Rightmove plc (RMV.L) Earnings Call Transcript & Summary

So good morning, and welcome to this investor update. I'm joined by Rory Hook, our CFO; and Tarah Lourens, COO. We look forward to taking you through this update on our business today. First -- if the clicker is with me. Apologies for that. I'll try the other one. Can we get some help up there? All right. Became another 1.5 minutes before we get going. Presentation mode. It's important. We're good? Thank you. All right. So let's start with this high-level view of our journey to date and where we're heading. For over 25 years now, Rightmove has been a leader in our core domain of Estate Agency and New Homes, combined with an exceptional reach and connection with the U.K. consumer. We're powered by exceptional network effects, delivering great value to both partners and consumers, and we have a compounding revenue line for Rightmove over time. We do have and are generating still vast amounts of data, close to 3 petabytes to date, and that keeps growing. There have, of course, been some big technological shifts and enablers through this period, all of them adopted by Rightmove at some stage and turn into value, both externally and internally. In 2023, we outlined the opportunity to start expanding our role in the property ecosystem through the logically connected strategic growth areas. And at the same time, we accelerated our next-gen platform work to make it fully modern, faster and AI ready. As of today, it's clear to us that both our platform and the fast-changing AI landscape in general are at a place where it makes sense to invest and accelerate. We want to proactively cater to the opportunities and the technological changes ongoing and coming. It's not with an eye to the next quarter. It's a train sight on the developments over the next 5 years. So from today, we will lean in and accelerate further, progressing strongly in our core engine and new growth areas, including the SGAs, and we will infuse AI into all we do. We continue to execute with discipline, high-quality approach and indeed, strong shareholder returns. So with that lead in, just a quick orientation to the 5 sections to go through today: first, a recap and scoring of the business since 2023, what's changed and how we now look upon the future opportunity, the areas of focus and execution going into that future more specifically, the financial strong outcome and long-term benefits that we generate, and finally is going to be conclusion. And of course, we'll get to Q&A. So let's start with a quick reminder. Our strategy is to develop the leading digital ecosystem for the whole moving experience, powered by exceptional data and network effects. So this strategic framework for growth and diversification that we set out before and you all know, we continue to follow this framework, including the highlighted focus areas. A couple of things to note. Residential find, top left, is still very much at the heart of what we do, and that's 90% of our total revenue. For the other areas that we expand in, we have 2 principles. One is that they constitute attractive revenue and profit opportunities; and two, that we build even further network effects back across the core business and platform as we execute them. Now we presented -- sorry, there we go. We presented these 5 Rightmove business pillars back -- to you back in 2023, and we have executed strongly across this period, both operationally and financially. We're definitely more modern, more product-led and more future-ready organization compared to the past. In the far right column here, you can see our self-scorecard summary marks for each pillar. We have done well on all of these and in some, really, really well. Calling out only a few of the highlights in each of the pillars. For consumers, we have maintained a strong leadership position in traffic engagement metrics in a competitively quite dynamic landscape. We led with product and experience innovation, and we have had an upgrade of our brand and marketing approach. We've also added meaningful amounts of users more directly connected and relating to Rightmove, all in, deepening our relationships and again, ramping our data sets. For partners in our core engine, we have delivered strongly across packages and products. We've also taken many of our partner interfaces and tools to the next level, and we are equipped with the best account management team in the U.K. with great confidence in the long-term runway of our core business. The strategic growth areas, which were around 7% of revenue at the half year, as you remember, have hit the operational marks that we set alongside very good revenue pace. Results and learnings have confirmed the large market opportunities we identified, and we remain excited about the segments. Now we did set out very ambitious and quite precise 2028 targets back in '23. We're continuously looking at the best long-term way to play in them. So whilst we see strong growth rates of around 20% to 30% as sustainable, our initial absolute targets for these will take a little bit longer to realize. Now within platform, transitioning to the cloud of our production and data platform is a methodical, multiyear and complex effort and in which we have made really great progress. Importantly, along the way of this effort, we've delivered high-quality service, platform performance and innovation. We're squarely becoming faster, more resilient and more efficient business, one we'll be able to innovate even more from. And lastly and importantly, our people. The team has grown with many new excellent colleagues and capabilities, combining with a long and deep experience bench we have in place. We're better and truly technology-oriented team and our culture and performance approach have strengthened. So my thanks to the team at Rightmove for what I think is fantastic delivery in an ambitious, competitive and dynamic environment. Now I know there's a lot of interest in the 7% of our business that is strategic growth areas or the SGAs, so let's just take a further look at those with a short video recap. [Presentation]

All right. So as you can see, we're leading with product and differentiation, and we're growing our position in these markets, and we're definitely driving revenue growth along with it. Let's look at some of the very notable strong operational outcomes during this period. In commercial first, you can see the great progress we made across several key metrics compared to where we were just a few years back. We've also done a lot of foundational platform and data work in the background fit for commercial real estate purpose into the future. In addition, it's worth mentioning that our share of time on site per similar web is now nearing our share in residential, and it is high quality. Over 70% of it is unique to Rightmove. Our share of FTSE 100 company real estate functions using Rightmove rose to 84% in the period. So our revenue growth is on a good compounding trajectory. We're now entering more of the product and package evolution part over 2026 and beyond. In mortgages, the metrics here similarly show the clear consumer interest and uptake of the MIP product. Affordability is very relevant for the 67% or so of all homebuyers who need financing, and it's very obvious that they like Rightmove providing these digital, intuitive and novel ways to help them. The 2x effect on overall site engagement by users of the MIP feature and the mortgage tools is very meaningful. It's a good example of a new consumer feature adding to the network effect for Rightmove. Meanwhile, of course, MIP users become better and contextually informed in their home hunting journey, and thus, they also become more qualified in their subsequent agent conversations. We'll continue product development and increasing our ability to segment the huge user base for the right mortgage process and products with nurturing paths and data loops with lender and broker partnerships. And lastly, for rental services, same thing here, very strong metrics, great progress in penetrating this opportunity. We double our volumes of enhanced leads, tenant leads and within a full digital product suite behind them to handle it, we're making life clearly more effective for agents. In late summer, we started to embed the 2 upfront part of Lead to Keys, which are the Enquiry Manager and the enhanced lead modules into many of the market CRMs used by agents, making workflows more effective yet again. And lastly, during this fall, we are trialing and enabling of those 2 upfront modules to more dual agents within the core subscription, something that will continue over the next year. It's an exciting penetration step-up opportunity, bringing efficiency to agents, landlords and tenant applicants at true market scale. And for clarity, the other Lead to Keys modules will be sold separately as they are and over time, of course, to that enlarged base. So let's turn now to the core Estate Agency, New Homes, again, 90% of our revenue with a bit more detail. We delivered a lot here in the past 2 years. On the left, you can see our ramping product innovation pace for both consumers and partners. Often, we actually build to both sites directly, like we did with the Ascend package for New Homes. And many of our consumer-only features, which drive utility, frequency and engagement with the site, also building up data signals that we use in future product builds either for core partners or that can provide other monetization opportunities for us. We have delivered a number of packages and products to our core partners. We built market product segments like Agent Accelerator for brand-new agents or Access for housing associations, and we now develop more tailored solutions to partner cohorts like multi-branch or corporates. On the right, with the Building Success Together program, we have continuously and meaningfully upgraded our business partnering toolbox and training support to the industry. The key outcome here is strong retention and sentiment scores. We're excited about the data-driven value creation and again, long runway of our core business opportunity. So now I'll show you another video. This is going to be of the OAV product, Online Agent Valuation. It's the latest and quite recently launched product for estate agents, which is going into rollout mode. It's a unique digital product. It helps both consumers and agents in one go to save time and build a relationship. Plus it's adding information about the most recent features and state of our property onto our platform. Tellingly of our times, it comes with an AI component built in from the start. OAV complements our existing suite of valuation products for both consumer and partners. And that's, of course, 1 that we built out quite meaningfully just in the last 2 years as well. [Presentation]

So to summarize the business progress and what we've been up to, Rightmove's consumer driven network effects are strong and our powerful engine for growth going also into the future. The strategic growth areas have delivered against operational milestones with good financial performance. Execution and product development plans continue towards what we believe are meaningful revenue opportunities. And engagement with core partners has strengthened. We've upped the game on product and relationships and see a long runway for growth. Now let's look forward. You also recognize this picture. It's important. We remain excited about the large and growing GBP 10 billion total revenue pool in U.K. property and home moving services. It can undeniably be much better digitized, more connected, more efficient, and we do have a role to play in that. And as you might know, Rightmove just turned 25 years, so happy birthday, of course. But mostly, we're excited about what we can do over the next 25 years. Now what brought us here won't take us there. We want to accelerate into this. So again, our strategy is to develop the leading digital ecosystem for the whole moving experience powered by exceptional data and network effects. We're guided by the vision at the top of our house, our 3 business pillars underneath, leverage and build the network effects that create value for consumers and partners and definitely generating a lot of value for Rightmove. Note that -- what we call new growth here includes the SGAs but the name also signifies that we have several ideas and opportunities in the hopper for the future. As you can see from the symbols across the house, AI has already taken a place in our home, has increasingly gone into how we think, plan and execute the entire business. So let's do a very quick backdrop on AI. The truly big change in strategic context since we set out our plan in 2023 is the pace of AI developments. Massive amounts of money is invested across infrastructure for compute and in applications. Now these numbers are large, yet all in are actually forecasted to grow into trillions over the next 5 years. Consumer usage from being served shorter answers and conversational interfaces in both existing and new platforms has grown to very large volumes already. And there, of course, there are predictions of agents replacing or maybe complementing humans in any facet of browsing or buying. So what's the upshot of this? Well, for sure, is that the innovation cycle is on hyper speed. There is creation, adoption and growth at scale. Far from everything, though, is ready, mature or high quality, as pointed out in many reports and of course, discussions. Nobody can quite tell what the true adoption curve will be and for what exactly, but there's undoubtedly a real paradigm shift and the curve going on. So again, that is what we believe that -- being the fundamental context change for us since we set out our 2023 strategy. And we're taking a balanced yet decidedly forward-leaning approach to this. We want to future proof and we want to accelerate our business with AI in mind and in doing. The point is this is not about today or even next year. This is about potential implications for consumer behavior, software and property services on a 3-, 5-, 10-year strategic horizon. I would say probably the only constant over that time is that we all still will need physical homes to live in. But let's, though, consider the starting point for property, our sector and for us. First of all, Rightmove has a phenomenally strong over 90% brand awareness, 85% direct and organic traffic. Our experience is tailored, fit for purpose. There's a lot of contextual relevancy and built up credibility. That deep specialty and aggregation is also what we deliver to partners. There are no signs of consumer disruption in any real sense of the world -- word. Second, keep in mind the consumer process of making it into a new home. First of all, it's a long and very comparison-oriented process. Comparing is actually not a necessary level. It's something consumers want to do. Two, a home is a very heterogeneous product, and nearly 10,000 new homes to discover goes up on our site every day. They're comparable, sortable, discoverable on many parameters. That's also where these strong habit loops come into place. Three, the location of a home isn't something people just try to easily decide for with an online answer. They know quite a lot about where they look, and often, they do it in real life. In the U.K., the average moving distance is 5.5 miles. Four, a home is a big ticket item, whether you're buying or renting, and getting to one ultimately is quite complex. Since you're going to spend 2/3 of your time there for years, finding the one is important. And therefore, the process is long. It's discovery and definitely also opportunity-driven. And finally, a home is a decision where emotion and truly personal preferences play a big role. With over 60% of households having more than 1 person, it's actually a double up of those preference considerations and the nurture process. So personal choice and comparison making is how people eventually get there. Powering up all that choice comparisons, deliberations, home opportunities in the right place at the right time with the right tools, that is what our specialty is. And ultimately, it's done really well and mainly through data. So I think I've said this before, but I really do think of us as a data company. Data is scaled. It's connected and to a very large extent, proprietary. If you look across all the data points here, you realize the power of having all of it with memory and learning patterns in one platform. Of course, LLMs have both started to democratize product development, and they really started to give really condensed and precise answers to queries for consumers. We have the advantage to also use the power of LLMs or AI applications, but we can derive reinforcement learning and sector-specific value with our live and whole market data set. We do not just hold static property data. We hold the U.K.'s living map, property intent and behavior, signals for pricing, supply and demand dynamics and geographies in our platform. Now let me just give one example of how we leverage this with AI already now. We start with all that scaled proprietary and connected data. At the data modeling stage, we use off-the-shelf ML or LLM models in our data hive. And now we augment them with proprietary Rightmove AI models that are based on our much more contextual data. So for example, for our vendor prediction model, which feeds a few of our existing products to partners, we've seen over 50% higher accuracy doing this by applying our data models, and that is, of course, a very substantial lift. Over time, the model will build up into scoring engines for different entity sets, and we can use both models and engines for products. In this case, the AI-powered prediction model gets orchestrated and piped into existing product, Opportunity Manager and Discover, improving its performance for partners. This went live only 6 weeks ago, and over time, it's going to drive usage uptake, package migration or spend-ups as part of our subscription model. Finally, and importantly, these improved products will generate even more and new signals from both partners and users and in a closed loop, that we'll be further adding to the data sets. That's going to drive new ideas about innovation down the road. It's a virtuous cycle and indeed a compounding effect. So investing more in these AI power ups of what we have drives reinforcement learning and value that simply otherwise wouldn't have happened. This is but one example of why we think now is the right time to go after this and doing it meaningfully. So a little bit more broadly than that half technical slide. AI is now becoming central to all we do. Internally, we will create, complement and enhance all our existing capabilities and the workforce. Externally, from consumers and partners on our platform, we will connect, predict and personalize to much greater levels than today. In short, we plan to be an AI winner. Now we're building on an existing base of activity, and we have reported continuously on some of these. We now have 27 top-down prioritized AI projects and many more smaller individually built applications. And as you can see, they are right across the entire estate of the company. Four external-facing ones went live just recently. Yet what we see here is absolutely early stage. There's a lot of ongoing exploration that needs to happen, keeping track of that very fast-changing tool landscape, productionizing pipelines, data and architecture, deciding what to buy versus build, figuring out how an opportunity that we have in the market or have identified might actually change with AI in mind and when and so forth. So with the fast pace of technology itself and also how search might evolve, we are convinced now is the right time to invest a bit of our very strong cash flow into this over the next few years. We leverage the position we have. We do it for future proofing and for value generation. The value will manifest itself both on revenue opportunities as well as cost or productivity. I'll add very clearly, Rightmove is out for quality, usefulness, production grade, security grade. Those attributes have made us a market leader. There will be things that we discard, but we'll learn faster. We wrap ourselves as usual in diligent assessments. We have financial discipline, and we have an always-on requirement to prove value in what we do. We're excited, but we're certainly not in the era of AI for fast PR drops. Concretely, our investment plans target 3 main areas: First, consumer innovation, in particular, the app and AI-powered search as well as progressing faster in the beyond find space. We'll create more utility, data loops and monetary opportunity. Second, AI-powered operations, bringing seamless experience and productivity benefits internally as well as externally from our back office; and third, strategic R&D capability for new growth areas. With it, again, we'll deepen Rightmove's ecosystem role and value creation. It's going to be through revenue growth. It's going to be through operational leverage, and we aim to hit double-digit profit growth on a sustainable and true long-term basis. We'll become increasingly fitter and opportunity-ready organization along the way. So with that, I'll pass over to Tarah, who will explain these 3 focus areas in a little bit more detail.

Thank you, Johan, and good morning, everyone. I'm Tarah Lourens, COO. Today, I'm going to walk you through our plans across our 3 investment areas and how they'll benefit Rightmove, our partners and consumers. I'm sure many of you here currently live in homes that you found on Rightmove. Our mission is to make the home moving journey easier and simpler for everyone, and that is something we do exceptionally well. Rightmove is already synonymous with finding a property, and we're extending our brand down the life cycle so that we become even more indispensable to consumers. This will unlock significant new revenue opportunities, which we are very well placed to capitalize on. We've made good progress over the last few years, releasing several new tools that support our users across the home moving journey and many key improvements to the core search experience. But as Johan has just mentioned, the landscape is evolving rapidly. AI is raising the bar for what consumers expect, and we want to go faster. We're going to accelerate our progress, in total, nearly doubling the product capacity that we have focused on consumer development. This significantly scales our efforts, allowing us to stay ahead of evolving needs, deepen our relationship with users and accelerate the building blocks that will deliver new revenue. Everything we do to engage our consumer base provides value to our core partners, whether directly by driving more leads or indirectly through enhancing the data signals that power our products or creating new ways for our partners to showcase their brands. We know that consumer behavior is changing quicker than ever before, and we will be at the forefront of that change. We're going to fundamentally transform how users engage with our platform. First, we'll reshape our search, delivering a hyper-personalized experience that leverages AI and helps users find the right property faster and with greater confidence. This will include conversational search that, among other benefits, will create new ways for our partners to engage with our audience. We'll also deepen the connection with our users through property inspiration and insights, keeping our casual browsers who are future buyers and sellers on our platform. Next, we'll lean further into the home moving process, creating an assisted experience to support both buyers and sellers as they navigate the complex and lengthy journey. We'll continue to develop our suite of integrated mortgage features to help users better understand their affordability and financing options. And finally, we'll complete the life cycle with a curated homeowner experience. We've already built a market-leading instant valuation tool informed by first-party data that no one else has at our scale. The recent launch of online agent valuations, which Johan just showcased, provides homeowners further insights and confidence to take the next step through a fully digital and Rightmove delivered experience. We'll continue to build out this space, creating a dedicated my home area on the platform, positioning Rightmove to be top of mind when homeowners are ready to sell and delivering more leads for our partners. Our ultimate goal is to provide a world-leading AI-assisted experience going above and beyond when it comes to property search and the rest of the home moving journey. To bring all of this to life, I've included an example of one of our new AI-powered features. Through Style with AI, users can transform any listing on Rightmove. It's part of a broader suite of tools that we've launched this year, all designed to help users understand the potential for home improvement, whether you're a homeowner or a home hunter. We want to be the place that consumers come to for all property-related decisions to increase platform stickiness, give us even more data signals and create those revenue opportunities that I mentioned earlier. Yes, it's a fun tool to play with, but through our early research, we found that over half of users who would use this tool are high intent, either visualizing if they could live in a space before progressing to a viewing or assessing the property for renovation potential. As with everything we do, we've taken a truly -- we've taken time to truly understand user needs, which has led to unique features like being able to remove furniture or adjust the lighting. And in the background, we've been trialing various models so that we deliver the best quality renders and reduce hallucinations. We want this to be a genuinely useful feature, so we've also included a real-time feedback loop, allowing us to monitor how the model performs at scale. And this, again, is a unique aspect of our tool. As I'm sure you all know, apps are incredibly powerful when it comes to platform stickiness. Once users download and start using the app, they are far more likely to return, stay engaged and make Rightmove their go-to platform. What's really interesting is that users who use both app and web are our most engaged, driving twice as many sessions and generating 3x as many leads. When searching for property, larger format screens play a crucial role. Users want to compare properties side by side, view detailed floor plans and carry out in-depth research, all of which is often best supported on desktop. So going app only is not the answer. Our goal is instead to elevate the app experience we provide so that whichever platform the user chooses, they have a consistently great experience. Our first step will be to align the core search features across all platforms. Then we'll lean into device-specific features like offline mode and biometrics. And finally, we'll introduce app-only features. We know that our app plays an important role for our highest intent users, so we'll play into that as an example, with new features that support the property viewing stage of the journey. Investing in our app now will strengthen our long-term position by increasing user engagement and enabling our strategy to move further down the home moving journey with our most serious users. Now on to the second investment area, our platform and operations. For simplicity, I've broken up our platform into 4 layers: first, the proprietary technology that we've built to deliver our consumer and partner-facing experiences; then the underlying data platform that powers our entire business; next, the back-office systems we use to deliver day-to-day operations, for example, for onboarding new partners or actioning product purchases and package upgrades; and finally, the technology infrastructure on which we deliver our entire platform in a secure and scalable way. We've been upgrading the platform over the last several years and are now well progressed in migrating to the cloud. We've built over 100 micro services within the experience layer, and this has led to a four-fold increase in code deployments in recent years. We now also have a unified data platform, bringing together ever-growing volumes of data that we're generating every day. Going forward, we'll continue to invest in all these layers but with 2 distinct focus areas. First, we'll invest in the operational layer of the platform, which has been a lesser focus until now. Here, we see significant potential, and I'll cover this one in a bit more detail on the next slide. Secondly, we'll build on our early learnings and create an AI-powered developer experience. The goal here is to reduce cycle times, eliminate repetitive tasks and enable our teams to deliver faster and with greater quality and consistency. The plan is to rebuild our operational layer from the ground up. For our partners, we'll provide faster and more digital service. AI will play a key role, delivering an intelligent and responsive experience powering all partner touch points, whether human or digital. Internally, we'll work more efficiently with streamlined processes and reduced manual workload. These new AI-enabled interconnected systems will also give everyone at Rightmove access to more data and create new ways to improve the partner experience. But the work to modernize our operational layer is substantial. And again, we want to go faster. We're at the very early stages of planning and design, but I wanted to demonstrate just how transformative this investment will be for our partner experience, so the team have prepared a brief concept video that brings the thinking to life. [Presentation]

This is an exciting step for us that would transform our partner experience and allow us to quickly innovate going forward. Our final area of investment will be to increase the capacity we have in our strategic R&D function. Until now, we've had a small internal team tasked with exploring new ideas. They have a keen eye on ROI, whether that be in terms of revenue, strategic benefit or enhancing the network effects. And the bar for consideration is high. Some ideas are never taken beyond analysis. Others are stopped after initial pathfinding when learnings suggest that the opportunity is just not significant enough, like we did in auctions a few years ago. Others have shown significant potential, and that's when we lean in. A good example is Rental Operators, which has scaled to generate around GBP 10 million annually. We're in a fortunate position. We have so many opportunities we could invest in if we choose to, and so we're adding more capacity to explore ideas faster and create a larger pipeline of future growth areas. Many of these ideas are at very early stage and have competitive sensitivities, so we won't be covering the specifics today. But what I will say is that a key theme going forward will be exploring new wallet areas across the home moving journey. We see the eventual opportunity here, both sizable and additive to the network effect. We will, of course, provide more details when an opportunity comes out of incubation and start scaling, which we're committing to do by 2027. So to summarize, investing in these 3 areas will deliver significant benefits. For consumer innovation, we're aiming to double our pace. We'll significantly grow our app user base, strengthening our long-term position and delivering a great experience wherever user chooses to engage. We plan to triple usage of our home mover and homeowner features, extending our relevance across the life cycle. And all of this creates new opportunities for our partners to engage with the largest home moving audience in the U.K. For our internal operations, replatforming our operational systems will transform the partner experience and deliver substantial internal efficiency. AI will allow our technology teams to work smarter and faster, unlocking even more capacity to innovate. And for strategic R&D, as we extend across the life cycle, we unlock new opportunities. We'll double our capacity to research and test more of these in parallel, generating a strong pipeline of future growth areas. Ultimately, this is about speed, scale and shaping the future, bringing forward initiatives that strengthen our position and make us even more valuable to partners and consumers. Now over to Rory, who will be covering the financials.

Thank you, Tarah. Good morning, everyone. Now turning to the financial considerations. To deliver the opportunity, which Johan and Tarah have just outlined, we plan to accelerate investment by approximately GBP 12 million in 2026 and a total of circa GBP 40 million over a 3-year period. Looking at the chart, this provides a split of the GBP 12 million P&L investment: GBP 3.5 million in consumer, supporting initiatives across the consumer domain as outlined by Tarah; GBP 2.1 million in apps with a proportion allocated to short-term burst to bring app functionality to parity with the web; GBP 3.1 million in operations, which includes a new back-office system; and an additional GBP 2 million will be invested into new growth to expand ideation capacity and delivery with the assumption that 1 or more initiatives will be backed with product and operational support, which we will provide details on going forward. Finally, we've included anticipated scaling support costs of GBP 1.3 million across the business. The majority of this investment will be driven by headcount growth in technology roles and AI-related costs. The roles will mainly be in product, engineering and AI. These figures are the P&L impact of the investment after capitalization. Total incremental investment will be around GBP 18 million in 2026 as we estimate around GBP 6 million will be capitalized. This capitalization will be in addition to our existing GBP 8 million of internal labor capitalization from BAU activity and will rise in line with salary inflation and applicable initiatives. There is significant rigor and discipline around our approach to investment. There has always been and will continue to be a healthy internal competition for capital. Every pound invested in our platform must deliver tangible business impact. We have embedded committees across Rightmove, covering AI, product development, revenue planning and people. These groups are there to drive prioritization, identify risks and opportunities and ensure accountability to budgets and targets. Both Johan and I sit on these committees, which use tailored frameworks to measure success and guide decisions. For example, new initiatives are supported by ROI business cases developed by the requesting teams, tested by the program and analysis team and scored using a blend of commercial, financial and strategic metrics to determine investment priority. Some indicative examples of the level of internal scrutiny are set out on the slide. The committee frameworks feed into group planning through leadership meetings, quarterly reviews and ultimately, Board approval. Importantly, we operate these structures in a streamlined, high-frequency way, allowing us to remain agile and responsive. The investment set out feeds into our main financial performance metrics, growth in revenues, underlying operating profit and earnings per share. Starting at the revenue level, our execution has been demonstrated regardless of the macro or property market. At a group level, we aim to maintain our current level of 8% to 10% revenue growth through the investment stage to 2028, aiming to increase sustained double-digit growth by 2030. As today, that will be driven by growth in the core business of 7% to 8% through the investment stage and beyond. This will be underpinned by an exciting array of products, continually enhanced and extended by our experienced product development team, leveraging our world-class data and AI capabilities. On top of core, the investments made since 2023 in the strategic growth areas will continue to diversify our revenue and support our ambition of double-digit revenue growth. We expect the SGAs to contribute between 1% to 2% of incremental growth to total group revenue. Together, we see a robust growth rate of between 20% and 30% as an achievable run rate going forward and into the long term. They're still on early journeys, and unlike core, they are unlikely to see a linear line of growth. But as Johan discussed, we are very excited about what these businesses could become, and we will not make short-term decisions that impact their long-term prospects. So in aggregate, core plus the SGAs should deliver robust 8% to 10% growth through the investment stage, but we want to be firmly in sustainable double-digit growth territory, which is why some of the investment outlined aims to contribute further revenue growth from new wallets or from existing areas. Moving to underlying operating profit. As I've explained, we anticipate a focused investment with operating profit growth lower in the early part of the period as we invest, then increasing as that investment begins to deliver returns, meaning we'll be nearer the higher end of the range towards the end of the investment period. As we look at our plans today, we see a floor margin of 67%. This is before any impact of the U.K.'s digital service tax, which we would expect to apply once eligible revenue passes GBP 500 million. We expect to see profit growth ahead of revenue growth again after year 3 as operating leverage kicks in for the initiatives outlined today. But our clear priority is sustainable underlying operating profit growth, moving from high single-digit to sustainable long-term digit growth. That's why we haven't provided long-term margin guidance. Our focus is on profit, and we'll have options to deliver that growth through either cost efficiencies or using the operating leverage to grow revenue faster. Throughout this period, we will remain highly cash generative and continue to deliver substantial returns to shareholders. The share buyback program will be EPS accretive, adding 2 to 3 percentage points to underlying profit growth. Together with a progressive dividend, the business should be capable of delivering mid-teen returns annually through the cycle. Before we move on, a few words on nearer-term guidance. We've introduced 2026 guidance today of 8% to 10% revenue growth and underlying operating profit growth of 3% to 5%, which reflects the investment outlined earlier. These are both within the ranges shown in the middle of this slide and assume a stable macro environment and no inorganic activity. So turning to our capital allocation policy. This will remain consistent. Our first priority is investment in the business against the framework set out earlier. Secondly, we will continue to evaluate value-accretive inorganic opportunities. We would look at opportunities that accelerate us towards our strategic ambitions quicker or provide us with products or services that we couldn't build better ourselves. As with our organic growth, we have a disciplined and high threshold. Any M&A would be expected to drive incremental growth to that outlined earlier. With remaining excess cash, we will return this to shareholders via a progressive dividend, which will grow aligned to earnings growth and share buybacks thereafter. I'll now pass you back to Johan to wrap up.

Thank you, Rory. All right. So next 5 years then in headlines, what's changing and why? Well, with an eye towards the world playing out with a whole bunch of different changes, and we talk through them, we see things on the left here being very stable, right? We'll continue to drive progress on the back of our strong position in the market. We have opportunities and foundations in the context that we operate. We run a very strong and compounding business model. The themes of change and the opportunity are set out on the right. First, LLMs, applications, usage of AI are unfolding at pace. Someone said that AI today might be at the equivalent stage of dial-up of Internet itself. Imagine what happened in the ensuing years. Nobody actually knows, again, what that curve of technology will evolve to, but we assume it will be rapid, and we want to be in a strong spot on it. Second, for Rightmove, AI does become central and foundational for all what we do. And third, we are specifically investing near term in consumer innovation, AI-powered operations and R&D for new growth. We'll become an even stronger platform than we're today. We're going to drive strong total shareholder returns for the near, medium and long term. And with that, let's turn to Q&A. If you could please use the microphones in front of you if you have them or we can get them, and press and hold the button to speak. And Rory will help to direct questions.

Jessica Pok from Peel Hunt. I've got 3, please. The 8% to 10% growth you're guiding towards the next couple of years, just to be crystal clear, you're suggesting the core is -- it's not a case that you're suggesting 8% to begin with kind of rising to the 10% over the next 3 years. Is that a matter of actually it can be choppy next 3 years depending on how quickly the SGA is in a given year? The second thing I just want to ask in terms of the top line is the 3 growth areas, I guess, the less predictable 1 is the new R&D spend. So within that top line guidance, can we assume that you're probably not assuming anything that comes out of those new growth areas in what you suggested? The second one is just on the peers. What are you seeing that they're doing on the AI front? Any color around that would be good. And then the final one is you pushed the SG&A kind of targets out further. Can you just remind us what are the pain points that you've seen so far?

Do you want to take the first 2?

Yes. So look, the 8% to 10% absolutely is a range. We've delivered 10% in the first half. We've guided 9% at the full year, so we absolutely see opportunities to get towards the top end of that range. And we so may do in the investment period. We're giving you a range like we have done for next year because there might be some things that influence it, for instance, just the pace of what we want to do in terms of the SGAs, in terms of tailwinds or headwinds. Look, if we get a push in new home developments, which we haven't had for the next last couple of years, absolutely, we'll be towards the higher end of that guidance. So it's absolutely a range. We think there's opportunities to get towards that within the investment period, but we're giving you what we think is a really robust reasonable range for that period. In terms of the new growth, look, it has to be quite material to make a percentage impact on our revenue growth given revenues are coming up to GBP 0.5 billion, and that's going to take a bit of time with these new areas. What we're talking here is not a product that will flywheel off core like the OAV or Optimiser Edge. And therefore, it will take a bit of time for it to come through. And that's why effectively, that new growth will be incremental to effectively the current growth that we're seeing past the investment stage. And we will do everything to accelerate that and to push it forward, but we think that's a reasonable time frame from what we're seeing.

And sorry, the third question, if we get to that, I think, AI and peers. So yes.

U.K. peers.

U.K. peers, yes. Look, I think I can comment quickly on the overall peers piece as well. I think you actually have a bit of grouping of active players, and you have some that seem much less active amongst the many actives. And I know that you all track them. It's definitely a healthy ongoing activation, definitely classified still as, I would say, experimentation stage, right, some great interesting pieces out there. I don't think there's anything that sticks out necessarily at the moment at least. And it's -- in the U.K., I would say it's the same thing, Zoopla probably a little bit more active than the other competitor on this stage. But no doubt, everyone is looking into this, and also OTM and CoStar, obviously, they've just announced a bunch of things around this, at least in the U.S.

The SGA targets, so you had a question on the SGA targets. Do you want to repeat that, Jessica?

Just to remind us on the pain points of SGA so far. You've reached a lot of milestones for that, but the target has been pushed out to the right slightly. So what have you seen, which has challenged?

Yes. Maybe I'll start and you chip in. I mean I think there's a couple of things with the SGA to flag. If we take commercial as a good example, we've had some headwinds in that sector. It's been impacted more so than residential. But also we've made decisions for the long-term value on which we haven't want to sacrifice for short-term wins. And the example of that is that as we grew customer numbers, you saw the fantastic growth we've seen since 2023 in that. Going forward with a price increase or a product now for us wasn't the right move. We want to continue to build that network effect, knowing better than anybody what a powerful network effect can lead to. We've seen that in residential. And therefore, rather than pushing on price and product now, continuing on that customer acquisition, growing consumers and growing customer side gives us a much better platform for the future. And so therefore, we were prepared to take that growth in commercial down a few percentage points. And I think that's an example within the SGAs that we are seeing all of these areas as real opportunities with large TAMs, where we absolutely see our sales being able to play a big part of that. That hasn't changed. But what we aren't prepared to do is take kind of short-term wins to sacrifice that long-term value. And so I think there's a little bit of that in terms of us providing that range of 20% to 30%, which, to be completely frank, we will be aiming for higher. Of course, we will do. And I would like to say it's towards the higher end of that range, but that is what we see, is a really robust sustainable growth rate in those SGAs for the long term.

And look, I would just add to that, the 20% to 30%, of course, that's not the inflection point that was needed for the previous 28 numbers. The 20% to 30% is a very meaningful 3 to 4x the core business. And as long as we feel comfortable with -- of course, we're trying to push them very meaningfully forward also commercially, but truly, we are looking at the long term. We talked about it, I think, on an ongoing basis, of course. And in some places, it's like we're doing this, great execution, but look, the opportunity might be even bigger if you think about it like this. And in some cases, you come up against some stuff that takes time that you -- we simply couldn't have forecasted by that time, PEPs and sanctions regulations that needs to go into all the machinery, Lead to Keys as an example, right? But look, that's part, of course, in doing business. And I'm really happy about those growth rates and what they will lead to over time.

Will?

It's Will Packer from BNP Paribas Exane. Three for me, please, as well. So firstly, to sort of frame the margin investment, we've obviously had a significant margin dilution in recent years already. We've had a 50% increase in staff. Should we think of it the backward-looking margin dilution was catching up where you needed to be and investing in strategic growth areas and now this is you proactively trying to get ahead of the curve? Or should we think of it still sort of as catch-up versus peers? We had the last couple of weeks a busy results season hearing about products like [ Hey! MO ], et cetera. Do you need to catch up to that? Second question, playing devil's advocate, why not have a much more aggressive investment in 2026 if the -- we have such a fast-moving market backdrop? Just understanding a bit why the investment is gradual over the next 3 years would be helpful. And then finally, I don't think we mentioned ChatGPT in today's presentation. They're very important strategic decisions forthcoming. How much do you integrate when they launch their integration -- app integration in Europe? Are you planning on being a part of that? Do you have to be because Zoopla will if you don't? How do you see that kind of risk/reward and decision-making?

Do you want to take the first and the [ third ]?

Yes, take the first. Yes. I'll start with the investment gradual. Look, it's -- where we envisage it is the investment is pretty quick in the first year and then it kind of stays pretty similar, growing very slightly over the 3 years. So it's not that we're investing and then continuing to increase that investment materially over the 3-year period, which is effectively why we expect to see underlying operating profit growth at the lower end of the range to start with. And then it starts rising, and so as we exit the investment stage, we're towards that double-digit operating profit growth. So we are accelerating and going fast with that investment from 2026. And what Tarah has outlined as well is that investment is on top of, a, the current investment that we're really happy with the ROI that we're getting across core SGAs and consumer at the moment and that we are very targeted and disciplined in what that investment gives us. You heard me talk about the kind of frameworks and governance that we've gone through, and that will add us a lot of firepower in order to see what we want to do. There are some things that we'll get quicker wins with because that's the nature of that investment versus, say, a back office, which is going to be a multiyear time frame. And that's going to take time to implement, and then it's going to take time to see some of the efficiencies come through that. But we feel absolutely that the GBP 12 million P&L investment is the commensurate value with what we want to deliver with this. In terms of the first question in terms of is it a catch-up, no, I mean, look, I think like all businesses, we're continually wanting to invest, refresh and evolve our business. And so of course, I'm sure Johan would have wished that some of that was a bit more upgraded when he came -- started, but I think that's the same for every incoming CEO. I think the investment that we outlined at the Capital Markets Day was specifically accelerating the strategic growth areas. We're not cutting back on them. We're really happy with what that investment will deliver. This is investment that we absolutely could have absorbed within our current margin profile, and we have that discussion. For us, that wasn't the right way of going this because we want to do all of this quicker. We see that if we waited like that, then the opportunities wouldn't be brought forward and we would miss out. And us as the market leader wouldn't find that acceptable. And so for us, lowering the margin in a short period of time to be at the front of the pace for what's happening and being able to take the advantage of the opportunities, of which, as Tarah gave some detail and flavor of them, we think are really exciting and varied, for us was the right decision. And we'll constantly look at margin as an output, as we've always discussed about what is the right level of investment. But as I say, very happy with that floor of 67% for the investment period.

Yes. And on ChatGPT, so look, there's an overall premise here in that wherever consumers are, we're interested in getting hold of them, right? But also very importantly, over 90% of them know about our brand, and we have 70% to 80%, obviously, of consumer time spent on portal. So there's an existing search engine, which is the biggest in the world, actually keeps growing, by the way, and it's not being replaced. And people have used that to some extent, that they actually go and look for our brand, and 85% or 85-plus percent of everyone actually comes to us directly or organically, right? So we have a direct relationship with them already. I think a lot of that is very transferable to another medium, where people might conduct some of their online activities, whether it's social media, which has turned into search in some instances or obviously ChatGPT. Now again, ChatGPT is powerful, right? It's very intriguing, of course, to see what they're doing backed by billions and consumer adoption, right? That goes for everybody. So if that makes sense for us to play in, we're absolutely open to that, right? Now when we talk to them regularly, they're obviously not ready with their European sort of setup and SDK. But we expect that to come, and we will entertain that idea for sure. There are still things to figure out in terms of what the setup is and where we'll go over time and so forth, right? We also have very good direct relationships with several of the U.S. companies who went on the apps in GPT already on.

Marcus?

Sorry, it's muted. Sorry about this. Clumsy, sorry about this. Can we continue on the AI? I'm sure you get this -- in every single meeting as well, we get this as well. I mean the concern seems to be that, going forward, as you said, a large part of traffic might have a different starting point. You mentioned Google, and obviously, that's obviously a day-to-day business today. But in the future, the risk is, as far as I understand, that any LLM might not prioritize. And the inventory leadership that Rightmove has is not that large. It's massive traffic leadership but not necessarily inventory leadership. So the question is if the starting point is different and it's not prioritized necessarily, isn't there a risk if the properties can be also found elsewhere that LLMs find it. So the question is do you think about potentially limitations to what level of data you will give to the LLMs because at least the argument would be that if the search criteria or the search would be better experience in, let's call it, ChatGPT, it might be hard to -- harder to compete. So is it really that you just say, okay, it's -- let's wait, but we are open to give our inventory to those sites, whatever they will look like? If you could give us just a bit more broader answer on this than what we just heard. And maybe 2 more questions. One is on the growth initiatives. I mean, obviously, you highlighted that the proceeds will just come later. I haven't really fully understood why that is. Is it just that you feel, with better tech, it will work better? Is that sort of like the bottom line, why we should still expect the same outcome, just a bit delayed? And then thirdly, on the cost base. I mean, clearly, Rightmove is a U.K.-based cost base company. A lot of other peers talk about outsourcing, not only software engineers but also other areas. Is that something that is starting to get discussed internally? Where are we in this context when it comes to Rightmove?

Okay. Great. I'll start with the first one and also let Tarah chime in being close to this. I think what you mentioned, Marcus, is actually interesting. If I got you right, the fact that we don't have a huge supply advantage, we do have a supply advantage, but it's not huge. And if that is exposed elsewhere, why wouldn't people go there? I would flip it and say precisely because there's not a massive difference in supply and consumers go to us and keep coming to us, it's because we deliver what we deliver for them. And then we built that repeat behavior. So I think that has real longevity. But again, in a new way of searching or finding information, it might be complementary type of information. Then you have to assess how you interact with that environment or, again, if it's actually a little bit like you see on search overall, right, it's not -- again, it's not that the 850 million weekly users on ChatGPT has just sucked that equivalent out of Google. Google reported 100 billion. A lot of it was cloud, right? But actually, they see search growing. But they're also obviously rapidly sort of redeploying how they serve answers. Right now, it seems to be all boats are lifting a little bit because this is interesting. It's novel. It's another way of finding information. And I think that's a parallel to what we do as well. First of all, having all of that content and as I said before, I think comparison and actual visualization is extremely important. But then you combine that with all the very contextual, specific linked in or logged on, et cetera, features. Very, very few, Google included, Facebook included, who try to go into different verticals actually get to that level of sophistication, right, because they try to rule the world up here as the answering engines. And obviously, that's, for sure, I think what ChatGPT is absolutely about doing right now. I think they're extremely focused on growing revenue as well, but it seems to be very B2B oriented and driving user and consumer, right? We'll see how it shakes out over time.

I'm just going to add. I guess 2 advantages for us that really stand out to me: one, the 25 years of data that we have that is just so much more than stock; and secondly, how deeply we understand what users want when it comes to property. We do thousands of hours of research with both consumers and partners every year. And as Johan said, we're doing so much more than search, what I showed you. Every part of the home moving journey, we're starting to provide value and tools that help you. We're going to be the one-stop shop for all of that.

So Marcus, on your cost one, and I'll come back to -- you might need to clarify the growth one. But on the cost, we continually evaluate our resourcing model. We have used contractors in the past where we want to accelerate and go faster. Those have always been kind of U.K. domiciled. Pre-COVID, we have used contractors outside of the U.K. We'll always look at our resourcing model in terms of what's best in terms of a measure of cost but also efficiency and also culture. So we'll always evaluate that. I think your question was just why is the new growth taking a little bit of time to come through. Was that the...

Yes.

That's the question. So the reason for us I mentioned is, look, to make an impact on revenues of up to -- coming up to GBP 0.5 billion, it's got to be anywhere between GBP 5 million and GBP 10 million, and that's just going to take time. Of course, we have products within core that can do that pretty quickly, but these new growth areas, and we're not counting a product like OAV or Optimiser Edge within that, right? So that's just going to take a little bit of time to mature and get off the ground, which is effectively why we're saying that's past the investment period. Of course, we'll try and make it quicker, and we'll bring more details when we have. Giles?

Yes, sound check. First question is for Johan. We sat here in -- well, not this office, obviously, your prior broker a couple of years ago, and I asked you, incoming, did you get everything you wanted from the Board around investment. And you said, well, you come from a pro-investment cycle, a very pro-growth environment, but you respected to the Board's needs to balance profitability and growth. And yet we are 2 years later and certainly suggested from Rory's earlier answer that there's a bit of catch-up here. So the question is do you finally have everything you want to be investing in. Second question is on the Rightmove Resistance Tour. So many leading questions I could ask there, but I'll leave it over to you to comment on how you see fit. But the one element coming out of that tour is that you're currently blocking ChatGPT. So a specific comment on that would be useful. And then finally, on the strategic growth areas, a very, very specific question about the mortgage and principal product. Is the launch of eligibility checker a tacet admission that there was a flaw in the original design of the MIP product?

Okay. I'll start with the first one obviously. Thank you, Giles. Look, it's pretty simple answer. I've always been and felt very supported by the Board. So we're going to go into some of the specifics, but that was true then. That is true now. And of course, the Board is -- it's a really great Board. They are challenging in our strategic thinking. That's where they had a lot of that piece. But at the same time, they're supportive of what we're doing then, a year ago. Same thing now.