Strong revenue growth slows surprising millon-pound losses at Zoopla

Zoopla boosted revenues 19% to £87.3 million in the year ending December 2022 accounts filed this week show as the portal continued to invest heavily in marketing its brands and developing new products.

The extra revenue came on the back of price rises and the end of free of charge contracts the portal had offered during the Covid 19 pandemic and helped reduce its loss after tax to £6.3 million – down from £17.8 million the year before.

MITIGATED

Losses were also mitigated due to a reduction in impairment made against the carrying value of investments for its subsidiaries including £1.6 million for Technicweb, £5.3 million for Websky and £1.4m for Yourkeys Technology.

The impairment followed a change in group strategy to focus on its flagship Alto product.

A note in the accounts reveals that in April 2021 Zoopla acquired 100% of Yourkeys Technology for £20.1million, later hiving up its trading assets and liabilities for £1.6 million.

SIGNIFICANT GROWTH

A Zoopla spokesperson told The Neg: “Revenues at Zoopla have shown significant growth year on year (+19%) and we are driving a healthy operating profit in 2022 of £2.1m (vs a loss of £6m in 2021).

“The loss before tax relates to the impact of accounting adjustments to the carrying value of legacy investments related to our software.

“These adjustments reflect our group strategy to focus on Alto as our flagship software brand. Our focus on Alto is designed to deliver efficiencies and open up more routes for revenue growth for our customers.”

The Neg reported in April how Zoopla was outsourcing its customer service team in a major change to the way it interacts with agents and homebuyers through a partnership with Ventrica.

And earlier this month The Neg reported how Zoopla parent company ZPG had changed the name of its property division to ‘Houseful’ whose brands include software platform Alto, valuations supplier Hometrack and upmarket agent Prime Location.

HOUSE PRICES

Zoopla’s latest House Price Index this morning revealed an uptick in both buyer demand and the number of sales agreed over September. Demand has improved in all regions of the UK and risen by 12% in September, while sales agreed are also up.

The decline in buyer demand over the summer months as mortgage rates increased has started to reverse, while enquiries to estate agents are up 12% since the August bank-holiday weekend.

Richard Donnell, Executive Director at Zoopla, says: “The housing market continues to adjust to a higher mortgage rate environment.

“Better news on inflation and the end of base rate increases has provided scope for lenders to start reducing mortgage rates which has supported a modest uptick in demand for homes this September.

“Buyers continue to remain cautious and many are waiting for better value for money and improved affordability from lower house prices or further falls in mortgage rates before returning to the market.”

And he adds: “House price falls have been modest with the average house still 17% more expensive than before the start of the pandemic.

Tougher mortgage regulations over recent years appear to have moderated the stress in the market.”

“Forbearance by lenders, tougher mortgage regulations over recent years and a strong labour market appear to have moderated the stress in the market compared to previous cycles that would have driven larger price reductions.

“House prices will continue to drift lower, especially in southern England, ending the year 2-3% lower meaning falling mortgage rates are required to boost activity and attract buyers back into the market.”