the U.K.: Different strategies, similar successes
• Australia-based Domain relishes challenge to take on dominant market leader
• Ingatlan.com: One of the most innovative verticals in the world
• Schibsted’s giant horizontal faces off against Axel Springer’s verticals in France
• How Germany’s largest portal is reacting to proptech disruption
The 100+ page AIM Group real estate annual for 2017, coming soon, includes in-depth
reporting of real estate classified leaders in 31 countries; reviews ten emerging start-ups
from around the world, and highlights the latest products and services in the classifieds
landscape. Pre-order today!
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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2017 Global Real Estate Portal Report

  • 1. 2017 Global Real Estate Portal Report September 2017 Prepared by Mike DelPrete
  • 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. 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. 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. 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. 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. 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. 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. 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. $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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Rightmove shows a steady drive towards higher customer spend each month. Driven by price rises and premium feature adoption.
  • 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. REA has mastered the art of the upsell, pushing customers to more expensive premium products.
  • 33. Premium products include bigger photos, better placement, and prominent agent branding.
  • 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. 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. 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. A leader in the space, Zillow has consistently grown its mortgage lead gen revenues. 2016 Revenue contribution Mortgages revenue
  • 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. 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. $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. 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. 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. The leaders in the field offer deep integrations across their sites, critical to their success.
  • 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. 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. $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. 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. 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. The premier agent program pits agent against agent, delivering leads to the highest bidders.
  • 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. 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. 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. 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. 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. 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. …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. $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. 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. $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. 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. 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. 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. 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. Zoopla’s strategy is geared towards diversification and creating a “huge cross-sell opportunity.”
  • 65. While Rightmove is solely focused on being the best marketplace to advertise property.
  • 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. 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. 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. 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. 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. 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. 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. 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. 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. Rightmove’s homepage—like its strategy—is simple and focused.
  • 76. Zoopla stays focused on property search, despite having a wealth of related services.
  • 77. Realestate.com.au keeps it simple, but also features home design content.
  • 78. Domain offers the most simple search experience across the major portals.
  • 79. Zillow keeps it simple with a straight-forward home search.
  • 80. Trulia highlights adjacent property data through its map overlays.
  • 81. Realtor.com highlights its mortgage lead generation product.
  • 82. ImmobilienScout24 stays focused on search, with a call-out to potential listing customers.
  • 83. Like the other global leaders, SeLoger is focused on a straightforward search experience.
  • 84. Visually cluttered, Trade Me Property attempts to highlight home valuations amongst banner ads.
  • 85. Like Trade Me, Schibsted’s leboncoin is a horizontal with a strong real estate section.
  • 86. Another leading horizontal, the Russian portal Avito, also has a strong real estate section.
  • 87. Avito, the horizontal, runs a real estate vertical, Domofond, to provide a tailored experience.
  • 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. 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. Rightmove is launching data-driven products to agents that drive efficiency and transparency.
  • 91. Trade Me has launched an agent hub and property insights (valuation and sales history).
  • 92. REA is innovating in emerging technologies and launching products across all customer groups.
  • 93. Zoopla is launching new products across the property value stream.
  • 94. In France, SeLoger is focused on products and services underpinned with data.
  • 95. Zillow is launching products to help its agent customers manage leads through the platform.
  • 96. Move has recently launched ”My Home”–a data- driven home portal–and a mobile AR app.
  • 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 • mdelprete@gmail.com About the author: Mike DelPrete
  • 120. Hungry for more? The AIM Group’s Real Estate Annual is coming soon. The global battles raging in the real estate classifieds space have never been as dynamic and exciting than today. In the U.S., Zillow Group is in a pitched fight against the industry; in France, the top horizontal player is fighting against a reinforced vertical; in the U.K., competing growth strategies are center stage; and in Australia, a spun-out Domain relishes the challenge to take on the dominant market leader. Some of the stories in this year’s real estate annual: • The battle for New York: Zillow’s StreetEasy vs. the industry • Rightmove and Zoopla in the U.K.: Different strategies, similar successes • Australia-based Domain relishes challenge to take on dominant market leader • Ingatlan.com: One of the most innovative verticals in the world • Schibsted’s giant horizontal faces off against Axel Springer’s verticals in France • How Germany’s largest portal is reacting to proptech disruption The 100+ page AIM Group real estate annual for 2017, coming soon, includes in-depth reporting of real estate classified leaders in 31 countries; reviews ten emerging start-ups from around the world, and highlights the latest products and services in the classifieds landscape. Pre-order today!
  • 121. 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