Purplebricks this morning announced 20% growth in revenues in its UK business in the six months to the end of October. Despite a step-up in UK profitability measured as EBITDA, its group operating losses widened.
In early trading today, by 9.30am, the share price in Purplebricks was down 9.6% to around 136p, after closing at 150p yesterday. At around 11.30am, the share price was down 11.3%, to 133p.
CEO Michael Bruce said he was confident that the success of the UK business will be replicated internationally.
Purplebricks said its strong UK performance was driven by double-digit growth in instructions, with a 6% growth in average revenue per instruction as customers bought ancillary products.
It said its market share of the online/hybrid sector was 74% in October, despite increased competition.
It also achieved ‘aided’ brand awareness of 97% and unaided awareness of 48%.
Altogether, it said UK revenue was up 39%, to £48.3m, with ancillary revenue up 25%. Adjusted EBITA in the UK was £8.4m, up from £2.3m in the first half of its financial year. UK operating profit was up 638% to £5.7m.
While it did not give actual sales numbers, Purplebricks said that in the six months to the end of October, it completed on £5.4bn worth of UK property, up from £4.6bn in the previous six months.
Group revenue was up by 75% to £70.1m compared with £40.1m in the first half, with an overall operating loss of £25.6m. This loss was up from £11.4m.
Purplebricks was upbeat about its overseas expansion.
In the US, it said it had established the foundations to realise the substantial market opportunity.
As at the end of October, it had 140 Local Real Estate Experts and sales consultants operating in seven States, with more in training.
Purplebricks said it had “experienced some challenges in Australia” against a tough market backdrop.
However, despite a slowdown in performance during the summer, in October there was a 35% growth in new instructions compared with September.
Its Canadian business, via an acquisition in July, is “performing strongly”.
Purplebricks said it had over £100m in net cash and that the company is on course for full year revenues of between £165m and £175m.
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.”
The upbeat note of this morning’s trading upbeat follows a fall in Purplebricks’ share price of some 62% this year.
The fall could continue next year, an analyst suggested on Tuesday, before the results.
Royston Wild, writing on the Motley Fool financial website, says: “The uncertainty that is crushing home buyer activity in the UK looks set to linger for some time yet, threatening to push Purplebricks’ share price further south.”
Wild says there are concerns that Purplebricks is expanding much too quickly.
“It’s yet to prove that it can replicate its success in the UK in its other territories of the US and Australia, so why is it still spending like it’s going out of fashion?”
https://www.fool.co.uk/investing/2018/12/11/the-purplebricks-share-price-has-sunk-60-in-2018-will-it-rebound-in-2019/
Comments (79)
im not sure how much longer you can go on being upbeat without making a penny. Looking forward to their share price dropping another 60% next year
Since Feb 2018 share price has fallen month on month from 489.80 down to close today 131.50. That is one massive fall. With nothing happening to improve the housing market on the horizon, maybe a no deal Brexit will finish PB off in 2019 if everyone closes their doors to wait and see how the future pans out? My money is on their share value collapsing which can only lead to one result, as they have no source of revenue to make a worthwhile profit and still no dividend for investors. PB can spin the books, duck and dive … but the writing is on the wall and “the city” is starting to show it and with warnings.
Once the public latch on to emoov debacle and were left out in the cold … what is the difference for them if PB go turtle!
If the public ever get to know the real conversion rate to sales completed = last nail in the coffin. I think it is time the regulators stepped in, in the investors and public interest. They should force PB to come clean, for thier reluctance is nothing more than an admission of something to hide … the truth?
Woodentop
If the public ever get to know the real conversion rate to sales completed
I think they have provided that figure here:-
· Completed on £5.4 billion of UK property (H1 2018: £4.6 billion), saving customers £96 million in commission
On £10 billion completions they save £96 million against NSNF agents(£10 billion @1.5% = £150 million) – therefore PB have charged vendors £54 million for £10billion of sales.
£54 million is equivalent to sales of 45,000 – 46,000 properties, which is approx. 60% of listings (assuming some have been on the market for over 6 months).
That’s what we have all been saying for some time, simple maths and although an assumption has to be used as PB will not give true figures, over a year or so any irregularity is softened out. However it is all still based on assumptions on figures which just like any other statistic can be manipulated which is something PB are very good at …. Bruce says over 80% complete which if found out to be a lie wouldn’t bode well for share value. I believe the figure is closer to 50% and it would not surprise me if it was under. If we could get the true figures it would also show if PB are selling homes at true market value.
Wait for the perfect Eye headline in 2019
PB team with RQ to challenge CW and RM. Z & OTM merge to battle RM4
My big question is this – without Axel Springer’s charity, sorry, I mean investment, where would they be now?
….. up to their shoulders, deeeeeeeeep!!!!!!!! into their own pockets?
Running West End United instead of where ever it is they are running in football.
Oh and having a lousy Mxas too.
It is all that has stopped them from going the way of Emoov, surely.
Crowdfunding for their own salary.
…..it’d be interesting to see what Oz and the US are paying the UK for the tech, management, admin etc. All the EBIt…….. variations make it quite difficult to understand what the true picture is.
Shhh!
Transfer pricing is a wonderful thing -accountants or alchemists ?
Got to make a profit in at least one territory havent they.
…… no, they should be in a profit in all of them!
They should but the point I was alluding to is that next time they go to the stockmarket for more money to spend on flights to Oz they can point to the UK and say the model works we just need more money. This time next year Rodders
Better for them to be making a small profit in one territory and big losses in the others than relatively small loses across the board.
Do you realise how many years it took Amazon to make a profit? You guys really are blinkered and bitter.
…..Purplebricks is to Amazon what the guy down our chip shop is to Elvis.
Do you realise how many years it took Emoov, Tepilo and YOPA to make a profit ?
You’re actually comparing purplebricks to Amazon? Seriously Dom you’re better than this.
What do we know, they tell us that it needs a fair amount of ‘cash burn’ before it makes money.
#LeadThemDownTheGardenPath
Oh dear !
PB have managed to burn through £50 million in just 6 months, leaving only £100 million in the kitty – it looks like the US could turn out to be their graveyard.
Also, the UK marketing costs are creeping up – perhaps those nice people at RM are starting to turn the screws?
£1.33 currently with a low of £130.60. Latest stats are going down well 🙂
We’ve seen 127.50p today!
129p a few minutes ago – down 14% #howlowcanyougo?
A low of 126p seen today. Exactly #howlowcanitgo?
Group loss £25M. Regardless of ‘clever’ accounting.
Only £100M left in bank (cheers Axel Springer, how delighted you must be!).
Making a loss still, so no new investment (surely?). Not sure how the share price dropping off a cliff affects them, but it can’t be good news (it’s wonderful to watch).
So, 4 years’ operating money until they go pop? – unless the market picks up considerably
Whilst it’s a hard market, list only won’t work. Also, with 50% of their customers left with nothing to show for £1500, lots of bad publicity.
Board presence has picked up a bit, but the public notice FS boards being up for more than a year as a bad thing. They can’t sustain the lies on the radio and TV whilst making a loss – so less new business. LPEs must be leaving in droves (they change regularly in my area).
Fingers crossed!
It’s not about the fancy headlines and the bronze tan lines, but the strength of the bottom line.
If you wanted a conservatory and the company wanted a large sum up front and you knew the company were hugely in debt and being propped up with external investors had lots and lots of bad press and they had been on watchdog already. You also know that a similar company that wanted money up front has just gone ‘pop’ taking everyone’s hard earned cash. Would you be mug enough to hand over that sum of money for your deposit on a promise that ‘trust me, it’ll all be good”. If so please let me know and if there’s sufficient interest I will set up PurpleConservatories.co.uk. What about Duck and Dom? You up for it? You sound like my kind of customers!
My gardener and I were having this same conversation yesterday
I asked him if I paid him £100 in the morning upfront would that be okay instead of the usual £400 at the end???
His answer is unrepeatable here; but he then went on to say that he couldn’t pay his bills on the upfront model!!!!!
Smarter than the average Brucey Brother my gardener is!!!!
How big is your garden, hope that’s not the monthly cost 😉
Annual trim of the bushes and trees 🙂
Am i reading it correctly group revenue has gone up £30 million and losses have gone up £14 million ?
Remind me again at how much the Bruces sold their shares to Axel for ?
Ok PurplePopPickers, 3 Tunes, You decide –
Wise men say only fools rush in
But I can’t help falling in love with you
Shall I stay?
Would it be a sin
If I can’t help falling in love with you?
or
Darling you got to let me knowShould I stay or should I go?If you say that you are mineI’ll be here ’til the end of timeSo you got to let me knowShould I stay or should I go?
or
As I walk this land with broken dreamsI have visions of many thingsBut happiness is just an illusionFilled with sadness and confusionWhat becomes of the broken-heartedWho had love that’s now departed?I know I’ve got to find Some kind of peace of mindMaybe
With some background music for the Purplebricks Share Price – everyone join in now
So long, farewell, auf Wiedersehen, good night
I hate to go and leave this pretty sight
So long, farewell, auf Wiedersehen, adieu
Adieu, adieu, to yieu and yieu and yieu
So long, farewell, au revoir, auf wiedersehen
I´d like to stay and taste my first champagne
So long, farewell, auf Wiedersehen, goodbye
I leave and heave a sigh and say goodbye
Goodbye!
I´m glad to go, I cannot tell a lie
I flit, I float, I fleetly flee, I fly
The sun has gone to bed and so must I
So long, farewell, auf Wiedersehen, goodbye
Goodbye, goodbye, goodbye
Goodbye!
Market unimpressed with the numbers. Down another 6% already today.
Initial share price was £1, and it dropped to 70p…….. Is it heading back to £1.00?
I hear Mike Ashley might be in the running to buy it then; and launch it on the high street…………… ha
Down 9.20% as of 10.48 am. Now standing at 136.20p
Does that mean the ducks shares have now dipped this year from a high by more than 73% at close today @ 131.50?
LPE confidence must be ebbing away too
Earning £200 per job must be so demoralising for their little souls at this time of year
No little Johnny you cant have a phone for Xmas as Daddy hasn’t taken enough money off enough people up front, for not selling their house recently …….
Interestingly I watched the full Mike Ashley interrogation yesterday from the commons panel.
When asked about how some business can appear to be trading well yet then go bust he laughed and said that was the job of accountants. They can make your figures appear as you want them, that’s their job.
No idea why I mention this ….
No mention of costs, LPE churn, numbers or actual profit. I don’t follow the stock market but I would have expected a bit more meat on the bones.
In Oz they retain about 20% that they’ve trained. Is that an 80% LPE churn rate AgentQ73?
Yep, do you know the UK rate ?
No idea of the UK rate, what woudl your estimate be?
I know cyberduck keeps an eye on the faces.
If you see this cybs, do you know?
I would guess at about 40% but dont know. I would guess that there is a core of LPEs who have been there for a couple of years but would really be interested in how many new starters are still in place 12 months later.
I keep a record of the numbers and have only done one comparison of “faces” as it’s a lot of work.
This was the note I made: “On 5th July 328 of the 369 LPEs that were on board on 23rd December were still working for PB. 6 of those that left were letting agents”. This would have been comparing July 2017 with December 2016.
I personally don’t see the reduction in the number of LPEs from the highs as a particular problem for the business. For me, this showed they were overambitious. If demand is there I’m sure they’ll be able to recruit in the UK. They don’t seem to have too much trouble maintaining the current number of LPEs …
656 LPEs this morning when I checked. The same number as on 17th July 2018.
AgentQ73, save a list of the current LPEs and then check back in 3 months and spend the morning comparing the two. Then let us know how many of the originals still remain.
I do monitor the UK LPE’s and in the period December 2017 to November 2018 there have been 282 leavers. I only record once a month so any LPE that starts and leaves in the same month is not covered, so the final number will be slightly higher. Based on 282 leavers you are looking at a UK churn rate of 40%-45% based on 650/700 LPE’s, so AgentQ73 you are spot on.
Just checked back on my data from November 2017 and of the 655 LPE’s listed on PurpleBricks website today, 454 were also employed at this time last year. So yes the long serving bunch are staying but the newbies are churning at a very high rate.
So for PurpleBricks to get their 201 LPE growth since November 2017, 282 LPE’s have left, so a churn rate of 140% on new starters. It is very high!!
Thanks for the info Gavialinae
Cyberduck
Im not that interested !!!!
“Completed on £5.4 billion of UK property (H1 2018: £4.6 billion).”
Finally, we can now compare listing to sold ratios, albeit without firm detail.
Apparently the average house price is £226,906
5.4 billion divided by £226,906 = 23,798
According to Zoopla PB have listed 3744 properties in the last 30 days, so lets times that by 12 = 44928.
Working this out, yes i know its very rough, but they wont reveal the numbers so this is what we have
52.96% of properties listed are going to completion
A looooong way short of the 88% stated on the BBC by Mr Bruce.
And a long way ahead of both yours and ex Jefferies CWD stalwart mr codling various guesses. Was it not 12% at one point
Jefferies stated 51%. My figures were correct for my area. Anthony’s have been pretty much verified by Purps own data and my data has been verified by independent journalists and trading standards. The fact remains that PURP now has to explain how it substantiates it’s 88% public trading statement.
I think you will find this is one of the many attempts of guess work that was spouted by Mr Codling. ‘ The lucky 14 per cent who have sold their homes waited on average around 4.5 months between selling subject to contract.’
If I may ask, what’s your holding at the moment Dom and, if any, what did you pay (£3?) and what are your thoughts moving forward – hold, buy or sell?
If I may ask, what’s your holding at the moment Dom and, if any, what did you pay (£3?) and what are your thoughts moving forward – hold, buy or sell?
I sold out in around March this year after dipping back in again, although at this current level I’m considering a holding again.
>My figures were correct for my area
So why did you remove your tweet after the Advertising Standards Authority ruled it was misleading?
Can you provide evidence that your data has been verified by independent journalsits and trading standards?
The evidence has been accepted as genuine (untampered with from its original sources) by the ASA and trading standards officers. Zoopla stated that their own data (which was used for part of my calculations and other agents) was not checked by them and was shown to be at odds with data from Rightmove, HMLR and PURPs own website.
Happily, the matter is now being dealt with by a statutory body, Trading Standards, so I am unable to comment any further other than to say, if Trading Standards believe I have made a misleading statement in an advertisement no doubt they will charge me and take the matter to court. I do not believe that will happen but, am confident that I would win any such case.
Think on this: PURP chose not to pursue their threat of legal action against me regarding my statements in my blog and, very tellingly, never provided evidence to counter Jefferies analysis or, take legal action to counter the claim that completely undermined their CEOs’ position and advertising claims. If you, ducky or any other PURP apologists don’t believe that speaks volumes, I have a bridge to sell you.
>The evidence has been accepted as genuine (untampered with from its original sources) by the ASA
Untampered with? You actually said your data was correct.
“We noted the two further spreadsheets PDQ provided which had cross-referenced the properties with information from the Land Registry regarding when that property had previously been sold. However, in one spreadsheet, the Land Registry data was incomplete, while the second spreadsheet was only comprised of properties cited as withdrawn. Furthermore, neither of the spreadsheets matched the list of properties instructed by PurpleBricks between October 2016 and 2017. We therefore considered that those spreadsheets could not be relied upon to determine the percentage of properties in that period that had been withdrawn without a sale.”
Why did you remove the tweet if your claim was correct?
Lots of companies threaten legal action and don’t pursue. I’ve done it myself. If the threat doesn’t work then you have to then consider what can actually be achieved and what it will cost you to achieve it.
Dompritch134. You seem keen to keep reminding the readership about certain comments made.
The PURP SP is a mere 35 pence or so away from the Jeffries under-perform rating and PB continue to avoid any listing to completion ratios to prove Mr Wood, Jeffries or anyone else wrong.
If you had access to information that is verifiable and completely tickety-boo that would turn things around would you;
a) Withhold that information at the huge expense of your share price, reputation and ultimately your business?
OR
b) Provide the evidence that is continually requested and called for to save it all?
And still we wonder who might be closer to the truth?
ArthurHouse02,
Good work. Comparing 12 times the number of listings in November with completions from 6 months.
I’d love to sit in on one of your Valuations.
Where is PIE’s censorship when its needed?
TBH CD, without anymore data from PB about how these billions of pounds worth of property sales are constituted there figures and my figures pretty much mean nothing. We dont know how many sales (completions) we dont know how long these properties were for sale, we dont know what % of the original asking price was achieved.
Someone once said that the value of a company partly evolves due to the potential future earnings and how investors see said company effecting its market place. As PB share price heads back towards £1, i would say the future is not massively rosy
>my figures pretty much mean nothing.
Why bother producing them then?
Here is a fact: a fall in Purplebricks’ share price of some 62% this year
Experts in the city believe it will continue to fall.
Try and spin that one ducky.
They do sell most of their property because where venders would have changed agents after 4 months, bricks customers have already paid and so stick with them . It’s a bit like brexit logic and not admitting a foolish choice.
This is why pay any way should be banned. …
Completed on £5.4 billion of UK property (H1 2018: £4.6 billion), saving customers £96 million in commission
[6] Estimated savings based on industry commission of 1.5%.
My Abacus is broken – how do they save £ 15 million more than the NSNF agents would charge?
That £96m commision would have been ploughed back into the country with revenue creating jobs and services to the public.
Unless they mean a total of £96 million on sales of £ 10 billion ?
That would suggest their List/Completion ratio is about 60%
Any firm in an expansive growth stage will generate cash burn, however the now established UK arm is generating EBIDTA £8.4 million with 39% revenue increase. Although it is still very early in other territories the UK is flying. Cash profit at £5.7 million
Average revenue also up per instruction £1138 to £1209.
The UK may be doing ok, but they are one company. Any income for the UK is used to subsidise other operations. You cannot separate the 3 entities. Face it as a global brand they are getting no where. LPEs are leaving by the droves in Oz, their “expansion” in the US is going incredibly slowly.
As for the UK time will tell how they ride the storm for the next couple of years. When the market is bouyant vendors are more easily parted with their £1500 as they assume their home will sell no matter who they choose. As the market hardens, vendors will sway away from parting with their money when they worry it will not sell and are effectively flushing £1500 down the toilet.
What is looking clear is that it was a huge mistake venturing overseas without establishing some form of local partnership .
The Canada deal looks to have been the way to go .
Australia Already flatlining. alienating the real estate community and already putting out bush fires Furthermore flying in from the UK “experts” with no skin in the local game to supervise . Making any sort of profit here is now more hope than expectation.
USA No evidence in the USA at all of gaining much traction.
As usual in typical Bricks style fought shy of revealing the number of instructions However it does state £1.7m revenue for US and av £4164 per instruction that breaks back to less than 408 deals,someofwhich would be buyside!!!!
The thing about the seemingly impressive revenue increase is that it contradicts the USP of being ‘cheap’. Some of this comes from ‘bolt on’ charges and costs which the customer may not have expected. Read the purplebricks_CS twitter feed to see how that makes people feel.
‘Revenue, revenue, revenue..
But where is the profit?
’’Turnover is vanity, profit is sanity’ as the saying goes….
I’m constantly amazed that people can issue this waffle without having any substance or actual evidence to back it up. “Aided brand awareness of 97%” what does this actually mean….and can he please release the research that proves this.
Lastly and most importantly to homeowners. How many properties are you actually competing on????
Aided Test:
Survey Guy in a shopping Centre:
“Excuse me Ma’am, Have you ever heard of Purple Bricks?”
An annoyed lady walking past wishing she could avoid Survey guy:
“Yes!” As she runs off
Survey Says:
Wow, 97 out of 100 passers by Said YES!
Unaided Test:
Survey Guy in a shopping Centre:
“Excuse me Sir, if I asked you to name 4 Real Estate Agencies, what comes to mind?”
An annoyed guy walking past wishing he could avoid Survey guy:
“Erm…. Foxtons, Country Wide, Savills, um something Bricks?”
Survey Says: Wow, 48 out of 100 people know of Purple Bricks…..
More likely, for the aided; 3% searched ‘Estate Agents – Name of Town’, saw the PB paid for Ad on the top and decided to spend 12 more seconds to find a real agent who they knew had a real presence in their town. The 97% were the agents in said town who were using their daily 5 minutes downtime to click on the said paid for PB Ad as many times as they could in said 5 minutes in order to use up as much of PB’s daily spend limit of pay per click as possible.
Must go, I have a target of costing them £30 today….
The chuckle brothers always manage to spin it around.
These lot are bit more slick when it comes to spin.
Michael Bruce = Hyacinth Bucket
“While it did not give actual sales numbers, Purplebricks said that …” Probably tells you all you need to know about this story. #smokeandmirrors
The fall in the share price indicates to me that investors and shareholders alike are seeing the writing on the wall.
Probably 5 years plus of cash burn they’re committed to now if they continue in all markets their fingers are now in, and that’s ramping up to many millions of £ per annum.
With £100m in the bank, there’s a big deficit here.
Maybe only 1 year left in ’em.