One of the City analysts briefed by Zoopla following yesterday’s announcement of the firm’s acquisition of uSwitch said he remained unconvinced by the move.
William Packer, of BNP Paribas Exane, also said that the briefing revealed a further loss of around 100 more agents to OTM in April.
This followed a loss of some 950 as at the end of March. Packer said that Zoopla had expected 500.
According to Zoopla, at the end of March there were 12,449 estate agency offices listing on its websites, down from 13,402 in February. However, there was a rise in overseas membership and a 6% increase in developer members.
According to a report on the Daily Mail’s website This is Money, dated last November 26, there were at that time 16,460 estate and letting agency branches using Zoopla.
Packer said that total losses to OTM “now stand at nearly 25% of the Zoopla agency client base”.
He said: “In our view, this will pressure longer-term revenues and also brings more pressure on traffic”.
Yesterday, Zoopla said that the pace of losses was slowing with churn returning to normal levels. It also reported that traffic was up by 11% in the six months to the end of March.
Packer said that in the briefing, an upbeat Zoopla said its acquisition of uSwitch – market leader in the energy and communications switching space – is a clear positive for its cross-selling story.
However, Packer said: “We remain cautious on the prospects of the underlying business and see the deal as a defensive move, with a limited strategic rationale.”
Other analysts took a different view. Gareth Davies of Numis described the acquisition as sensible and Zoopla’s trading update as solid. Robbie Capp at UBS said: “We see this as a very attractive acquisition for Zoopla, with a strong strategic fit at a reasonable price.”
Shares in Zoopla maintained their strong performance yesterday, ending on 215p – up 30p, or 16%.
Zoopla is paying up to £190m for uSwitch, whose brand will remain. The uSwitch bosses could earn nearly £40m from the deal.
According to the Motley Fool, uSwitch’s 2014 revenue of £62.9m is a quarter of the £238.1m reported by Moneysupmarket “making uSwitch very much a number two player in this market”.
It went on: “That’s also a fair description of Zoopla’s share of the online property sector, versus market leader Rightmove.
“Zoopla will now be a number two player in two big, profitable markets.”
Sites for switching hit controversy earlier this year with allegations that customers were being directed to providers earning the sites commission, rather than to the cheapest deals.
uSwitch chief executive Steve Weller told MPs that the firm would compensate customers who had been misled into signing up for an energy tariff more expensive than others available.
Last month, Zoopla appointed Gareth Helm, formerly brand director of Moneysupermarket, to be in charge of its marketing.