Rightmove plc (RMV) Earnings Call Transcript & Summary

Thank you, Nadia. Good morning, everyone. I'm joined by Alison Dolan, our CFO. Hopefully, you've had a chance to see the presentation, which we posted this morning. I thought before we -- to kick off, I will take a couple of minutes just to give you a quick summary of all those words. I think it's 40 minutes long, so I'll try and do justice in 3 minutes. Firstly, the network effects for the half of our business are really stronger than ever. We've had record traffic and leads in 2021. Traffic was up 15% on the already record number of 2020, and leads were up over 27%. In terms of customer numbers, I think we saw a continuation of the trend from H1 with the estate agent numbers building back and New Homes developments continuing to sell out due to the imbalance in supply and demand. I think our performance in 2021 really underlines the strength of the business model, both in weaker and stronger property markets. So our ARPA growth of GBP 101 compared to that in 2019 really shows that we can build back strongly. I think it's worth drawing out the momentum in 2021, which will carry forward into 2022. The December-to-December ARPA growth, so taking 2020's ARPA -- December 2020 ARPA and comparing it to December '21's ARPA, was actually the highest we've ever achieved in a 12-month period and another great demonstration of that, which Alison refers to in the presentation, is if one looks at the second half Agency ARPA growth, which was actually double that we usually see in the second half of the year, and obviously, that momentum because the second half really helps us into '22. ARPA itself was driven by healthy upgrades to Optimiser 2020. We had 1,400 in the year at an average uplift of over GBP 300. So again, a continuation of that story we spoke about 6 months ago. And our product delivery in the year was really strong. We had 4 product launches during the year, customer product launches, all of which, as you will see in the presentation, are achieving good revenue rates -- run rates already. We've also made significant progress with digitizing the property market through our mortgage and tenant services ambitions. And there, as we've discussed previously, what we're really doing is we're sort of investing in the momentum of the future. So looking forward, I know there are worries about interest rates and inflation and what the impacts will be on property market. And I've got no doubt actually that, of course, that cost of living rises will really impact a number of people. But if one looks at the data, home movers themselves, I think, their appetite to move has not been dimmed. So looking at our most up-to-date data, which runs until the start of this week, the market is still strong, demand is up 16% on last year and sales are being agreed at about a similar rate as this time last year. And again, just reminding you that this time last year we all thought we were approaching the stamp duty deadline. So it was an elevated rate of sales agreed. In terms of transactions, so things that are just coming through the pipe now. According to HMRC, transactions in January were about same as 2020 and 9% ahead of 2019. So I think it's not unreasonable looking forward to think that transactions will perhaps be at a more normal run rate, probably somewhere between 1.1 million and 1.3 million. Given the lack of supply, we're also predicting that housing prices will probably rise by about 5% this year. There is still a lack of new stock coming to market. There are a few rays of sunshine. We've seen valuation requests through our lead tools up about 10% on this time last year. And some of that now is just starting to come through in terms of new stock to market. So that's positive. And agents are certainly reporting a lot more valuation activity than they saw this time last year. So looking at Rightmove, I think 2022 will see further small gains in Agency numbers, but I don't see that the supply-and-demand imbalance to New Homes is really going to change in the next 6 months. So I think, overall, I'd say, we'll see a slightly small -- a small gain in agent numbers, but that will be offset by a further small fall in New Homes numbers. And given all that momentum from last year, I think -- before someone asks me the question -- I think ARPA growth will be somewhere between sort of GBP 95 and GBP 105 in the year. So really positive. And in terms of innovation, our innovation for next year or for this year will continue apace as detailed in the presentation. So we've got a plan for another 3 new products in 2022. We're also pushing hard on our efforts to make transaction more digital. So a real focus in mortgages to bring the mortgage in principle on to Rightmove in the first half of this year, which will be a big step. It's a complex part of the process and one that confuses and frustrates consumers. So we think we can make a real difference. As I say, hoping to get that on site, it will be the first place to bring together search and mortgages. We're hoping to do that by the first half of the year and give us a baseline to optimize from. In terms of the rental transaction flow, lots of really interesting progress in '21. The first half of this year, we're going to see some really exciting new deliveries with our process flow that will enable agents and tenants to communicate entirely electronically, all the way from leads to keys. So that's really exciting. We'll see that launch towards the end of the first half, along with our new open banking reference in quarter 1, which will provide real efficiency for tenants. So it's about 1/3 quicker to apply and about 20% quicker to process. So that's exciting. Rather than me babbling on further, I'm sure you've got lots of questions for us, so perhaps I'll stop there, and we can take some questions.

[Operator Instructions] The first question comes from the line of William Packer from BNP Paribas.

Three for me, please. Thanks for providing the ARPA growth range and the membership guidance, GBP 95 to GBP 105 and flat, I think. Could you just help us think through what the kind of upside and downside risks out there? How do you go to the top of the range? How do you get to the bottom? Is it primarily the performance of New Home that drives that? Any color there would be helpful. And secondly, on cost guidance, I suppose, in the release, the kind of key outlook item was that you are now thinking of a range of 25% to 27% of cost as a percentage of revenue versus 25% for FY '22, as you commented. I think it was at the half year results. What's changed? Is that phasing because you beat on costs in 2021? Or is that more product investment? Obviously, the market is pretty focused on that right now in the wider classifieds space. And then I suppose related to that, finally, could you kind of give us a little bit of an update on where you are in your product development in areas like mortgages and lettings and when we should start to see monetization? And perhaps, any view on commission sharing, which some of your peers are exploring as a revenue model and whether that works for you?

Thanks, Will. Right. I'll talk about some of the upside risk. But Alison, talk a little bit more about cost guidance, and then I'll come back and talk about that transaction products. So what would push us towards the top side of that guidance is probably not New Homes. I think one can see already, as I say, with New Homes, this is supply-and-demand imbalance. It takes a while to build a house. So given what we see already, I don't think that really turns around in the first half of this year. So I wouldn't think that's what drives us. I think -- well, the upside risk comes from these new products that we launched last year that -- if you've seen the presentation, there are some numbers in there. I think they're generating a run rate of about GBP 30 million already. So actually, how do they grow? I'm really optimistic. I think the guys have done a cracking job and shared a little bit more about how we think of our product, which I think is -- we've got a really thoughtful strategy in there. So I think if that, will we see more adoption of those products? I'm pretty optimistic, but wouldn't want to promise it just yet. Does that get to your upside risk? Talk about...

Yes. So the key driver of getting to GBP 105 is where we built the success of the new products, which has been -- which has done pretty well in '21?

Yes. So you see that come out through Agency ARPA. Maybe, Alison, would you like to talk about costs?

Sure. So we're continuing to guide to margin for '22 of 74% to 75%, so slightly narrower than the 25% to 27% of cost that's in the release. So that's the first thing I would say. No structural change at all in the cost base. And Slide 10 in the presentation give you a very good guide as to the categories of cost. It's pretty much a mirror image of what we're expecting for '22. So a bit of an increase in people costs, and that's from new heads in the product development team, a bit of salary inflation, a bit of growth in G&A as COVID savings unwind. So the bridge shows that they decreased in 2021. We don't expect to see that this coming year. And broadly, no change in the rest of the cost base. So we'll see some increase, but reiterate margin guidance of 74% to 75%.

Actually, on that, just having said all that, I sort of understand your concern. I think there's 2 things to think about that, the sort of operational margin as we're developing product margin and there's the operational margin. We still -- if you look at our products that we talked about in the release, everything we deliver is digital. So it's -- they still have very high operational margins, which I know it's not exactly same as a lot of people are talking about. But yes, rest assured, we really care about profitability of our products. And as Alison said, it's a bit of timing and a bit of head count. In terms of the sort of slightly more transaction work in mortgages and rental services, I think, as I said before, we're slightly further ahead in transaction services in that journey. So we are now monetizing. I think we've got a lot more to do, and we're still focusing on building a really strong platform. Super excited about the transaction flow, which we can talk more about perhaps at the half year, which we'll launch in the first half. But also quite interestingly for us, right at the end of last year, we launched 2 new landlord insurance products. So just to remind you, we are effectively an insurance broker for landlord insurance. So we don't take the risk, but we work with the underwriters to create insurance products, and this is a first for us. And we've seen really sort of heartening uptake 6 weeks into the new year. Because what those products do is they leverage the quality of our references, so we've been able -- 1 product is now -- has got unlimited cover for a landlord, which is new to market. And the other product at a lower price point sort of covers the basics, if you will. So really excited by that, and we are starting to see the monetization. But absolutely, focus right now is let's build a strong platform. And it's exactly the same story with mortgages. The big push is let's build a strong platform that really takes some of the mystery out of what you can afford with the MIP. Super excited. Again, if you look at the numbers in the deck, the difference we've made to the conversion rates at the top of the funnel, I think it would be real hard, but we're on to something. But we're very fortunate that we can continue to work through that in through the MIP -- sorry, mortgage in principle -- through the mortgage in principle. And actually, we can take our time to get it right rather than sort of slightly going off, frankly, half-cocked and just chasing revenue. So we're really trying to up those conversion rates before we push on the monetization. Still, I think as both Alison and I said last year in various talks, still believe that both of those opportunities are sort of GBP 20 million profit opportunities in 4 years' time. Nothing to change my view on that. So we're working to a plan. In terms of commission share, yes, I absolutely know some of our peers are doing that in other markets where perhaps the market structure is slightly different. It's fascinating. When we talk to our customers, commission share is sort of -- it becomes a really negative conversation. And I know, probably for all of us, we think, particularly if you're small and don't do many transactions, commission share sounds super logical. You only pay when you transact. But they find it sort of -- it impinges on their good work, and it suggests something quite negative to their ego. So I'd never say never on commission share. I think it's just got a slightly uncomfortable sentiment side. So I don't think it's particularly likely in the U.K. And interestingly, when talking to peers in some other markets, they've done the same sort of research and got the same feedback. Maybe it's a particularly sort of Anglo-Saxon view on the world as opposed to a slightly more European view.

The next question comes from the line of Ciaran Donnelly from Liberum.

Just one for me, actually. You talk about retiring Optimiser '15. Quite simply, kind of if you could give us some insight into your views on the package structure going forward, will it remain a 3-tier structure? Would you look to kind of make any changes to perhaps increase the yield of the Agency base?

Okay, I'll try and be brief because this is a topic I can talk about for about 4 hours. So someone will have to stop me. Probably worth starting actually -- I'll come back to Opti '15 -- but it's worth remembering that our package structure is quite different to many package structures. So they're sort of bottom thresholds and within -- and I think, in the presentation, we showed some of the numbers. Customers can buy more products and put them into a package. The package is flexible, so we don't need sort of 5 to 10 package levels to optimize, unlike some different package structures in other industries. So that's worth remembering. In terms of long term, I think, again, what we've seen in the past is, typically, our package structure we renew sort of probably every 5 to 7 years. We're at about year 5 of the current package structure, so I think we've got a few more years to go before we give it an overhaul, sort of soup to nuts overhaul. In terms of optimizing, I think we've shared in the presentation some really fascinating data, which is, after a year, an Optimiser 2020 customer on average has spent another GBP 93. So if you took the amount they were spending when they upgraded to Optimiser 2020 at about GBP 300 of uplift, 12 months later, they then decided to spend another GBP 93. So that really sort of shows the power of our products and the power of package structure. We don't have to keep revising the package structure to get people to move up the ladder. So our opportunities for now are get more people into Optimiser 2020, show them the value of the products, and then they'll grow and offer themselves, which is -- I would say it's a brilliant conversation, but it's almost not a conversation. It's even more brilliant than that. And then the other opportunity is the -- Essential customers is now with -- our independent customers is our largest customer group, helping them see the value, getting them sort of to try sample and then getting them to upgrade. Because the other number, which I think is quite interesting, to me at least, is the trigger spend. So the amount the customer spends before then making a big product spend uplift is about GBP 80. So if we can help Essential customers spend GBP 80, see the value, I'm fairly confident our data would suggest they would upgrade. So we need to work on that. That's a bit of a longer thing. We're currently trialing a few ways of helping them see that value. In terms of your first part of your question, Optimiser 2015, it's really following the great up-sell success we've had in 2021. It's now a case of we're tidying up our package structure. I am very excited to stop saying Optimiser 2020 and be able to just call it Optimiser again. So it's sort of always in the plan that what we would do is we'd wait until we had the majority of customers upgraded and then we would retire '15. So it really is a tidy-up to go back to a 3 package structure rather than sort of 3.5 structure that we've had in the interim. Does that make sense, Ciaran?

Yes, that's brilliant.

If you want, we have 3 hours of the conversation. Give me a call.

I'll call you later.

The next question comes from the line of Michelle Yao from Goldman Sachs.

This is Lisa Yang from Goldman. I have a couple of questions. So firstly, on your ARPA guidance, thanks very much for giving that. I'm just wondering, given what you achieved in 2021 and if I look at the -- I think that slide in your presentation, Slide 9, which shows really an improved momentum and a very strong exit rate, do you think that could be a bit conservative? I'm just wondering what -- why there would be a bit of a slowdown in that improvement momentum into 2022. And related to that, I'm just wondering like how much of that ARPA growth that you're expecting is sort of already secured? The second question is on the pricing strategy for 2022. I think last year you talked about increasing prices across a certain percentage of your customer base. I'm just wondering how that has panned out and how you're thinking about raising your prices. What percentage of agents should see a price increase? And what's the magnitude of that? And the third question is, again, on the ARPA growth. Historically, you've been growing more around GBP 80, GBP 90. And obviously, you're guiding now to GBP 95, GBP 105. Do you think that's the new normal? Or is there anything specific to 2022, which means from 2023 onwards we should go back to more the historical rate? Or on the contrary, we should expect GBP 100 per year going forward?

You're welcome. Right. Let me try and walk through those 3. So maybe, ARPA guidance, we've been conservative. I think I'd let you decide that. We have a headache, so perhaps I'll defer and not really comment. But yes, I'll let you decide whether we're being conservative. How much of it is secured? Well, a lot of it -- well, some of it comes from obviously that momentum in the second half. So that's really positive for us. Some of it will come from product up-sell. Well, it's too early -- what, it's only been 2 months into the year. So not much of that has happened [indiscernible] I guess. The other thing, there is an element which is about 40% of it will come from price. And we've communicated to about 20% of people on the plan so far. And that's going entirely as we would expect, given our 17 years of history at raising prices. So that looks pretty much on norm. So yes, a chunk is secured, but there's still quite a lot of work for us to do. In terms of the price -- broadly, the price plan actually looks not dissimilar to 2021, both in terms of number of customers -- I mean final number of customers, the lay-down for the year, which, again, a reminder for some of you who've noticed for a long time, it is now different. It's slightly more spread through the year than it used to be, given the price rises we pulled forward into 2021. So they will occur again at the end of -- towards the end of '22. In terms of magnitude of price, yes, about 10% again, so it's pretty similar actually from a planning perspective. And again, as I say, the 20% that we've already communicated feels really encouraging, feels very similar to the success we had in '21. Then you got a third question about ARPA, and I've written it out and I can't remember.

GBP 80 to GBP 90.

Is GBP 80 to GBP 90 -- is GBP 95 to GBP 105 the new GBP 80 to GBP 90 or, if you're as old as me, the new GBP 60? Yes, I think so. We'd like to move forward. Does that answer your question?

That's very helpful, yes.

The next question comes from the line of Miriam Adisa from Morgan Stanley.

Firstly, just on the margin of the new digital products. I think you said that you're still expecting them to deliver a high margin. But could you sort of run through any additional ongoing costs you may have on some of these products once you've passed the development stage? Just to get a sense of what the margin differential might be versus the core advertising products. And then secondly, I guess, it seems like there's a lot of product development going on. Just thinking -- wondering how you're thinking about how much of the agent commission pool longer term you'll be able to capture as these new products start to come through. And then on the vendor lead side, clearly, there's a lot of popularity there. So how are you thinking about product development in the lead generation business? And how are you thinking about pricing that and the opportunity to really accelerate pricing growth there?

All right. Where should we start? So margin new products. So most of the new products, when we launched last year, the fall, we're going to launch this year, they are digital advertising products. So fundamentally, they're 100% margin -- at the margin because to operate they're purely digital. So I don't know if that -- I'm sort of hesitant because I'm not quite sure if that was your question. Was that your question, Miriam?

Yes. So all of the new products. I guess some of them are just advertising, but then, I guess, with the mortgage and tenant services...

Right. Yes, mortgage and tenant services. Yes, so mortgage is, fundamentally, we are heading down the digital route. So it will be similar. We're not intending to be a mortgage broker. We're not intending to have rooms full of mortgage brokers. So that will be very similar to the marketing products. Tenant services, we're on a sort of a development path, currently performing a reference, involves human input. It's one of the benefits actually of the new open banking references. It will require less human input. So one of the reasons -- I think I've spoken about -- probably a while ago now -- one of the reasons for choosing Van Mildert -- to purchase Van Mildert is it didn't have a massive market share. So therefore, we haven't got a business with hundreds and hundreds of people in it. So as we digitize it, we can increase our volume without increasing the number of people. So that will increase margin. The insurance products, which is a big part of the opportunity, I think, in rental, those are -- because we're acting effectively as a broker again. So obviously, they're very high margin. So that's -- those things. Agent commission pool. So I probably -- I might have to whisper apologies because I'm slightly embarrassed. I think our share of agent commission pool has come down because the commission pool has gone up and we haven't gone up quite as fast. So we're probably now about 6% of agent revenue. And again, I think, one of the things, hopefully, that comes through the presentation -- and feedback off-line is welcome -- one of the things that comes through is we believe we can capture more of their marketing spend. So typically, an agent spends about 15% of revenue on marketing, and we're -- so we're less than half. But also, we think we can help them expand the amount they spend on marketing. So both by the efficiency tools that we deliver, have always delivered, things like the Best Price Guide, which was run a record 14 million times last year by agents. Things like the tenancy flow actually not only create great opportunities for us, it creates a lot of efficiency for agents. So hopefully, that will come through and they can then spend more marketing. And also, as we put in the deck, we're going to launch some more training options that will lead to an NVQ Level 3 for them by the end of this year, which will save them some money. So I guess, simplistically, I believe we can win more of the marketing pie, and we can make the marketing pie bigger for agents. So that's, I think, where we are, and we've got a long road to go there. Vendor lead products. Yes, it's sort of amusing to me because then suddenly vendor lead products are trending, but we launched our first vendor lead product in 2012, I think, and then our second one in 2018. So they're not new to us. They're really good. And again, we think slightly differently to some others. We -- they're wholly digital products. We put quite a lot of underpinning work in the last year to increase the inventory, to increase the performance and, therefore, increase inventory. And you'll see from the deck that vendor leads increased by 40% since 2019. So it was a testament to the work that's gone in there. All of our products are about generating vendor opportunities for agents, whether that be the top-of-funnel consideration stuff, the brand marketing the agents do, which is probably a U.K.-specific thing. So I understand it's quite difficult to draw parallels with continental peers because it doesn't happen so much. That behavior doesn't happen so much in Continental Europe, happens in Australia. So I think we've got lots more to do. Interesting -- we've got an interesting product launch in probably Q3 this year for agents, which is further towards the top of the funnel, but is still fundamentally about generating vendor opportunities for agents. And I think, if you have time, in the deck, there's a graph that shows the number of instructions that agents win versus the number of units -- products agents buy. And you can really see the impact of that. So hopefully, that's covered everything, Miriam?

Yes, that has.

The next question comes from the line of Joe Barnet-Lamb from Crédit Suisse.

Excellent. There's a couple left from me. The first one is just on Optimiser. And you're obviously very excited to just to be able to refer to it as Optimiser rather than Optimiser 2020. What is the price differential between Optimiser '20 and Optimiser '15? And as such, how material has migrating across been for ARPA in FY '21 and will it be for FY '22? And then my second one is just with regards to the balance sheet. Given where the share price is and your positivity on the future, would you consider being more aggressive on the buyback at current levels?

Okay. So Optimiser, yes, you know I love simplicity, Joe. So yes, just being able to call it Optimiser again is a delight. The price differential, on average, it depends on where you are because -- I come back to the sort of first point that our packages are threshold, so you can have a -- not every Optimiser '15 is spending the same amount of money. Some are well beyond threshold. On average, that steps about GBP 300, to give you a sense, so that's built into our sort of ARPA prediction -- no, I'm not allowed to call it prediction, am I? Our vague ARPA guidance for this year. Is that where you were...

Yes, that's perfect. We can do the math on that.

And the balance sheet, that sounds like an Alison question.

So look, the policy on the buyback is that the buyback really is the balancing number to return all surplus cash to shareholders. So the policy is to grow the dividend firstly in line with underlying EPS. The priority always is organic investment in the business, and then we will leave the buyback as a way of returning the remainder of surplus cash. And because we do that and manage to a very low balance sheet cash number, the only way for us really to ramp up the buyback program would be to gear up in order to do that. It's something we've looked at before. There are clearly pros and cons to it, but we have no plans to do it, certainly, in the short term. I think we're pretty happy with not being a geared business. There are definitely operational advantages to it. So no plans right now.

The next question comes from the line of William Packer from BNP Paribas.

Just one clarification to Lisa's question earlier. I just wanted to make sure I heard correctly. It's right to think of GBP 95 to GBP 105 is the new normal for ARPA growth for the medium term, not just for 2022?

Yes to that.

[Operator Instructions] The next question comes from the line of Giles Thorne from Jefferies.

My first question is on total memberships and new players out there suggesting that they've now got a higher level of total memberships than Rightmove. And given whole-of-market listings has been a big part of your consumer value proposition forever, really, is this a metric that you recognize? And is it something that particularly concerns you? Any thoughts there would be useful. Second question, yes, I recognize there is a lot of talk in the market around vendor lead. And some of the other products out there are suggesting astronomic returns on investment for agents. So I'd be curious -- and it was a question that was asked earlier -- but I'd be curious again to know what you're intending to do to invest in Opportunity Manager or the Optimiser package, increase ROI or basically better predict potential service? And then lastly, mortgage in principle being offered on site is evidently a bonus for consumers on their journey. But in the U.K., to say the obvious, you have a pretty well-cultivated price comparison website sector that's incredibly well entrenched and not going anywhere. So I'm just curious how you interplay against the consumers' awareness of those sites that I'm presuming will have a better, more varied mortgage panel than yourself. Any thoughts there?

Thanks, Giles. So total membership -- I don't know if you've got the presentation in front of you. On Slide 19, I've included a stock penetration chart because there are a number of different ways of counting a branch, which might sound slightly bemusing, but really happy to take you through it one day. There's lots of different ways of counting it, and I would suggest that we're not counting in the same way. So rather than getting to all of that, the thing that really matters, as you point out, is how much of total available stock is listed on your portal. That's the real consumer measure. Because, again, if we are totally straight with each other, having one customer who lists 5 properties a year is very different to having one customer that lists 10,000 properties a year. So I thought rather than sort of getting into all of that, I'll take that away and just show you total stock penetration. So if you look at the slide -- the chart, bottom right, Slide 19, it broadly says we're mid-95%, and we're still at mid-95%, which is, I think, the number it's been almost for as long as I've been at Rightmove, which is 16 years. So it's pretty much stable. So that's the answer to the first question. But you're right, having the stock is important. Secondly then, the lead investment. We're investing in all sorts of things. And as I say, it's across the spectrum. I think it's very beguiling to get hiccup about the final-mile delivery, if you like, of the vendor lead, but you do have to concentrate on the whole marketing funnel in the U.K. So on average, I think 2.8 -- a vendor will invite 2.8 people out to value their home. If you're not in that 2.8, everything else becomes somewhat irrelevant. And what we do -- and that's driven by brand. It's pure consideration. Do -- does the agent sell properties like mine is the key question, which if you remember is exactly what Sold By Me is sort of -- the product was launched in 2019 -- is driving at. Because what we do see from our vendor lead products is it's all very well offering a great product, but agents get deselected if their brand isn't prevalent. So you have to be a bit careful. And we can generate -- yes, it's really easy. Our tech guys are really smart. We can generate lots of leads. We can send them to more and more and more agents. It reduces the quality. So what we're focusing on is sort of all the things that make us unique as a platform, which is about our scale, about things like thinking about products and features. So on Slide 23, there's a collection of neat words which effectively describe our vendor opportunity strategy. So it's really fascinating. I'll give you a little anecdote about Sold By Me. So Sold By Me is the feature that lists properties that an agent has sold near where a potential vendor lives, but it exists within the search channel, but it shows the properties that are near where they live because vendors -- because people share that with us, but don't share that with anyone else. So that's really powerful, firstly. That's smart targeting. It's really powerful. And we had some feedback. The guys were doing some consumer research on a different feature on the page. And the consumers said, "I really like that feature at the bottom of the page. It really helps me understand what's going on." And the guys were a bit confused, frankly, Giles, because they didn't know what [indiscernible] what feature is that. But it was Sold By Me that we're talking about. And of course, what that does, it means you just get real engagement because it doesn't feel like a hard sell to people. It feels like a really useful feature. So product as a feature is a really, really important part of our strategy. You mentioned Opportunity Manager. So that, again, I think leverages what we know about consumers. The first-party data we have, it's just unhelpful. We don't have to make really radical predictions. And all the difficulty and, rightly in my view, dangers that come with that in terms of data piracy, we're sharing some things people tell about themselves. So our strategy is really to work across the funnel and think about vendor opportunities, all of which then lead to one path. And the return on investment, again, I'd sort of refer you back to that chart that just shows the number of leads versus the number of products people buy. I mean it's pretty remarkable.

MIP.

MIP. Why are we different to price comparison? So -- well, firstly, I think that -- I think there's only one that is doing a full mortgage in principle on site. So price comparison, you have to be a bit careful with mortgages because anybody can offer a headline great mortgage rate. And then actually, you find that most consumers can't access the rate because they don't have the loan to value or they don't have a credit score. So first of all, mortgage is a bit more complicated than perhaps other products. I think the real advantage we got is you have to think about different mindsets. Mortgage is a part of the purchase journey. So how much can I afford? Now can I get the mortgage? Now can I move in? Whereas price comparison is how do I optimize my outgoings. So it's a very different intent. And it's actually -- we see exactly the same in rentals. So where we offer insurance to tenants, we don't offer them price comparison in insurance because that's not what it's about. We offer them certainty and speed. So by bringing -- we think, by bringing together search and the detail of the mortgage in principle will give -- and it will be a full lender of backed mortgage in principle, which might have up to 119 questions, it's not a sort of guesstimate. Then I think that will put us in a really different position to the mindset of price comparison. And price comparison is really about remortgage, not about house purchase, first-time buyer mortgage. And if you look at the conversion rates, yes, I think we're showing that we've got a really interesting consumer base, and it's up to us to deliver them a really great service. So that -- did I get there for you, Giles?

That's understood. Just one follow-up on the point around, basically, memberships and the chart on Slide 19. Has there been a closing of the gap on whole-of-market listings? Has there been...

Sorry. You broke up. Has there been a closing of the gap with...

Yes, that's right. Sorry, I was leaning back and I'm speaking through my laptop speaker. I should get a headset. But anyway, yes, has there been a closing of the gap in total market listings? If you put membership numbers to one side and listing, has there been a closing of the gap?

Closing of the gap, yes. So what we're seeing, actually, which I think I spoke before, but what we're seeing is a slow migration back from most of the 2,500 branches that lets it go to go to OnTheMarket when the market had the one other portal rule. Since that was dropped, we're seeing very slowly those branches migrate back to Zoopla. So yes, Zoopla are returning towards the position that they might have had in 2014 in terms of market share.

The next question comes from the line of Gareth Davies from Numis.

Just two follow-ups for me. First, going back to Optimiser '15, is that a switch-off H1 or H2 event? And in terms of the tale of people who you wouldn't have expected to have moved across, is that all meaningful? And as such, on past experience, do they all then move when you switch it off to -- and that should be a decent step-up in penetration for the Optimiser 2020 product? Just a little more color on that. And then second one, the commercial market, I suppose the mindset in the market is always talk about the biggest hindrance to that being kind of real success and just the desire for market participants to move online. Can you talk about how that shifted through the pandemic and sort of any optimism you've got there for pretty strong performance, albeit relatively small still in the context of the group?

Thanks, Gareth. So I'll talk about Optimiser because I love it, and Alison is going to talk about commercial. So Optimiser '15 switch-off, yes, majority will be first half. There'll be some that go into the second half. We've got some customers who are on contracts, which we will respect. So that will get folded up in the second half, most in the first half. Previous experience would suggest that what we're doing is we're saying to customers, "We're retiring this package. We would suggest you move up to Opti '20. Here's why it's awesome, Opportunity Manager, things like that." Maybe we'll get Giles out selling it. So that's what we do there. And -- but we do, of course, we would say there is an option. "You can go to Essential, if that's your thing." History would suggest that probably, when faced with a tight choice, about 90% of agents will move up and 10% will go to Enhanced. So I don't think we'd see anything particularly different this time around.

And is that meaningful in terms of penetration, in terms of the number of people left on it? Is it 90% of an exceptionally small number, so it's irrelevant? Or is it kind of a couple of percent on to 2020 penetration? Does that make sense?

Effectively, actually, there will be a slide. I can't do the math in my head because I'm not fast enough. There's a slide where you could work it out because we show you how many are on '15 and how many are on '20.

So Gareth, the 2020 number had about 10% of independent agents on Opti '15 -- I'm sorry, 10% of independent agents on Opti '20, 21% on '15 as of now that will revert. So 30% once we get everybody migrated.

Yes. It's Slide 25, Gareth.

[Operator Instructions]

Sorry, Nadia. Just the second part of that question on the commercial sector, Gareth. Yes, you're absolutely right. It is less digital really as a sector than residential has become. It's probably about 7 or 8 years behind residential in terms of the move to digital. The pandemic has helped, I think, to accelerate some of the move to digital. Behaviors have undoubtedly changed, and the supply and the demand dynamics have also changed as well if you think about where demand increased, which we saw a huge increase in the demand for industrial space, warehouse space, for example, as everybody was ordering from home. Clearly, a big drop in the demand for offices and for retail space. And as the changing demand dynamics move around, I think, the old kind of network of contracts and the way in which things had operated before have also started to change. And certainly, for us, we have seen an uplift in the number of listings on the site both by property owners and usage of our site to look for a commercial property by occupiers. So I would expect to see, for example, search for office space and office listings carry on becoming more digital in the way that it did both during '20 and '21 and similarly with industrial space. We now are the largest portal for commercial property listings. And so again, big plans for growth in that revenue line. Does that answer the question?

Yes. Fantastic.

[Operator Instructions]

Well, Nadia, I think we've exhausted questions.

Dear speakers, there are no further questions at this time. I would like to hand over back to yourselves for closing remarks.

Well, thank you, everyone. Thanks for making time. Actually, thanks for giving us more of your morning than usual. I hope you have a good rest of the day. And as ever, if you've got follow-up questions, please just get in touch with Alison or myself. Thank you.