Zoopla jumps 2% after £75m software deal

Discussion in 'Market News' started by Lily, Apr 19, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Company buying software specialist PSG and upbeat on outlook

    Zoopla has moved higher after paying £75m for software specialist Property Software Group.

    PSG provides software services to UK lettings and estate agencies, and fits Zoopla’s strategy of building on its core online property business. At the same time Zoopla said its full year results would be at the top end of market expectations, helped by a strong performance from its uSwitch business.

    In our view, the acquisition provides agents with a one stop solution to their front and back office systems, a clever move and one not available to their main (organic growth) focused competitor.

    In essence today’s acquisition will ultimately lead to less complexity and more services for Zoopla and PSG’s customers. For instance in all but the smallest UK businesses, agents upload property details to their back office systems before uploading again to the property portals. Today’s acquisition will allow Zoopla to provide a one stop shop for day to day inventory and CRM [customer relationship management] all the way through to digital marketing.

    The acquisition of PSG enables ZPG to offer agents a comprehensive “end- to-end” solution for property professionals allowing them to manage every stage of the process from marketing a property through to exchange. This will give agents much greater visibility throughout the process and will, in our view, make Zoopla’s offering differentiated from Rightmove’s.

    The group also announced that thanks to a “strong performance” at uSwitch the group expects full year 2016 results to be “towards the higher end of market expectations”. This implies a 4% underlying upgrade to consensus 2016 EBITDA estimates.

    Looks a sensible fit, at face value price looks okay given retention and customer renewal rates, fits Zoopla strategy of expanding beyond core agency model.

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