Dear reader,
In September 2024, REA Group, the Australian property giant backed by Rupert Murdoch’s News Corp, made four separate takeover approaches for Rightmove (LON: RMV). The final offer valued the company at 775p per share. Rightmove’s board rejected it, calling the price a material undervaluation of the business and its future prospects. At the time of writing, Rightmove shares trade at 438p. The board that turned down 775p now presides over a business worth roughly half of what was offered for it eighteen months ago.
That is the context in which this week’s deep-dive sits. Because underneath the share price carnage, the business itself has not fallen apart. Revenue grew 9% in 2025 to £425.1m. The operating margin held at 70% for the second consecutive year. The company returned £220m to shareholders. By almost every operational measure, Rightmove continues to perform exactly as it always has. And yet the market has de-rated it aggressively, with the shares now trading on a forward PE of roughly 15 times, against a ten-year median closer to 30 times. The current PE ratio sits around 50% below its historical median of 29.5 times.
So what is going on? Is this a genuine value opportunity in one of the highest quality businesses on the London Stock Exchange, or is the market correctly pricing in structural threats that the headlines have not yet caught up with? This piece sets out to answer that question.
This piece covers:
Business model
Financials
Competitive landscape
Growth strategy
Valuation
Investment verdict
The business model:
The business model is simpler than it might appear. Rightmove does not sell houses. It does not employ estate agents, arrange mortgages, or take a cut of transactions. What it does is charge estate agents, lettings agencies, and new homes developers a monthly subscription fee to list their properties on the platform. That is more or less it.
The genius is in what that simplicity creates. Buyers search on Rightmove because that is where the listings are. Agents list on Rightmove because that is where the buyers are. Each side pulls the other in, and the longer that has been true, the harder it becomes for either to leave. An estate agent without a Rightmove listing is, for most buyers in this country, an estate agent that does not exist. Agent retention sits above 90%, not because agents particularly enjoy the annual fee increases, but because leaving is not a real option.
This dynamic gives Rightmove something most businesses spend their entire lives chasing: genuine pricing power. Every year the company raises what it charges each agent, a metric known as average revenue per advertiser, or ARPA. Agents grumble. Some have gone as far as filing a £1.5 billion class action lawsuit. Ultimately they still pay, because the audience Rightmove delivers cannot be replicated elsewhere at anything close to the same scale.
The income arrives monthly, the cost base is relatively fixed, and the infrastructure requires nothing heavier than servers and a head office. Last year the company converted 70% of its revenue directly into operating profit. For context, that is a margin most businesses in any sector would find difficult to believe.
Competitive landscape and the CoStar threat
For most of Rightmove’s life as a public company, the competitive threat has been more theoretical than real. Zoopla never closed the gap. OnTheMarket launched in 2015, alienated half the agent community with a clumsy one portal policy, and spent a decade going nowhere. The honest assessment for most of that period was that Rightmove had no credible challenger.
That changed in December 2023 when CoStar Group, a $34 billion American real estate data giant, acquired OnTheMarket for roughly £100 million. CoStar is not a scrappy startup. It built Homes.com into a serious rival to Zillow in the United States by spending heavily and absorbing losses for years, and it arrived in the UK with the same playbook. Two years on, OnTheMarket claims visits are up 55%, page views up 110%, and sales leads up 94%. Impressive numbers, though ones coming off a very low base.
The more interesting risk is not traffic share but negotiating leverage. Rightmove’s pricing power has always depended on agents having nowhere else to go. If OnTheMarket becomes even a credible alternative, agents gain something they have never really had: a reason to push back at renewal. That is the structural threat CoStar represents, and it is a more serious one than the headline traffic numbers suggest.
The lawsuit adds another layer. A £1.5 billion class action filed at the Competition Appeal Tribunal by Jeremy Newman, a former CMA panel member, alleges Rightmove has abused its dominant position by charging excessive and unfair subscription fees, with over 250 estate agencies backing the claim. Rightmove has called it without merit. These things take years and rarely settle at the full amount, but the case is a symptom of something real: agents resent Rightmove, and they are increasingly willing to say so publicly.
Financials
Income statement
The top line tells you everything you need to know about this business. Revenue grew 9% in 2025 to £425.1m. Underlying operating profit grew 9% to £297.7m. The margin held at 70% for the second year running. Pick any year in Rightmove’s listed history and you will find a version of the same sentence. The numbers change slightly. The story does not.
The cost base is worth examining. Roughly 60% of operating costs are payroll, with the remainder split across technology, marketing, and other costs. Underlying operating costs rose £11m year on year, driven primarily by people costs and investment in the technology stack. The margin held at 70% despite that increase, which tells you something important: Rightmove is disciplined about cost, but it is also beginning to invest more heavily than it used to. The company has guided that 2026 will see accelerated spending on AI and product development. Margins are unlikely to expand from here in the near term, and investors should model them as stable rather than improving.
Underlying EPS grew 11% to 29.1p, faster than revenue growth, reflecting the compounding effect of the share buyback reducing the denominator. That is the quiet magic of a sustained buyback programme, even in a year of modest top-line growth, earnings per share can grow meaningfully.
Balance sheet
Rightmove’s balance sheet is unusual for a company of its size and profitability, and not in the way you might expect. Total assets stand at approximately £125m, with total liabilities of around £39m. For a business generating £300m of operating profit annually, that is an extraordinarily lean balance sheet. There is almost no fixed asset base, no inventory, and no meaningful debt. The closing cash position was £42.9m.
What this tells you is that Rightmove has essentially no need for capital. It does not retain earnings to fund growth because it does not need to. Every pound of surplus cash is paid out, which is why the buyback and dividend programme absorbs virtually all of what the business generates. The flip side is that the balance sheet offers no buffer if the business deteriorates. There is no war chest, no asset base to sell, and no financial engineering available. The investment case rests entirely on the operating business continuing to perform. That is a risk worth naming clearly.
Cash flow
This is where the quality of the business becomes most obvious. Operating cash flow rose to £308m in 2025, representing cash conversion of 107% of operating profit. Converting more cash than you report as profit is the hallmark of a truly capital-light business model, it means working capital is moving in your favour and there is almost nothing being spent to maintain the asset base.
Capital expenditure was just £7.7m for the year. For context, that is less than 2% of revenue. Most of what Rightmove spends on investment goes through the income statement as people costs rather than onto the balance sheet as tangible assets. The result is that free cash flow and operating profit are nearly identical numbers, which makes valuation straightforward and the shareholder returns programme highly predictable.
The conclusion from looking at all three statements together is simple: this is one of the highest quality businesses on the London Stock Exchange. The income statement compounds steadily, the balance sheet is almost aggressively lean, and the cash flow conversion is exceptional. The only analytical flag is the accelerating cost investment in 2026 and beyond, which will test whether management can sustain margins while genuinely building new revenue streams. So far, the track record suggests they can. But the market is clearly not giving them the benefit of the doubt at the current share price, which brings us to valuation.
Growth strategy
Rightmove’s core business is mature. Membership grows at roughly 1% a year, and while ARPA still has room to move, the company knows it cannot raise prices indefinitely, particularly with 250 estate agencies currently making that argument in court. The question for the next five years is where the incremental growth comes from.
The company’s answer is threefold: artificial intelligence, financial services, and adjacent verticals.
On AI, Rightmove has been moving faster than its public image might suggest. The company ran 31 strategic AI initiatives in 2025 and pushed out over 6,000 product releases across the year. CEO Johan Svanstrom has been characteristically direct about the ambition: “AI is now becoming absolutely central to how we run our business and plan for the future. We are investing to accelerate our capabilities, which we are confident will create an even stronger platform and higher-growth business over time.” The most visible consumer-facing product is conversational search, launched in early 2026 in partnership with Google Cloud, which lets users describe what they are looking for in natural language rather than filtering by bedroom count and postcode. The less visible but arguably more valuable application is on the agent side, where AI is being embedded into Rightmove Plus, the business management platform agents use daily, with the aim of making it indispensable to agency operations rather than just a listing page.
Mortgages is the growth area that most investors overlook. Rightmove already has 10 million consumers subscribed to its marketing CRM, people who have told the platform they are thinking about moving. That is an extraordinarily valuable dataset for mortgage origination. In 2025, mortgage revenue grew 46% to £6.8m. The absolute number is still small, but Svanstrom has publicly targeted £25m in mortgage revenue by 2028, and a new partnership with NatWest announced in early 2026 suggests the pipeline is building.
Commercial property and rental services round out the picture. Commercial revenue grew 13% to £15.3m in 2025. Rental services, led by the Lead to Keys product which digitises the end-to-end lettings process, grew 35% to £7.1m. Neither is moving the needle yet, but the company is guiding for 20% to 30% growth across these strategic areas in 2026.
The honest assessment is that none of this is transformational in the near term. Rightmove in 2026 remains, overwhelmingly, a property listings business. But a company embedding itself into mortgages, tenancy management, agent operations, and commercial property is structurally harder to displace than one that only provides a search page. That matters more than the revenue numbers do right now.
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