Purplebricks this morning said that the challenging UK market is shaking out both traditional and online agents, highlighting weaknesses in both their models.
However, for itself it reported ‘good progress’ in the UK during the six months to the end of October, saying it has grown revenue by 20% year on year.
It said it has achieved double-digit growth in instructions, and made more average revenue per instruction. Last month, it said, it achieved market share of 74% in the online/hybrid sector.
In the US it said it has established foundations to realise ‘substantial market opportunity”, and has some 140 Local Real Estate Experts and sales consultants operating in seven States.
In Australia it has “experienced some challenges” in a tough market, but said that in October it had a 35% growth in new instructions compared with September after changing its customer proposition.
In Canada, the business it acquired in July this year, Duroprio/Comfree, is “performing strongly in line with our high expectations”.
Overall, Purplebricks said it has a strong balance sheet, with a net cash position of over £100m, and remains on course to meet full year revenue of between £165m and £185m.
The trading update gives no details as to profit or losses, or the number of properties sold.
Group CEO Michael Bruce said: “The challenging UK housing market is driving a shake-out in the industry, highlighting weaknesses in both some traditional and online agents business models.
“Against this backdrop Purplebricks continues to grow and win market share.
“Longer term, with the best known brand in the sector, our flexible business model and the strong balance sheet, Purplebricks is well placed to further strengthen its leading UK position and replicate this success overseas.
“We are confident about the future for our business.”
However, City analyst William Packer of Exane this morning said Purplebricks’ performance in the UK had experienced a sharp slowdown in growth.
He said: “The company have communicated two key numbers for its UK division – organic revenue growth at circa 20% and ‘double digit’ instruction growth.
“This compares favourably to UK transaction volumes at -3% for the year to date. However this is a sharp slowdown for Purplebricks versus their last full financial year performance (revenue growth at c.80% and instruction growth at 50%).”
He said possible reasons included higher cost of vendor acquisition with more intense competition from other online agents, and traditional agents reducing fees to limit pricing differential.
Yesterday, Purplebricks shares fell 9% ahead of today’s trading update.
They finished at 181.30p, down from 200p, at one point falling as low as 171.40p. In early trading today, the shares lifted some 4%.
Separately, and prompted by a query on Twitter as to whether Purplebricks now has reviews on Feefo, we can report that it does.
At the end of last year, we reported that Purplebricks was going to use Feefo as well as Trustpilot.
However, at the weekend, EYE reader PeeBee tweeted to Feefo that despite our story, “I’ve yet to find a single review”.
In fact we are told by a reliable source that Purplebricks currently has a score of 4.7 out of 5 from 1,067 reviews on Feefo.
The page will apparently be going live once Purplebricks’ new website launches, which is due shortly.
Purplebricks to add new customer review site Feefo – but says it will still work with Trustpilot
Comments (47)
I didn’t think Rightmove allowed direct contact like this on PBs user login page. They allow direct messages between buyers and sellers, I got the big boot for ‘Allegardly’ doing something similar.
PB is offering a private sale service via Right Move.
An interesting “Online Comment” today…
”Let’s hope that profitable trading arrives fast because the money to keep the firm going is coming from shareholders. Last year, more than £100m flowed in from the issue of new shares, and the year before that, more than £50m came from investors. Each time there’s a fund-raising event, the interests of existing shareholders are diluted. Yet the estate agency sector is cyclical. If the bottom drops out of the market, all bets are off! I see Purplebricks as ‘risky.’”
For a start-up (and that’s what PB is) to increase revenue by 20% YOY is laughable.
Most startups will grow by 300-400% in 12 months, especially when they are still young.
If revenue is growing this slowly, I would be very, very worried.
Here is my 2018 data for the last/this year in two neighbouring towns:
Town 1: PB has 13% of market share and 61% of its own stock SSTC, therefore with a national abandon rate (PB like to use national figures) means less than 50% sell.
Town 2: PB 12% of markey share and 62% of its own stock SSTC, and as above less than 50% can expect to be sold. Interesting to see the number of price reductions to acheive a sale!
Anyone want to try your own town snap shot, takes about half an hour? You may just find all this fear of them taking the market is nonsense and you are worrying over nothing? Go to PB own web site, enter your towns name, include SSTC and nothing else, results in all stock being advertised. At the top is the total of properties listed (currently). Open another pane in your web browser and go to RightMove and do the same. Total in top left corner for all agents. Now enter the post codes for each PB property on PB site SSTC at a time. To the right of RM window is the quick option to see sold history at Land Registry. Often a guide to see if the price is right or may be advertised after completion? Simple now to do the maths, be interested to see your results.
I don’t see any supporting evidence for PB to claim they are making good progress! I also note that today PB web site is claiming?
“More Properties Sold
More Quickly
Than the top ten agents”
Are we going to see the ASA step in again? I cannot see how they can qualify this is truthful.
Mr Lawson posted
2018: 64376/706(Y/E) (estimate for average number of LPEs)
Growth in the early years was fueled by LPE growth and the number of LPEs. At about 650 they have pretty much hit equilibrium point for the current demand levels in my opinion and growth from here on in is more organic.
Reducing from 706 to 650 is not equilibrium; based on your numbers it is a contraction of 8% in 6 months. If the growth was fuelled by LPE growth will the contraction be fuelled by the instability of listing rep numbers?
Of the 650 listers (which was left out of the report presumably because of the negative growth) how many do you estimate have more than 2 years as contractors to Purplebricks?
Staff stability, contentment and loyalty are important aspects of a service industry yet that doesn’t seem to feature either.
No trading figures, just a lot of talk. However, cash in the bank appears to have dropped from £153m at the end of April to £100m by the end of October. Appears to be following the share price down. Basically they are worth what they have in the bank and not a lot more.
It’s utterly amazing to think that in today’s Statistical Driven Business World, Purplebricks are unable to provide this single Statistic for a January to December Year
FROM THE PROPERTIES LISTED BY PURPLEBRICKS IN A YEAR HOW MANY ARE ACTUALLY SUCCESSFULLY SOLD (WHERE THE SELLER ACTUALLY RECEIVES THE PURCHASE FUNDS FROM THEIR BUYER AND MOVES OUT OF THEIR HOME) – VERSUS THOSE THAT PURPLEBRICKS FAIL TO SELL IN THAT SAME YEAR.
I know, I know…. it’s like asking “Where did we come from. Are we the only ones in the Universe etc” ……however, if you claim to be like an Estate Agent and “Selling Houses”, WHY ARE YOU (PURPLEBRICKS) KNOWINGLY WITHHOLDING THIS INFORMATION?
Many would say, a simple question? …..however, for Purplebricks it seems it is NOT that simple to provide a straight answer.
Here is an excellent way of any agent finding out what percentage actually sell and complete.
Take 10 properties onto the market (making sure to smear your camera lens with Vaseline before taking photos). Pop them on rightmove. Do nothing else for 10 months.
You will invalidate your results if you:
call/email/text any potential buyers.
print anything
advertise anywhere else
be proactive.
After 10 months, count the amount of invoices you receive and x by 10.
Friday late afternoon around 21,500 listings and an average listing age of 25 weeks
Monday morning around 21,500 listings and an average listing age of 17 weeks
Today around 21,700 listings and still an average listing age of 17 weeks
You would have to relist huge volumes of property to adjust an average listing age by 8 weeks over the course of a weekend surely? Is that a Purplebricks or a portal glitch? Was the data corrupted or is the outcome corruptible? Questions, questions and so few answers.
I’ll finish with some positive Purplebricks news because they need it;
Purplebricks. One brand of clear winners with the most unsold and price reduced property available today. And most other days too.
They’ll always be a place for Bruce in Parliament. The way he dodges the truth will sit well on his CV.
It all catches up with you at the end.
And it is….
These guys still going? Not seen a board in months round my way.
Still looking at other onliners recent woes, will not be long now 😉
They huffed and they puffed
They say grey have £100 million cash still on the balance sheet. Does anyone know the total that has been invested and spent so far?
Think the word is “funnelled” so far.
Interesting no mention at all of the number of LPEs in the UK, seems at best to have plateaued perhaps even falling ? This is critical to future growth. Given that one of the keys to recruitment has been the granting of share options, the recent rapid reduction in the share price can’t be helping morale at the coal face, especially as many LPEs might be struggling to earn a reasonable living.
The good thing is the consumer is getting smarter and that’s why the PB model will also struggle.
Emoov is going under as the Vendor DIY demand is not there.
It’s easy to do business and say what the City needs to hear when it’s not your own money you are investing.
Statements about growth when you started with nothing are very misleadingly and for the first few years can look fabulous.
I had one instruction now I have two. I have grown instructions by 100%. Send your money.
Mark, yes it’s easier to grow fast when you are adding LPEs and when you first start off.
Here is PB’s published growth of instructions since the year to 30th April 2015 as well as the number of LPEs average (A) or year end (Y/E):
2015: 4330/35(A)
2016: 19200/154(A)
2017: 41211/448(Y/E)
2018: 64376/706(Y/E) (estimate for average number of LPEs)
Growth in the early years was fueled by LPE growth and the number of LPEs. At about 650 they have pretty much hit equilibrium point for the current demand levels in my opinion and growth from here on in is more organic.
With my proxy I saw 13.7% growth compared to H1 2018. This picked up in the last couple of months which might just be the way the seasonality is playing out.
Much slower growth but growth nonetheless. I don’t think they’ll be leaving the UK any time soon unless they can’t grow without increasing costs. The H1 results in December will show us how much marketing & admin costs have increased.
Considering you seem to be a fact sheet on the success of PB, what is the conversion rate of completed sales to listings?
Woodentop. I did some research into this a while back after I heard that Chris Wood had tweeted that it was 14% and was trying to charge me $500 an hour for “insight”.
On a small sample, the estimate I came up with was between 68% and 75%. Some of the properties had been sold but unless the evidence pointed to them being sold by PB I didn’t credit them.
Other than that, I think the company claimed in a live radio interview back in October 2017 that it was 88%.
Jefferies have said at different times that it’s 14% and 52% from memory.
Another company did some research (I forget the name) and their sample showed 57% (from memory).
If you find all this confusing then why don’t you do some research of your own. I’m sticking to my own estimate as the other estimates come from people with a vested interest.
What do you think?
What do I think? Why is anyone using estimates!!!!! PB brag this and that, provide detailed information of growth, income, apparent profit, detailed listings BUT never EVER let anyone now how good they really are at selling a property. Why, what have they got to hide? Maybe, just maybe if the consumer ever finds out how unsuccessful they are at selling their homes (a logical conclusion), they would reconsider the on-line model as not being very good at selling properties with an upfront fee with no incentive to sell or to even achieve the best price (PB are no different to the others that are or have gone gone out of business). Income is their only means of staying afloat and duping investors. I have done my own reasearch in my area and over the last twleve months we estimate …. OMG were Jeffries were right at half? Most vendors switched to traditional agents.
Woodentop,
Little transparency in the whole industry. What commission is charged, whether it’s negotiable, conversion rates. Then you’ve got overvaluations to win instructions which Which? suggest is worse from the High Street. Then cartels in some areas.
Spin from the onliners, spin from traditional agents and their cronies. Traditional Agents bringing complaints to the ASA against the onliners when they are also misleading.
On the point of switching. I used to get phone calls from other agents all the time when I was selling with PB. Suggesting they could do a better job and offering financial incentives.
I’d love to be a fly on the wall when Traditional Agents get asked about PurpleBricks 🙂 I wonder whether you’d be able to substantiate everything. If I was PurpleBricks I’d pay people to “mystery shop” Agents to see what they’re saying.
A pretty sordid industry really. It’s dog eat dog out there.
I thought we were discussing PB and it would seem you are deviating as usual to support PB.
Here is my 2018 data for the last/this year in two neighbouring towns:
Town 1: PB has 13% of market share and 61% of its own stock SSTC, therefore with a national abandon rate (PB like to use national figures) means less than 50% sell.
Town 2: PB 12% of markey share and 62% of its own stock SSTC, and as above less than 50% can expect to be sold. Interesting to see the number of price reductions to acheive a sale!
Anyone want to try your own town snap shot, takes about half an hour? You may just find all this fear of them taking the market is nonsense and you are worrying over nothing? Go to PB own web site, enter your towns name, include SSTC and nothing else, results in all stock being advertised. At the top is the total of properties listed (currently). Open another pane in your web browser and go to RightMove and do the same. Total in top left corner for all agents. Now enter the post codes for each PB property on PB site SSTC at a time. To the right of RM window is the quick option to see sold history at Land Registry. Often a guide to see if the price is right or may be advertised after completion? Simple now to do the maths, be interested to see your results.
‘I used to get phone calls from other agents all the time when I was selling with PB. Suggesting they could do a better job and offering financial incentives.’
I’ll find this under the ‘Never Happened’ category.
As a pure guess I would think about 60%, I assume that given they are pay anyway they have a high proportion of extremely motivated vendors who within reason are going to sell regardless, if you are going to pay regardless and you are aware of what you are getting into I cant imagine many of their vendors will be “testing the market”.
I would guess this offsets any overvaluing to win instructions, higher fall through rates and potential buyers being put of by difficulty arranging viewings etc.
The total lack of mention on lettings is IMO very telling.
Is it just me or is Purplebricks still not listed on Feefo (site checked at 07.42 am) https://www.feefo.com/categories/property/5
Chris,
“The page will apparently be going live once Purplebricks’ new website launches, which is due shortly.”
Excitement draining update from Bricks short on detail .Missed opportunity or bad news buried?.Little info provided of penetration in the USA ,number of instructions,sellside /.buyside .I guess the market will fear the worse
Dodged anything about Oz
Nothing flagged up to counter the stalling growth in the UK in a challenging market apart from announcing they have managed to have squeezed the last pips from the orange.
It seems that lettings didn’t even deserve a mention
Very flat and unenthusiastic .Maybe time for some fresh faces
Purplebricks – A Company built of Straw
Purple Straw in fact.
It’s probably time to leave Purplebricks to it and to their fate, whatever it is.
Completely agree Robert…
market forces and the realisation they cannot keep spending the advertising money without hiking fees.
Mechanising FSBO and gathering all those instructions into one place along with all those vendors is doing actual estate agency a service.
Once agents learn to overcome the fee objection and the misleading claims about PI listings, if Messers Bruce & Co can convince investors to keep subsidising their listings everyone can be content.
Absolutely agree all the anger is not good for certain posters on here their poor mental health.
Don’t confuse opposing comment as anger.
The novelty has worn off, the bubble burst, the reality has set in.
The vanity of listing volume is disguising what is truly happening at Purplebricks. When people like Richard Desmond get beneath the skin of the model and say More? You want more? Word soon starts to spread and the greedy sheep investors realise there’s nothing to miss out on.
Agency hasn’t been disrupted more than fee levels in some areas have been corrected. Rightmove has done more harm to more agents than all of the disrupters put together.
How can you publish a trading update and give no real trading figures?! What are you hiding? Come on, whats your turn over and profit or are you a still a “not for profit” organisation?
This trading update doesnt say anything at all. No substance no proof of income or growth, just accept what Brucie says. Is this really how the city works all smoke and mirrors.
The truth is reading between the lines i suspect. The statement has so little brovado in it, that perhaps things at Purple Towers are not going so well. With the Emoov debacle investors must now be wondering is this model even has a future.
This is an interim statement, hence why it is fairly brief on ‘meaty’ detail…although there is a wide range for year end projection of £165-185m.
UK business IS building,but with the falls in share price, the market is starting to price in a slightly more realistic value…but the land grab and opening in so many international locations for me is still the ticking time bomb. With world economies slowing down and Oz already showing big signs of strain, this next year will be critical. With 140 LPE’s in 7 US states, they are already stretched and as with all online businesses, you have to be very noisy very quickly to survive. Exit strategies for shareholders and directors will be reviewed shortly, although there is a cash reserve…nut that’s what Foxtons had and look where they are. I still reckon this will be a UK business with outpost in Europe due to the backing of Axel Springer…and at a lower share price too. Tick tock tick tock
After one year, just over 1,000 reviews on a site that only allows properly reviewed on completed sales which, presumably, are only carefully submitted to that review site by Purplebricks. How many actual completions in a year….?
And how many on donttrustpilot in the same time ?
Over 2000… IN THE LAST MONTH.
And that’s EXCLUDING those that have been #NUKED.
One thing is certain…
#TRUTH_IS_COMING_HOME
So roughly 24,000 on Donttrustpilot and 1,000 on Feefo in the same time ……………………..
PB have have signed a 25 year deal with NASA.
They have SOLE selling rights for any Property which will come onto the market on the moon. First 100 customers pay £0 with free Conveyancing.
Anyone taking that deal would be a lunartic.
I’ll get my coat…
Thought that deserved a like, I’ll get my coat as well.