Shares in Purplebricks stormed up yesterday after it reported a sharp increase in revenues and a maiden profit of adjusted EBITDA of £300,000 in the six months to the end of October.
That figure compared to a loss of £6m in the same period last year.
EBITDA, said Purplebricks, is after costs, depreciation and share awards are taken out.
Its revenues rose 159% % to £18.7m.
However, despite the EBITDA figure, it posted a pre-tax loss of £2.8m, the Telegraph reported.
Anthony Codling, equity analyst at Jefferies International, said that without knowing how many homes the company actually sold, it was difficult to gauge its performance.
In yesterday’s interim results, Purplebricks notably did not say how many homes it had sold.
However, it did yesterday provide analysis, as follows:
“Verification exercise
“We are very proud of our success in selling property on behalf of our customers which is testament to Purplebricks being the most positively reviewed estate agent in the UK. We recently conducted a verification exercise on a random sample of our properties marked on the portals as SSTC, nationally and regionally, against the Land Registry database.
“We took into account the sample size of our properties and regions referred to in any notes published by analysts in the market and increased them five fold. We also looked at a larger sample of 10,000 properties spread across the UK (which did not include any of the regional sample).
“The results of the samples were as follows:
10,000 properties sampled nationally: Confirmed as registered by the Land Registry: 91.9%
1,611 properties sampled in Southampton, Bournemouth and Birmingham: Confirmed as registered by the Land Registry: 87.5%
“For the remaining percentage in each sample that was not confirmed as registered at the Land Registry, we obtained third party evidence from Solicitors and thereafter from our records as to the status of those properties which comprised of a mix of SSTC, exchanged, completed but not yet registered at Land Registry or back on market.”
The Land Registry does not record which agent sold what – and the information does not exist anywhere else in public.
However, Purplebricks yesterday said it had sold £2.589bn worth of property in the six months to the end of October.
Divided by an average house price of £220,000, this means it sold 11,500 properties – no mean feat.
Purplebricks said yesterday that it would do the calculation differently, based on its claim of selling one property every 16 minutes. We have not yet received this calculation but will get it to you as soon as we can.
Yesterday, Purplebricks shares rose some 19% from 105p to 125p.
Comments (59)
And not long after this story was announced PB are now under criminal investigation by NTSEAT. Dependent on that investigation are we likely to see banning order. Their share price will be valueless? Is this the end of PB?
P B is no Ryanair the low cost Airlines succeed because they operate within fixed parameters e.g.NO negotiation.
There lies PBs San Andreas problem
Incredible uplift since results nearly 40% uplift valuing Bricks at a mind boggling £343m before turning a penny profit !!.Maybe an opportune time to go to the market for a cash call which would allow them to rollout in Oz and still have sufficent funds to hoover up one of the listed letting agents and take a big apple pie slice of the market
It isn’t incredible other than how limited some people’s comprehension is. and how incredibly badly broken the system is.
None of these figures make any sense at all yet people believe it’s a sound investment.
Any chance they had to show some kind of profit (even an adjusted one ignoring all the costs) this period because they know the next 6 month period is going to be a significant black hole? Therefore you can claim that the next period is ‘a blip’ based on time of year/unusual market conditions because ‘hey we were just going into profit the period before.’
The way to combat PB is not to slash commissions to compete with them but to compete with them where they are almost totally dominant – on the internet.
How many sellers do you think pick up the phone and call them immediately after seeing a TV ad? I bet less than 10%.
Instead of using the internet to look for agents in your area they are googling PB and a myriad of other search terms and PB are all over those valuation producing terms like a rash. Most traditional agents are letting then have a field day.
Not me though.
So many businesses, among them estate agents, are not even utilising a fraction of the opportunities that PPC advertising gives them to generate both seller and buyer enquiries in their area. There is a massive opportunity to reap low hanging fruit which OTM for example, for all its laudable aims, is missing almost completely and its members are missing out as a result.
My agency has a near 40% market share and the overwhelming factor is my experience in PPC advertising and, just as importantly, website conversion. It is just as pointless sending visitors to a website that doesn’t convert as it is giving a load of valuations to someone incapable of bringing back an instruction.
I have already had discussions with some agents on PIE about sharing my PPC campaign (which can be adapted to any area) on an exclusive basis i.e.., only one agent per area. If anyone is interested email me at agentpink92@yahoo.com
Blockbuster Video, Super Snaps, Kodak……….. up until a few years ago most high streets had a branch of these successful multi million pound brands, along with many independent long established equivalent’s….Where are they now?
I am not advocating the whitewash that is PB reported figures, they clearly are presenting one scenario of many by using tricky calculations…… To be fair though even the very worst estate agent wouldn’t pop along to a Valuation and say…”We’re rubbish” You’d work the data to your advantage, present yourself in the best possible light to sell your brand.
As an agent its concerning but I have a feeling that the traditional model estate agent is in imminent danger of Blockbuster Videos fate if we do not take PB as the wake up call it so clearly is!
And that’s why we need to start a new network, united to promote the value of the independent compared to the alternatives.
They are making a loss and considerable risk of making an even bigger loss based on the facts they have provided and the market provides without needing to look at agents comments. The recent announcement by PB is to try and keep this sinking ship afloat, you do that by reinventing data to make it look good to a potential investor. You get the stock market to follow suit with only the intention of making money out of it, not bothered one bit if it fails. This is nothing more than the dawn of the “new age” confidence trick. It is all spin, which we come to recognise is nothing but deceit. They are pushing the boundary of criminal charges if only the OFT would investigate? And where is NTSEAT with the investigation into portal juggling and LPE’s? where is TPO regarding LPE’s? and where re the web portals who promised a clamp down on misuse of the web? Meanwhile Bruce & Co rake in fat cat salaries while £18.5M has produced approx £33,000 gross profit still to pay tax (their words not mine).
As for doing things right, well All Agents are a joke if they allow reviews to be posted before the customer has had chance to see how good the service is. They should be forced to make this publicly known before people read their reviews and companies are allowed to use them for PR. Their reviews appear to be misleading certainly not indicative of what the public are wanting. The ASA should stop advertising stating “subject to terms and conditions”. It should say “all costs are not shown and you are likely to pay more than we are letting on”.
It is time the wild west of IT was locked up, it is not just our industry it is happening around the globe. Deception a is criminal offence in most parts of the world.
Ooops should read £330,000 gross profit. Who knows I might actually be nearer the truth?
At the risk of incurring the wrath of the assembled company I venture to suggest that all the words being expended on this and other PB threads are just so much hot air.
Dissect the numbers, bleat about their tactics, call them names: I doubt that the Bruce Bros give a flying fig about anything that is said on here about them (unless it gets too strong) as they are quite clearly succeeding so far as the City and the general public are concerned. So what, if they are currently making a loss? They can afford it. At least for now.
Knock them all you like but, when all is said and done, unless the traditional full-service industry gets together to deliver a really powerful and continuous public message that the likes of PB and other partial service agents are not as good as they claim, this lot and others will steal more and more of the market.
I agree with your sentiment wholeheartedly. I criticise …but I am just one voice on a forum. As independents we need to form a new network to speak as one and develop a fighting strategy. If you read this and want to be part off it… add a comment in the thread.
Networks…Countrywide, The Guild of Professional Estate Agents, National Homes Network have all been tried and a myriad of others and franchises, The Mayfair Office, Fine and Country, London Office etc. Then of course there is the NAEA to represent the fighting strategy part of it. Estate Agents are not very good at working together unless they do better out of the arrangement for themselves rather than the masses which only ever lasts a short time. People in sales too often are selfish. The aggregated data networks have been the most successful so far…portals! Set up your own portal and have control of all the leads and then the agents will influence their destiny…now how can we do that? Hang on a minute…we did it with Rightmove and we now need to support another…..You can see Agent V, agents aren’t very good at the big picture…mention OTM and watch the howls yet it worked with Rightmove which has continued to pay back the original investors (corporates) back until as recently as this year when they all sold their final holdings to reduce debt!
But what about if that network gave you the tools to attract more business inquiries, win them easier, deliver the service and be able to prove you have done the better job?
From a personal perspective I don’t need to reinvent the wheel as PB and the like have not had great traction from a Nationwide perspective, for the same reason we traded happily when Foxtons’offered 0% for six months. The reasons are the same in that those people looking for someone they can trust with their biggest asset will agree to a mutually acceptable price, those who want cheap will use PB or whoever else is offering cheap fees at that time. PB are haemorrhaging cash and like any business they will need to either get profitable before it runs out or ask for more, but the second time around on cash calls if the figures don’t stack up you start looking like a snake oil salesman.
In short it doesn’t matter what we think or say, PB will live or die on these merits. The resulting smaller pool of fish will be divided between full service agents, with those that do not offer an acceptable level of service at an acceptable price falling by the wayside.
Surely, bolt on fees must fall under the same banner as letting fees? I wonder if they clearly state to their client how much they get for an introduction or ignoring that piece of law.
I have yet to see anything even slightly resembling a positive comment about PB from a competing estate agent. Every time PIE publish an article about PB it’s immediately used as a punchbag for the rest of the day. You may not like what they’re doing because it poses a threat and you don’t know how to combat it but this IS a company that is growing, selling houses (for less than us) and making money.
Guys, what happens when you list a realistically priced house in a decent area on RM?….Yup, you get viewing leads and then you get a sale. The property sales industry doesn’t need the type of agent it used to. PB offer a solution. The days of ring outs and mailshots are long gone. The market’s changed chaps and PB got in there early.
Stop knockin and start learnin.
x
Anyone care to have a stab at answering this – What percentage of the market is made up of realistically priced houses in decent areas?
FromTheHip has a point and this is why Countrywide are running around reinventing themselves at huge cost. They are playing the long game, but it is dangerous for a listed company to do that.
Know your enemy, and don’t get drawn into desktop warfare and get out there and deal with the issues. The PB figures are for half year up to October 31st…lets see what the next 6 months has in store. PB have been clever and so have the clients that use them. The clients ring up all the local agents to get a range of prices, then go to the fixed fee option and list the property and are happy to list at the correct price. They are hoovering up all the serious sellers…the rest are scrabbling around often having to over value to win the biz…at a reduced fee. Remember it always takes 3 years for businesses to make enduring profits, they are getting close within 2 years. Don’t get hung up on how many houses they are selling, their fees are including additonal sums…the Stock Market announcement says that the average client spend is actually £1,000 and even Australia has a revenue of $AUS 570,000 in 7 weeks! In the art of warfare and business, know you enemy, have plans to win the war and not the battle, but things are changing!
P-Daddy,
Things are changing…. things are in the process of being thought of and developed to help the independent in the war ahead.
They arent making money they are making a loss ! If you look at the stats the spectacular growth had come to a grinding halt by September .November has been well down on instructions and I will be surprised if H2 beats H1 which means that they will return to make a loss.
They already have had to increase their fees and squeeze money through the back door by imposing some very expensive conveyancers who receive a bad press You can fool all of te people some of the time comes into mind
Great idea but whether Bricks are the company to run with the baton is very debatable
I think the one thing you can learn is that through advertising you can buy houses to sell at £500 to £600 each with a cheap fee offering, and then you can make money as long as you charge up front, keep the work afterwards to an absolute minimum, and charge over the top for other add on services.
However most of us don’t have other people’s money through investment to carry losses through a couple of years while we manipulate ‘our reviews’ to portray our service in a great light.
I personally just want to do a great job at a fair fee for my customers, and get them the best walk away result (money in their pocket from a motivated buyer) followed through to the final stage of completion…..and only get paid on my results. My average fee is still less than £2,000….so no-one saves ‘thousands’ compared to our fees.
I don’t think anyone would deny that if they had a house that was easily valued (because it’s in an area with lots of comparisons), and easily saleable (because it’s a popular area/style/design), then by putting it on Purple Bricks who then get it onto Rightmove and Zoopla it would ‘sell’ very easily and therefore save a reasonable amount of money. However getting it to SSTC stage with that sort of house is not usually the hard bit, and if it was in a chain with good agents each side, and no real problems in the chain then I am sure all would be well and the vendor would be happy with Purplebricks. The difficulty comes if the chain is made up of lots of ‘Purplebricks’ style agents who don’t really care at all about sales progression as they have had their money. That is why everyone is so keen to see how many Purplebricks have actually got through to completion. If ever the whole chain ends up being made up of agents who don’t really care if it completes then the whole process would be a nightmare for the vendor. Caring Agents do a lot more than just get the property to SSTC stage.
Well said. Caring agents also go the extra mile to achieve the very best sale price rather than ‘ the first reasonable offer that drops in’.
@fromthehip64 I’ve not met one person in this group who doesn’t appreciate the hybrid model. I think you’ll find what my learned friends and peers object to, is the claims (which are ludicrous at best) about “sales” volumes, 34% more likely to sell your home than a high street agent, we achieve 100% of asking price, we have a 5star review, blatant portal juggling to gain an unfair advantage / market traction (only to have their wrists slapped by ASA, repeatedly, as seemingly, they don’t care).
Nobody objects to a level playing field, we do object to deceptive BS.
“…this IS a company that is growing…”
HAS grown – from zero… hardly an unusual achievement. Is now apparently shrinking. Over 700 ‘listings’ down over a period of 2 months (credit: Hillofwad71)
“…selling houses (for less than us)…”
In some instances, they may well be. But on the other hand, they are NOT “selling” for a lot more than you.
“…and making money.”
Not proven in the slightest. They are spending more than they are receiving – since when was that classed as “making money”?
“The days of ring outs and mailshots are long gone.”
Sorry – which distant, barren planet are you referring to here?
No they didn’t, they’re not making a profit let alone the HUGE profits promised 33 months ago.
Have a look at Taylor Underwood, the benchmark of best practice for hybrid agency. Jane is local and respected, a genuine expert. Her agency is making genuine profits that these 340 listing reps can’t manage between them. It is embarrassing that there are people daft enough to fall for the spiel and that includes people who think selling 1 property a week is enough to earn them a living.
So I went out to a MA yesterday.
PB had been there already and the owners wanted to get an alternative view.
The owners said PB charge £750 upfront, much less than me.
Then they said this was subject to using PB conveyance services.
So for selling a little flat at £115,000 guess how much PB legal services were?
£600 ? £900 ? £1,200 ?
Nope
£2000 plus VAT !!
You are joking…….no your not….. of course, this is where all the newly declared profit comes from….and the LPE’s commission no doubt.
Yet another way of hoodwinking the public.
FYI
I’m taking on the property tomorrow and I have lined up a potential buyer for it too.
Reason they chose me. Simple
I don’t talk out of my 4rse !
This is what it says on their website ‘Your own Local Expert from valuation to completion’.
So why doesn’t your local expert know when your sale completes and why don’t PB have all those numbers reported to them and immediately to hand?
Your own Local Expert from valuation to completion
Positively reviewed! I spoke to Trust Pilot last week about using them. They openly told me that PB and others get their customer satisfaction review immediately after going on the market! I tried to explain to the chap that of course they are going to give a good review at this point as they ‘think’ thy have saved some money. He suggested that they can always review their feedback at a later date. I explained that most will have forgotten they have done it and PB won’t be reminding them. I told them I wont be using the site as I would have expected that to get a true customer survey it would be conducted at the end which would give the customer a true comparison. It’s all a sham!
Very good points…….it’s just another tool cynically being used to deceive the public. Hopefully people see it for what it is ….a manipulated waste of time…the sheer volume of numbers shows that.
I would imagine it’s not doing trust pilot any favours either. I wouldn’t ever look at any reviews on their site now.
I thought the same. Made me question all their reviews across all sectors and how the reviews can be manipulated. Surely this is illegal somehow? They are openly manipulating the reviews to con the public… and win business.
Does anyone know who normally releases the keys for a PB completion. You would have thought it would be the LPE ….but then surely they would have totally accurate figures on their completions.
Many ‘reviews’ state that one of the negatives of using PB was having the ‘inconvenience’ of handing over keys to the new owner.
Which just proves further how much the LPE and PB really care if the sale completes or not
The most telling thing about this whole story is why don’t they know? I know every single completion in our agency as it happens….why don’t they…because they don’t care. Once they have been paid (or are owed if deferred) they really don’t care about the end result!!
Perhaps they don’t want to know either!!
“Once they have been paid (or are owed if deferred)…”
But there’s the thing – they AREN’T owed anything!
The ‘deferment’ is via a loan agreement arranged by PB with a merchant banker. PB will have been paid their NSPA cut pronto.
Len Barry sang the future in 1965…
It that ‘Like taking Candy from a baby’ or ‘I Struck It Rich’. Actually is it the two combined together?
In my home town they have 7 on the market, 3 of which have been on their site for over 12 months !!. On contacting their call centre as a prospective house seller I received some interesting responses to what I thought were some pertinent questions.
I asked how many properties my LPE had in their patch and how many had they sold .She was unable to acccess that information .I then asked her how local was my local expert I gave my postcode and asked how far they lived away .She said she was based In Solihull and didnt know -at that point I gave up!
Bricks are at a tipping point November has been a poor month for them with a drop off in instructions and a winter season to battle through so H2 unlikley to exceed H1 which means they are likley to dip back into a loss,.Difficult period ahead
I am surprised they have manged to keep a large cash bank available What do they do with that? .Rollout the carpet througout Oz or spend it on buying a lettings agent
The frothy valuation of £300m makes this a very specualtive buy
I am obviously being a bit dense here, but bear with me. They mention comparing properties marked as SSTC on the portals with Land Registry data. Are they trying to establish whether these specific properties showing SSTC are completed via Land Registry Data? As the sold prices/dates take at least 2 months, possibly 3 for the Land Registry to provide such data, how is this possible.Surely due to “data quality” as the portals keep banging on about, the PB stock cannot surely still be showing on the portals once the sold price data is available.
Perhaps i have read this wrong though, or PB could just be making it up!
Same thoughts exactly!
IF they are completed sales – what are they still doing “on the portals”?
I seem to recall RM said they would take down properties that were sold, lol.
‘Purplebricks said yesterday that it would do the calculation differently, based on its claim of selling one property every 16 minutes. We have not yet received this calculation but will get it to you as soon as we can.’
That would be 16,425 in a 6-month period – unless, that is, they have “audited” the number of minutes in an hour… hours in a day – or days in a year.
Nowt surprises me these days…
Take minutes in a 7.5 hour working day NOT a 24 hour day.
Minus minutes involved in a coffee break, toilet break, turning on PC, scratching bum….
Then when all time wasting is removed from the day and you are left with 1 hour working time, a sale every 16 minutes = less than 4 a day!
I think my calculations add up…
For “We have not yet received this calculation but will get it to you as soon as we can.” read the PB BS department struggled to come up with one “justification” for their wildly inflated suggestion / Press Release, fathoming a second could’ve caused their two brain cells to collide, resulting in spontaneous combustion of the head!
The average transaction price for all property in England and Wales is not £220,000. The land registry data average is formed by a weighted bias of about 36% of transactions.
They sold about 9500 properties in 6 months with 340 staff. That is 1 property each per week, about 54% of what a 2 a week negotiator is expected to sell.
A business that burns £230,000 each week (their figures not mine) having a surplus of £300,000 means it has enough reserves for 9 days.
Given these figures are for 2 active quarters for instructions it ought to be a massive concern that £300,000 isn’t enough for the Mid November- Mid February dry season.
It will be interesting to see what happens in London where sales have stalled. Will vendors in negative equity list with them and waste their listing fee or will they go traditional and pay a commission if and when they sell?
Hmmm so they still made a loss. Not a profit. Sounds like a Gimmick buy using EBITDA and trying to hide something else.
I didnt know what EBITDA was so looked it up:
Investopedia
“A common misconception is that EBITDA represents cash earnings. EBITDA is a good metric to evaluate profitability but not cash flow. EBITDA also leaves out the cash required to fund working capital. Consequently EBITDA is often used as an accounting gimmick to dress up a companys earnings. When using this metric, it is key that investors also focus on other performance measures to make sure the company is not trying to hide something with EBITDA.”
Form your own views.
Yattering on at greedy investors and bulimic jourmalist who will swallow anything and regurgitate it without ever digesting what is being said always works with numbers.
We all see 1 sale a week as worse than average but investors hear £2.589 billion and lack the wit to divide it down into a performance.
Not forgetting that the profit they announced was still gross and still liable to tax deduction (their words not mine).
intersting….very interesting!!!
Why does a vision of you sitting stroking a white Persian flood my brain when I read your comment?
Hmmm…caught at it again….and I thought I was being secretive.