Ladies and gentlemen, thank you for standing by, and welcome to the Rimuru Full Year 2020 Question and Answer Conference Call. At this time, all participants are in a listen only mode. After the speaker introduction, there will be a question and answer and Answer. I must advise you that this conference is being recorded today, the 26th February 2021. I would now like to hand the conference over to Mr.
Peter Brook Jones, the CEO. Please go ahead, sir.
Thank you, Roberto. Good morning, everyone. I'm joined this morning by Alison Dolan, our CFO and Miles Shipside, our housing market expert. Hopefully, you've had a chance to see the presentation, but I thought I'd take a couple of minutes to start off with and give you a quick summary of all the words that you may have heard. 2020 was Rightmove's 20th birthday.
And of course, there's not been a year like it in our history. Asked. COVID has upended the lives of everyone in the UK and it's had a tragic impact on many people. But from a Rightmove perspective, we've emerged stronger. The network effects of the hospital business are stronger than ever with record traffic and leads.
Traffic in 2020 was over 30% higher than 2019 And the trend continues into this year with a new record number of visits on 17th February with 8,500,000 visits in the day. Answer. And that's all led to our market share of time according to Comscore nudging slightly higher. That traffic is turning into leads and sales for our customers. Leads last year were up over 27% and quite remarkably transactions according to HMRC were only down 11% on 2019.
Despite the uncertainty around the end of Sun Beauty holiday, Home Hunters continue to want to move. And our leading indicator of sales agreed for February 2021 It's 20% higher than the 2019 number. Undoubtedly, 2020 was tough for our customers, asked. And we offered both financial and practical support, as you know, both to help them in the short term, but also to share empathy at a moment when our customers were hurting, which With only around 200 leaving the industry in the year and branch numbers in total being positive in the second half, partly as multiple branches were unfrozen and answer. And new businesses started up, encouraging encouraged by the vibrant market.
The number of new joiners in the second half of the year was the highest in any 6 month period since the first Q1. But looking forward, I wouldn't want to get too carried away. The lack of available stock And there is of course continuing macro worries. And for clarity, I don't think the timing of the stamp duty holiday will have much impact on the number of transactions in 2021. And answer.
Relatively slow build rate due to COVID safe protocols, we'll see the numbers of new homes development listed fall a little from here. We're planning product led ARPU growth in 2021 and expect the growth rate to be close to that of 2019. Over 1,000 agents have upgraded to Optimize 2020 in the last year and consistent sales we're seeing consistent sales in the second half of twenty twenty one In second half, on the 2021, we've got off to a good start with around 6 year grades in January. We've also made good progress with our strategic projects in and answer. Amongst other things, the ground up rebuild of the property details page, which will enable more exciting products in 2021, And we've delivered the 1st phase of the digital tenant journey.
And finally, I'm delighted to say that after a pause in 2020, We've restarted our capital return program with a 4.5p dividend today and share buybacks in March. So that's it for me. Over to questions. And
answer. Ladies and gentlemen, we now begin the question and answer session. And answer. We have the first question from the line of William Baker from Exane. Please go ahead.
Your line is open.
Hi, there. It's Will Hackett from Exane BNP Paribas. Thanks and Answer. 3 from me, please. Firstly, it's encouraging to see a rebound in agent numbers in the second half of the year and answer.
And your guide of flat agent numbers for 2021 suggests the stabilization after some weaker years. Could you talk about how you and answer. See the structural agency outlook. I suppose some would argue that consolidation is likely, others would argue asked. Digital actually reduces barriers to entry, and so you could see an acceleration in the state agency formation as the market recovers.
So just 1st question to comment on that dynamic. And then secondly, more specifically, does your guidance include any negative impact from consolidation with Countrywide? And answer. And final question for me is, Boonen published a pretty aggressive e mail this morning calling you overpriced and not innovative. Asked.
Could you update us where we are on their launch process and what they're doing differently? How many agents have they signed off? Is there any product differentiation? Thanks very much.
Thanks, Will. So starting off with sort of my view on structural outlook for agency. Asked. I think I would hope I'm being pretty consistent when I say what we're going to see and I totally accept asked. From the outside of the industry, it's a little harder to see.
What we're going to see is a continued process where at the very large end, I think we'll see a little bit more consolidation. I'm interested, as I'm sure you are, that we've seen rumors of a few deals in the last few weeks. But what's fascinating asked. It seems to be on the whole, it seems to be people looking to buy in to the industry, which I think suggests that there's asked. There's some real positivity about agency for the future.
And then at the bottom end, what we're seeing sorry, I shouldn't say and answer. At the small end, what we see is continued fragmentation. So what's fascinating in those numbers of branches and answer. That joined us in the second half was around that 50% of them were entirely new businesses and they're small. These new businesses are small asked.
2, 3 person businesses. At the moment, what we're seeing, as I noticed in the presentation, is Sadly, around about 50% of them don't survive their 1st 6 months, which I think is probably pretty usual for SMEs. Asked. Obviously, as the market gets better, that ratio will improve. So I think we're set for Digitization to continue to allow you to operate at a smaller level.
Interestingly, one of the guys who used to work with Rightmove and answer. Last couple of years, did set up his own agency in Essex. In the last 6 months, he's a great test case for us. And answer. His argument was, I've been telling agents all these years what to do.
I'm going to go and prove that I can do it myself. So what he's done actually, he set up on his own asked. Using entirely digital methods and opened a small branch, as you said, it was a projection of confidence. Asked. And in the last half, he's actually recruited 2 more people because he couldn't keep up with the work himself.
Now I wouldn't want to say that John is every agent, and obviously, answer. I've got soft spot for him because he was a good employee, but I think that sort of shows the direction of travel. I think we'll see more of these very small because they can be nimble. So yes, hopefully, Mike, I'm being consistent. I think in the medium term, we'll still see branch numbers rise in total.
Talk about Booming. So Booming, latest Information we have is that Boomi is possibly going to launch second half of March, and answer. Would be my best guess. In terms of agent branched sign ups, not so. Don't have a number asked.
To hand, I think I would probably conservatively suggest they should do quite well signing up agents because at the moment it's 0 cost, 0 commitment. So as mentioned, why wouldn't you? So I would expect I think we should expect that number to be reasonable. And answer. I think as ever, thinking about competition, the real challenge for a portal of any sort is actually getting consumers to come to your website.
That, over 80% of our traffic actually is brand led. So 80% of our traffic comes to Rightmove Because people have either type Rightmove directly into their browser or type Rightmove into Google. So you have to offer something different to attract that traffic to your portal. I think Boeing has taken quite a different approach at the outset. It appears again, I'm only going on what I've read, which will be the same as that that you've read.
Asked. It appears that what they're trying to do is talk about sort of everything to do with the home, whether that be whether the sofa will fit in my asked. Living room or whether my energy bill can be reduced. So if you like, it's a bit of right move, a bit of and answer. Pinterest and a bit of money supermarket and use of it sort of blended together.
So it's a really interesting approach. I tend to believe the Internet prefers specialists asked. And consumers will come for a really clean experience around the refocus topic. But as ever, Yes, we will watch carefully and we'll see what they launch.
Thanks, Peter. Very useful color. Can I just follow-up and This is a segue? Just to hear your latest thoughts on the wider competitive backdrop. Zoopla obviously launched a pretty aggressive price point or went free for a while.
Have they reverted to normal pricing now? Where on the market in their pricing? And are you seeing any big shifts in agents among your peers. Thanks.
Yes. So as far as I know, Zipporah now returns to normal pricing. Asked. No particular big shifts. You're right, Wilfred.
You don't remember Zukra offered 2 deals, 6 months free for an agent and answer. If they signed up for, I think it was a 24 month contract and 9 months free if they left right if an agent left right move and answer. And you signed up for a 32 month contract from memory. Well, you can see the impact of that in our numbers. In terms of on the market, I think what we've seen there is on the market have become rational and answer.
And have really started cutting back on the free deals they're offering people. So you can see that their branch numbers have fallen recently asked. As they've asked people to tell me, which I think makes a lot of sense. Broadly speaking, seeing through the noise, asked. Actually competitive dynamic doesn't feel terribly different to this time last year.
And answer. Thanks, Peter, for the color.
You're welcome.
Thank you for your question. We have the next question from the line of Adam Berlin from UBS. Please go ahead. Your line is open.
And answer. Hi, good morning, Peter. Welcome, Allison. Three questions from me. The first question I wanted to ask is, all the demand indicators you talked about in terms of housing transactions, house prices, agency commissions all going in the right direction.
Asked. So why have you been a bit cautious on pricing this year and guiding for kind of ARPA growth below 2019 levels and answer. And in such a strong market, so just explain if you could explain your thinking around that, that would be really helpful. And answer. Second thing is, I wanted to ask you about what Scout24 are doing in terms of a consumer subscription model focused on tenancy initially.
You're obviously not going down that path and answer. You're giving away the Tennessee passport free and hoping to generate efficiencies. Why did you not think you could charge consumers In the same way, the scale 24 is going to be getting quite a lot of traction in Germany. And then the third question I wanted to ask you was about and answer. Something you didn't talk so much about in your presentation, which is about kind of other lead gen you might be able to do in terms of mortgages and Forward band and other things that was talked about more in the note this morning.
How are you thinking about those issues? What progress and answer. And will we see any revenue impact in 2021, 2022 from those initiatives?
And answer. Thanks, Adam. So let's talk about ARPA first. I think it's easy to walk past the fact there's still a lot of uncertainty in the macro and answer. I think we're all on a sort of vaccine high, but there is still uncertainty.
And when we were thinking about pricing for 2021, that uncertainty was certainly forefront of mind. Asked. And we could have led with price this year, but we chose to deliver products for a few reasons. Firstly, product ourselves tends to pick up sooner asked. And it picks up as soon as agents feel confident about their marketplace.
And you can see from our numbers in second half of twenty twenty, we think that focusing on product will see confident asked. Agents increase spend more quickly than we would do with a sort of normal pricing round. Secondly, we've got a lot of goodwill in the second half of last year, and on. Our sentiment indicators would show that. And we want to be unempathetic to our customers.
Not all of them are feeling confident just yet. Asked. Whilst as you know, the demand in the hedges nationally are really strong. There are areas and submarkets which are not looking to go. So Central London, and answer.
And actually from a practical point of view, a product led strategy really it's great because it adjusts asked. Really quickly and really effectively to an uncertain market, whereas as you all remember, a pricing strategy is takes around 4 to 6 months to fully rollout. And answer. And what would we do if the national housing market shuts as it did quite historically in March last year? In the middle of that, what do you do?
Asked. Or if a local area has its housing market structure, there are practical considerations for us. And it's not to say we're not doing some price rise too. It's just less of the mix this year. Asked.
I suspect that by the end of the year when we look back, we'll be close to the sort of seventy-thirty product price growth spectrum end of the spectrum rather than answer. Perhaps where we've been in previous years, which is fifty-fifty. So that was really the logic with going after that. The other thing that's worth noting when you look at ARPA in total is when we talk about ARPA in total, that is the blended ARPA and answer. Between agency and new homes, and I think what we'll see in 2021, as I mentioned in the presentation, and answer.
New home developers are sold out pretty much, the large ones. So we'll see a double impact. We'll see a reduction in volume and answer. Development listed on-site because they're all sold, but also fairly rationally and the new homes developers are terribly rational, you don't market so hard asked. If you're forward sold and you sold everything you've built and you guys will note from the notes that the big PLCs put out, a lot of them are forward sold until the middle of the year.
So inevitably, you don't market quite so hard. So that also feeds into the blended ARPA. Secondly, you asked about asked. Yes, I think it's a really interesting
product.
We talked to them. I sort of I like the idea. I think we have to remember the term market is different. So P2P sales and the sort of mindset around transactions and I know it's rentals, but big fee rentals as well in Germany, much stronger market. Asked.
So it's I'd never say never. It's certainly not on our roadmap right now. It's one to keep a watch. I have a gut feel and we haven't researched I have a gut feel that UK tenants would behave quite differently. We also, of course, have to be mindful that the legislation in the on.
Okay. Around upfront rental fees is different. And so that would add complexity if we chose to go into that market. What we've chosen to do and answer. To sort of go on for a similar theme is all around our digital tenant journey.
So by giving the passport upfront, which is and answer. It's free to tenant and agent and viewings manager, which I'm sure you've seen my slides, so I'll try to talk about it too much, but viewings manager, Which really helps efficiency. It also helps. Well, we've had feedback from agents that it's reduced no shows by 50%. And part of that is because the viewing strategy reminds tenants and answer.
But partly that's the feedback from tenants saying they must prefer it because they can if they've found somewhere else they can cancel automatically without a chance to bring up. And asked. Obviously, being British, we don't like having difficult conversations, so it's completely to do that from a link. But the monetization for that comes it's sort of and answer. The monetization comes from referencing.
Referencing is a profitable business and obviously that all feeds through, But also what we call in tenant services. So the idea when you move into a rental, you really need to sort out insurance. Asked. Many tenants don't realize that they are responsible for insurance and they think it's covered by the handle. So that's an interesting conversation.
We've helped 7,000 tenants do that. And we are also now starting talking about broadband. As an aside, one of the fascinating things we've learned asked. Is that broadband is more important to tenants than water, which probably at the moment makes a lot of sense, doesn't it, because we're all connected to our broadband. So So they actually sought out brought back much earlier in the process.
So again, we're exploring that. It's early days for us. It's really promising because If you offer a good product at the right moment in the conversation and of course with referencing, we know you're going to be moving in as a tenant because the reference asked. What we can now experiment with and it's showing some really, really promising signs is when do we start talking to you about broadband. And answer.
And that's how we know that you have to start talking about broadband before you start talking about insurance because it's much more important than people thought it early. Asked. In terms of mortgages, we continue to work with Nationwide. We have learned so much in the last year. You'll remember us and answer.
We've learned so much in the last 13, 14 months. And actually this year, we're really planning To push on, the thing for me right now is I want to accelerate our learning. So not particularly focused on generating revenue from that. I don't want to just and answer. Flat to the side, we've been around convinced, which would be the way we can generate revenue or probably a pretty simple calculator Well, comparison to all that doesn't feel like us.
We want to really learn. And again, we're focused on making the journey more efficient Because I think that's how we'll maximize its revenue in the long term. I think I'd hope that we get a little bit more revenue in 2022 from those activities, asked. But probably it's 'twenty three, 'twenty four before they really start to be noticeable in the P and L. Was that your 3?
Yes. Thank
you very much. You're welcome.
Thank you for your question. We have another question from the line of Natasha Brillian from Citi. Please go ahead.
And answer.
Good morning and thanks for taking my questions. I just wanted to come back to ARPA and pricing. I know you said the majority will be product. Can you just confirm what asked. The underlying price increases for this year.
And then beyond this year, the sort of seventy-thirty split that you talked about, do you expect that to be the new norm? And if so, will you need to put more investments into people, technology to constantly deliver these products if pricing power starts to fade? Asked. Second question is on the developers and the development numbers. I know previously when we've talked about the cyclicality of this business, There was a thought that maybe even in a more buoyant market, actually the developers would continue to advertise.
Clearly, they're sort of out of stock at the moment. But is there a better way you could perhaps asked. Charge them to avoid these lumps and bumps rather than charging on a per development basis, some sort of retailer just to try and smooth that revenue stream. On. And then my final question is just on cash.
You talked about maintaining a cash balance of about €50,000,000 Why do you feel that that's necessary and would you go below that for any reason temporarily? Thank you.
You're welcome, Natasha. So your first question, pricing. So what we're doing with our pricing is we're doing we're expanding Our geographical and stock based splits, so you might remember, I think I talked about this last year. If you roll back a few years in right move, we used to charge the same amount regardless of stock level and regardless of location, which asked. Wasn't the most efficient way of doing pricing.
So what we've been doing over the last few years is, I think last year it was sort of plus or minus and answer. Plus or minus 60, £70,000,000 depending on the area in the country, despite the country up into 5 zones. This year, we're expanding that a little bit more, so more like plus or minus £100,000,000 asked. And also, we're just looking at those agents who've got higher stock. So can't give you sort of an average increase because it doesn't really work like that.
It's very different depending on customer type and package, but that's the sort of sense. If you are a customer in those groups, you're Probably looking at 10%, something like that. In terms of seventythirty, so Interestingly, I think our growth in 2015 was seventy-thirty. And we then probably 2019 and answer. We would have been fifty-fifty.
So it does move around. I wouldn't want you to think the seventy-thirty is now a new normal. We plan it and answer. And it changes depending on the market. So depending on market structure, it could be anywhere between those 2.
They're probably the end stops Of the range, let's say, this year, it's probably more likely to be seventythirty, but I wouldn't think that it might not be fiftyfifty next year. It doesn't really indicate anything because after all, for us, and answer. It all looks pretty similar when it hits the P and L. So we don't mind. We think either model works and answer.
And it has to what's more important is does it work for our customers. So certainly wouldn't want to suggest we've given up on fifty-fifty. I'm sure you'll see it again. In terms of developers, yes, it's an interesting question. We have looked at different models in the past.
Asked. I actually think this model the model we have is a pretty reasonable model for us and our customers. I suppose I can sort of whinge about things and many people and answer. But actually, it is a hedge. It is a semi hedge because the markets are kind of cyclical.
Obviously, when Agents are having a really good time because the market is great. We do well with agents, but new end developers are also doing lots. They're selling lots and answer. And vice versa. So I'm probably not terribly minded to change the model because I think that natural hedge, whilst I have to accept that It has its down moment.
It's also if you look at numbers in, say, 2019, it helps us. So actually, I think it's a reasonable balance. Asked. And what the developers are doing is they're still listing all their stock with us that they have. They still spend on marketing.
They just Take away that's a bit of discretionary marketing at the top, which as I say, I think is entirely rational for them. So yes, we continue to look at it. I don't think we'll change it. Asked. Well, you have a question, so Francois, since you are about €50,000,000
Sure. Hi, Natasha. You should think of it really as asked. It's a liquidity protection measure and probably a bit of caution in calling an end to the volatility of the last year. Certainly, our underlying policy in terms of returning surplus cash to shareholders has not changed asked.
And neither is our policy in terms of long term holding in of cash in the balance sheet. I think we are just being mindful of the way that the past and answer. And particularly the 3rd lockdown where there were moments at which it seemed at least likely that the housing market would be closed again. So it's really just a reflection of caution in calling an early end to volatility. We're making a start asked.
To returning to a more normal balance sheet with the dividend and the resumption of the share buyback. And you shouldn't really read anything in on. The higher levels of cash other than a bit of caution in preserving some extra liquidity.
Asked. Okay. That's really helpful. Thank you to you both.
Thank
you. Thank you for your question. We have the next question from the line of Robert Berg from Berenberg. Please go ahead, sir. Your line is open.
Just one follow-up from me actually. It's maybe a question for Alison. If I was to look at the top line growth 2021 versus 2019, the growth is coming at 0 or next to 0 Profitability. Obviously, you've been through a very strange time, so I'm asking a question on asked. Is this kind of a trend where we should expect growth?
Because as you mentioned, it's coming more from products, more investment. Should we expect growth now to lower profitability levels. I think Alison alluded to a margin more towards the 70% level. Asked. Or is this kind of an abnormal trend and we should expect margins to progress back up to the mid-70s that were seen in the past?
And
answer. Thanks, Robert. So I think just I mean, in terms of The drivers of growth, we are seeing growth in ARPA, particularly at the agency level of asked. 7%. And we've talked this morning about a return to the sort of margins that asked.
You saw in 2019, there is definitely an element of cost catch up this year. If you look at the profile of costs during 2020, gross savings of 4,600,000 Will not repeat this year. The majority of them won't repeat this year. And there is an element of catch up, particularly with respect to recruitment, Which will accelerate some of the costs into 2021. I wouldn't necessarily read that asked.
As a structural change in the margin of the business, if you think about the margin at the agency level, which is the primary driver of and answer. Our margin and how strong that is, it takes a large movement in margin elsewhere to really make a dent in that. So what you're seeing in 2021 is an element of cost increases on 2019, which is a combination of Lack of savings, the lack of the savings that we saw in 2020, the return of a more normal level of annual increases Both sort of €5,000,000 to €6,000,000 which is the levels that we've seen in the past and then an element of catch up. And don't forget that 2020 was the 1st year in which we saw a full year of van Mildenh costs, which will also be included going forward. So those are the underlying dynamics of the margin and
answer. Perfect. Thank you.
Thank you for your question. We have the next question from the line of Sylvia Konya from Deutsche Bank. Please go ahead. Your line is open.
Asked. Good morning. Thank you for taking my question. I have just one follow-up for Arisen actually On the cash return policy, considering where the cash balance ended in 2020 asked. And considering what your previous policy was to return all excess cash to shareholders, asked.
So we think that if you want to get to around €50,000,000 balance you mentioned, the buyback program in 2021
answer.
Asked. Sorry, she's just making a funny face at me. Hi, good morning. I mean, clearly, the in year level Of cash generation for 2021 will be similar to previous years, yes. And we ended the year with just under 90 on.
So if you take this final dividend, which is about 40,000,000 Plus the in year cash generation, we will potentially need to accelerate some of the buyback levels that we've seen in the past in order to end the year with asked. Did that answer the question?
Yes. Thank you.
Thanks, Lisa.
Thank you for your question. 1st. We have another question from the line of Lisa Yang from Goldman Sachs. Please go ahead.
Good morning. I just want to follow-up on the asked. ARPU growth guidance, you said it would be mainly led by products this year. Could you maybe give us a bit more color in terms of on the main contributors and your assumptions around the package upgrade beneath that. The second question is similarly on the ARPA.
Would it be possible to get your thoughts around the evolution of ARPA For agents as opposed to new homes, I understand the new homes might be under a bit more pressure. So if you were to compare this to the 2019 level, would you say asked. ARPU growth for Asia could be a bit higher and new homes a bit below where it was in 2019. On. And the third one would be on your comments around the revenue opportunity from referencing contract and services.
Could you maybe talk about the sort of road map to just sort of tap into that revenue opportunity? How big could that be? Is that going to be a contributor for 2021? Or should we think about maybe more the outer years? On.
And the very last one, if I can. Is it just possible to get your sense of how you think commission pools or agents Have changed in 2020, just to get a bit of a sense of the underlying health of your customers and how you think that could evolve for 2021? Thank you.
Thanks, Alicia. So ARPU growth, what's going to drive ARPU growth in 'twenty one? I think that's the first question. Mainly, as you see, sort of continuing optimizing upgrades. It's not the only thing.
We guess you might remember, you can either buy our products and answer. As I mentioned, you can either buy them in a package or you can actually buy them to valet card. But I think the main driver would be those optimizer upgrades. So people upgrading asked. From Optimizer 2015, which was the old package up to our new super premium package up to 2020.
Asked. And you'll see, we're seeing upgrades at about the 350, 360 level. So that makes quite a big difference to ARPU quite quickly if we continue on that part. So that's the majority and answer. The growth in agency.
And yes, in terms of the growth in segmental ARPUs at New Hampshire Agency, sorry, answer. Yes, I think your assumption is broadly correct that we'll see compared to 2019 at a segmental level, we'll see more Coming out of agency, then we will out of new hands. So yes, it's probably the shortest answer if possible. And then sort of Road map from here on that digital tenant journey and journey some more revenue, think the contribution in 2021 will be small, probably similarly. I don't I wouldn't want you guys to be writing any big numbers into your notes for 2022, probably even 2023.
I think it's a sort of 3 to 5 year and answer. Horizon that we're looking at in terms of that journey, obviously, we're sort of laying down the structure of the journey. I don't think asked. Whilst tenants are moving towards it and I'm actually delighted that we're seeing from an agent perspective, we're seeing up to 70% asked. Fewer viewings per letter, which of course is efficient for agents.
But the other thing that's not often talked about was it's much better for tenants because that means tenants aren't wasting their time and on. So but I don't think you should expect a particularly notable revenue contribution and answer. True until probably 3 to 5 years from now. I think that was it. Was it does that answer your question, Lisa?
Or was there something else I've missed?
Yes. Just wondering your thoughts around the evolution of commissions, agents commission last year and into 2021.
Asked. Yes. Good question. Sorry about that. So measuring your mission is definitely more of an art than a science because unsurprisingly agents and answer.
So, what you have to rely on a few relatively small scale surveys asked. And you have to be a bit careful because extrapolation too hard becomes a full 0. So What I think we've seen is that commission has bumped up a little bit, maybe 5, 10 basis points, that sort of level. So that don't want to get carried away. The other thing, of course,
has happened is that
achieved price has gone up, and we continue to see Pretty good achieved price growth. So all in all, I think the net agent commission pool has gone up on a unit basis. And then of course, This year, I would like to think we'll get back to a more normal transaction run rate. So on a volume basis compared to last year, and answer. Maybe they'll say a bit more as well.
So I think agents are in an okay place. Actually, when you take all of that together, out. And I think it's interesting that we've seen good agents actually some good agents are noticeably pushing their commission up a bit more on. 5 basis points, but probably a reasonable average guess. Miles, anything to add on our commission call?
Well, there's obviously a large positive of Solteridge contract pipelines. There's obviously the stamp duty that could affect some of that. But overall, agents reporting to me that their cash flow It's very positive.
Thanks, Pavel. Sorry, we covered that one off now. Is there anything else I missed?
And answer. Thank you for your question. Asked. We have another question from the line of Gareth Davies from Numis. Please go ahead.
Your line is open.
And answer. Just one last for me as well. In the context of the presentation you did earlier online, You mentioned a number of sort of innovations looking forward. I think the one that stood out was quite interesting is the move into auctions. And answer.
Certainly felt slightly left field to where we've seen you go in the past. I just wondered if you can expand on the scale of the opportunity, Kind of how your payment model would work in that environment and kind of what's particularly interesting about it?
Okay. Let's start with what's interesting and it might explain the rest of the question. So what's interesting about auctions is asked. I think I sort of remember a little bit in the presentation. What I suppose the UK public probably has a vision of auctions.
It's an auction room and and answer. The problem for most homebuyers is at the moment the gap reports you're committed, asked. Which means if you need a mortgage, you probably don't get involved because the difficulty is you then have, I think it's asked. Can we answer 10% deposit? So your reporting fee is quite high.
And of course, you can't apply for a mortgage also that is in auction because you don't have to get by it. So I think it puts people off. What we've seen emerge in the last probably 5 years is the online conditional auction. And answer. And the features in online conditional auction, and there are a few different suppliers who offer it.
There's more there's typically more information upfront. Asked. So as a buyer, you can be a bit more confident. There's of course the fact that these auctions typically take place over a number of days or a week And you're not under pressure with auctioning them because it's all online. So you bid online means that you don't have that or maybe it's just me that we'll be just being worried about a switch asked.
So that gives consumers more confidence. Asked. Probably the big thing is conditional. So those are the benefits for the buyer. So if you need a mortgage, you're more likely to be able to participate.
Asked. As a seller and Asyncog agent, what typically happens and certainly with our initial partner, what we're seeing out of their data is Completion is a lot quicker because a lot of the legal work has been prepared upfront because as an ultra property, you're a lot more confident that it's going to sell. So Whereas, yes, we're seeing completion at about 56 days from an online conditional auction, which is about half the time of the normal asked. Sale. So from a seller, it's really important because you it's not going to work for everybody because you may well achieve a slightly lower price, of course.
Asked. So what you start to do is you start to get certainty, which for a number of people, not just people in financial distress, it's really important. So that's sort of what we're seeing happen. And this is really, as I've been emerging over the last 5 years. That's why it's interesting.
It's not a big portion of the marketplace, maybe a Couple of percent of transactions. And what we've chosen to do, we think it because it has advantages for buyers and sellers, Because we believe that it's an area that requires clear explanation, I'd say it isn't for everybody, We've decided to sort of offer this service to KF Investing online auction providers. So we're not running the auction. That's not our experience. Asked.
And we will also give a lot of consumer information on the page. So not only can they see how to bid and they can see the current bid and the time left and and answer. And that's all the information. There's actually a help panel which means they can understand exactly what is an auction. So in terms of opportunity, I think it's the last part of your question, difficult to see at the moment.
So the current structure is pretty much it's an advertising deal. Asked. But I think it's difficult to see because we don't know whether our participation and sort of sharing Information will change the percentage of the market. I wouldn't want anyone again, I wouldn't want anyone to get sort of massively carried away that suddenly we're going to turn ourselves into an auction provider. Asked.
I don't see it. I think it might be a portion of the market. And who knows, it could grow from a couple of percent a bit, and that will be good news for us. It's really about us trying to service this part of the market and actually utilize our trusted status because consumers trust us. And actually, we therefore can supply that sort of impartial information.
That was very no answer. Is that answer to
the question? Yes, very good. Thank you.
Asked. Thank you for your question. We have another question from the line of Maria Mavista from Morgan Stanley. Please go ahead. Your line is asked.
Hi, good morning, everyone. Thanks for taking my questions. Two left for me. Just on unbound milled, just wondering How should we think about the cost base for that developing over time, particularly as we move towards the next stage of development? Are there any particular sort of step changes or things that we should be aware asked.
And how you're sort of thinking about the margin profile of that compared to the core business? And then just on the agents on hybrid agents, just wondering what you've seen so far in
the market and sort of what your
expectations are for the And sort of what your expectations are for the new year? Thanks.
Thanks, Miriam. Asked. In terms of van Mildred costs, the total cost base is certainly immaterial in the context of our total cost base. It's about asked. €3,000,000 of operating costs and then we amortize about €500,000 You shouldn't expect to see any increases in that really going forward.
It may come down asked. A little. The majority of it is headcount. They've added about 80 heads in total to the overall asked. Headcount base
of the business.
So that may change at the margin, but it will not be anything significant. And
answer. Yes, just to answer that, Marybeth, I think the journey we're on, I mean, we're on this digitizing journey in rentals. And I think what that means for Vamedevis is asked. Yes, over time, we're using our base to make that process more efficient and more digital, so we can increase volumes without increasing headcount. So my aim would be that the margin profile will look incrementally better as we start to run those changes through.
And answer. In terms of hybrid agents, I think what we see is, again, they are I mean, they're good businesses. They are very asked. From the new listing numbers, because that's when most of them charge. So that's when their income appears is directly linked to the number of new listings.
So what we see with those businesses is that they probably had another bad second half because new listing numbers were going up. I would imagine that The first half of this year, they'll have to pay a little bit more attention because the numbers are going down. So I think that's it's just a slightly different dynamic. Asked. I don't think we should get carried away that either it's about to be a total new dawn or the death knell.
Answer. They just asked them a little bit more than a traditional agent because of their charging model. Does that answer?
Yes, that answers it. Thank you.
Thanks, Marion. Thanks, Marion.
Thank you for your question. We have another question from the line of Andrew Ross from Barclays. Please go ahead. Your line is open.
Great. Thanks and good morning all. Thanks for squeezing me in. I've got 2. First one is to follow-up on Natasha's question where I think you said for those agents who are seeing a price increase in 2021, that increase is about 10%.
Can you tell us what percentage of agents are not getting a price increase for this year? I suppose there's quite a bit of mix going on there. And on top of that, what percentage of agents Did not get a price increase for 2020 because COVID happened at a time where you might have had that conversation. So are there a big chunk of agents who have now not seen an increase for 2 years? That's the first question.
And then the second one is your visibility over that Kind of up to 8% ARPA growth for this year. At this point, how many of your agents have you had the ARPA conversation with? I know it always used to be kind of At the start of the year, but I think it's a bit more spread out now. And should we assume that because most of the product growth is optimizer 2020 for those agents who you've had the conversation with, it's pretty much locked in at this point and there's not really room to do better? Asked.
Or is it possible that there might be more upsell from those agents as you go through the year? Thanks.
Right. I'll do the second one first. So what we've said, we've done about we've had about 20 odd percent of the conversations Now for the 2021 price increases, there's also 20% in that on that. Yes, 20% over the 20% 2021 conversations. I think that's one of your questions.
And then the question about, so if someone had asked. How the price rise does that we sort of locked in on the ARPU growth? No, actually not. We will we continue to see upgrades Sort of pre and post price rise conversations. So it doesn't necessarily lock us in asked.
To that, I mean, obviously, it sort of guarantees a floor, I suppose, but it doesn't lock us in. So that was that one. In terms of 2021 price rise, I can't remember the exact number, But it's the majority won't be seeing a price rise. So that's one of the reasons it will be product led. And then in 2020, I don't have the number in front of me, Andrew.
And answer. To get to your question, I think your sort of end point was, does that mean there's loads of customers who won't whose prices won't have gone up In 2 subsequent years, was that what you there won't be many in that category, I think is the answer. And answer. I don't have a sense of one number in front of me, I'm afraid.
And is your plan by when you To, I don't know, August this year, when you start to think about the price increase for 'twenty two, but we're now going to go back to an across the board price increase for everybody? And answer.
I think it's a good question. It's a little early. I think as Alton noted a bit earlier on, there's on. There's still a reasonable amount of uncertainty floating around in our world for all of us, isn't there? I think I'm taking updates as I have to repeat, I'll confuse myself.
And answer. I think we'll wait and see. I don't see a reason that we wouldn't return to a more usual pattern, but I think we have to wait and see
asked. What are you looking for there? Is it the health of agents? Or is it kind of competitive dynamics for the question about? And answer.
I would have thought that given the state of the end market, which looks pretty solid and given what we're hearing about kind of commission rates and the health of agents P and L, I don't see at this point why there would be much of an uncertainty about your ability to do price for 'twenty two. So Yes. Are you just being cautious or is there something specific you're looking at there?
So yes, health agent. Jeremy, I'm always a bit cautious. I would agree with everything you said in terms of what I would guess right now, but I think and answer. We don't need to make a decision now, so we'll wait and see a little bit. We've obviously got to work out what's going to happen with Sam Dutty or Rishi's got to work out, not me.
And answer. And there are other sort of general macro worries, so let's see how that pans out. But actually, I agree with everything you said. I don't see a reason today that we wouldn't be doing it. And answer.
Very helpful. Thank you.
You're welcome.
Thank you for your question. There are no further questions at the moment.
Lovely. Well, should we call that a day then, everybody? And answer. There are no more questions?
No, sir. There are no more questions.
Thank you, Roberta. Right. Well, thank you, everybody. Thanks for coming along and spending 50 minutes with us. And as ever, if you've got any more questions, then get in touch with either and answer.
This concludes the conference for today. Thank you for participating. You may all disconnect.