Shares in Purplebricks bounced up yesterday after the firm announced its results for the year to the end of April and said it would move into profit this financial year.
The shares finished the day at 140p after starting at 130.25p.
CEO Michael Bruce yesterday was bullish, shruging off prospects of competition from the likes of Countrywide, saying that the difficulty for traditional agents launching online ventures was that they would be “cannibalising” their own businesses.
However, one City analyst challenged claims of the percentage of instructions converted to sales, saying the figure did not take account of fall-throughs.
Purplebricks yesterday announced that it made a loss of £12m on revenues of £18.6m and said it had sold £2.8bn worth of properties in the year – compared with Savills’ sales of £5.9bn in 2015.
Purplebricks did not say how many homes it had actually sold in the period, but the Financial Times reports that Bruce said at a briefing that was around 12,000. Purplebricks did reveal that 2,386 sales were agreed in May.
Bruce also said that Purplebricks hoped to emulate Zoopla’s one-stop-shop model, according to the Telegraph.
Bruce said of the competition, which now includes Countrywide which has launched an online trial, and oSavills which has invested in YOPA: “We are way ahead of anyone in the market, traditional or online, in terms of investment in tech, marketing and infrastructure.
“The difficulty will come for [traditional agents] in cannibalising their own models against each other.”
He added: “For every £1 we spend, they will spend £5.”
Purplebricks also said it is expanding into Australia and one City analyst, Anthony Codling at Jefferies, said: “We believe that the structure of the Australian residential market is actually more readily suited to PB’s model than the UK market, and that a PB portal would work there. Next stop America?”
However, Codling challenged Purplebricks’ claim that it had a 77% conversion rate from instruction to sale.
He said in a note to investors: “Purplebricks defines sale agreed as when both buyer and seller have appointed solicitors, effectively offer accepted, or sold subject to contract. The group does not disclose how many of the 77% have converted to an actual sale.”
He went on: “We estimate that one in three of Purplebricks’ paying customers do not sell their home. Rightmove believes that ‘on average about 15% of Sold STC or under offer properties come back on the market after the sale has failed to proceed.
“If we apply this to Purplebricks’ 77% conversion rate we derive a sales success rate of 66%, which suggests that one in three customers have paid their fee but not sold their home.”
Russell Quirk, founder of eMoov, told EYE: “What a fabulous industry-inspiring success story this is. It’s an impressive set of numbers and I’m really pleased for Michael and Kenny and team.
“Great work. It certainly bodes well for us at eMoov as the clear number two in the space.”
Comments (8)
” pay me £900 for a 1 in 3 chance I wont sell your home ” doesn’t sound very compelling to me ! – This is manner from heaven for anyone up against there snake oil salesman on a listing and I suspect that even these figures are massaged to within an inch of their life by PB’s spin doctors.
And as to “Profit in the next financial year” that is just plain and simple deceit the FCA should do something about that as some unwitting investors will assume that if they say this that there must be a reasonable likelihood of it transpiring – makes my blood boil!
Again this is where I start jumping up and down waving my arms in the air!
The reason PB is able – AT ALL, to have any kind of business is because RM allowed them to market on their portal.
Before you say, SO WHAT?
Well it wasn’t PB or Emoo who invested huge sums of money advertising on this portal it was the estate agents over the last 10 to 15 years.
I really do think if OTM listened to its clients and allowed all agents to advertise wherever they want (remove 2 portal rule) they might find the cohesion they so much desire and perhaps we can all stick 2 fingers up at RM.
Just a thought peeps !
wouldn’t it be fabulous if several thousand agents over night binned RM and went with OTM!
In one blow, the High street agent could take control of their portal advertising and see off the online competition.
Of course that will never happen. We will all be too busy squabbling amongst ourselves while companies like PB make a beach head and begin to eat into our market.
Ho hum.
A few questions
Are the profits huge? Did you list over 100,000 properties? Have you got a 20% market share? Did any listing rep earn £100,000? have you evidenced every valuation in accordance with redress scheme requirements? Are you selling to Zoopla as rumoured?
Polite request to the disliker, please could I have 360 dislikes today? Stopping 2 seconds short of 3 minutes was noticeably and embarrassingly premature; a tad tardy!
Always thought that PB colours and strategy may be a little too inviting to Z. Although Z would have to be more discreet than an outright purchase at this time. Keep an eye on Episode 1 Venture Capitol who have invested in Love Film, Zoopla and eMoov in the past.
Now that really would upset Russell Q who had so much initial support from from Z supporters prior to the meteoric but unprofitable rise of PB who now need to sort out additional cross selling revenue streams via Uswitch or such like.
PB and all the other hype merchants are spending zillions of pounds promoting the brave new world of agency to the general public. Let them get on with it. They are doing us a favour.
At the same time, trad agents should expand their offering into online as well. And then reap the rewards of all that publicity the first-movers have bought for us. Get prepared, then step in and take away their market. In 5 years time most of the first-movers will be gone.
PB is cannibalizing the whole industry and as soon as they can sell out they will leaving the marketplace in tatters with vendors not selling and agents not earning.