Purplebricks shares increased 17.7% on Tuesday after the group said in a trading update that it expected to beat full-year profit forecasts.
The online estate agent announced it will beat full year profit expectations due to a sharp increase in demand during the coronavirus pandemic.
The AIM-listed company unveiled half year results for the six months ended 31 October 2020, where total fee income increased 6% to £49.1m This was helped by an increase in the number of new instructions, which rose by 8% to 35,387.
Operating profits increased from £200,000 losses a year ago to £6.9m, whilst revenues fell 6% to £44.2m.
Instructions were up 8% in the first half of the year, the firm said yesterday.
Earnings before interest, tax, depreciation and amortisation (Ebitda) shot up 110% to £8.4m in the six months to 31 October.
Purplebricks believes that there is “clear evidence” that consumers are starting to shift towards apps and tech-based alternatives to traditional high street estate agents.
Shares in Purplebricks on Tuesday jumped 17.7% to 89p, thanks in part to its “virtual capabilities”, according to Vic Darvey, the firm’s chief executive officer.
He said: “Purplebricks has delivered a strong performance in the period with instructions up 8% and total fee income growth of 6%, despite the UK housing market being disrupted through the height of Covid-19. This continued momentum demonstrates the strength of our technology-led business model and our ability to adapt quickly to a changing market.
“We are now emerging from the pandemic in a very strong competitive position. As a result of continued financial discipline and operational excellence across the business we have experienced strong growth in adjusted EBITDA, up 110%, and a significant improvement in cash generation compared to last year.
“Purplebricks focus for 2021 will be to re-accelerate the growth of our core business by continuing to enhance our digital innovation, our virtual capabilities and increasing agent productivity through automation and efficiency. This period has shown that our technology-led business model is now more relevant than ever, as customers continue to shift to being more comfortable buying and selling their homes digitally.”
Comments (15)
With lots of people now working from home you would have thought PB would have picked up a larger share of the market because if you are at home why not take the online route and show your prospective buyer over yourself. The fact that they have not expanded market share in what should have been the perfect scenario for them probably means that if lockdown did not happen they would have reduced market share.
I feel the better quality high street independents are still very current however there is the undisputed fact that the publics perception of on line transacting has increased exponentially through the recent Covid-19 Pandemic. There almost seems to be a need for a half way house between the two models now (no not the former CWD style) The future I imagine is going to be very different. Not confident in talking on leases on 5 years plus terms that’s for certain.
padymagic much truth in what you say – PB is based upon a Lister aka Local Property Expert. One person in the field. A proactive selling agent, has negotiator, senior negotiator, manager, admin support, so even a small operation has 3.5 salaries, typically 6 or 7 per branch or double with lettings, with salaries as 60% of an agents cost base, for PB to employ Negotiators as well as Lister’s doubles wage bill overnight = red digits in the annual accounts. To sell more property, PB would also need to actually have a CRM that is utilised and worked, instead of DIY buyers sees property online, views by themself, yes I know vendors can pay more for assisted viewings, but it is the carnage post sstc that I always thought you used an agent for, 12 to 20 hours to list and sell a property over a period – 20 to 60 hours of agents holding sales together – keeping all parties sane/away from strangling each other. This end can be automated but big cost to do so properly, when it does exist then online model might work more.
I think PB need something they haven’t seemingly considered: Organic Growth.
All of PB market is driven by marketing, advertising and false promises, because they haven’t had genuine 5 star approval they’ve never had traction.
For PB to actually become a “disrupter” they need to improve their service and actually sell the properties they have listed (or what we traditional estate agents call “estate agency”) but this would lead to a much higher cost per instruction and thus make their business unprofitable.
So either way they are sunk
Profit was made from all the wages they saved by making dozens of head office workers redundant during a pandemic after telling them their jobs were safe
Back in the day when I was driving around I used to see owners trying to sell their own properties, hand made boards, adverts in newsagents etc. I reckon this was about 5% of the total market. There are and will always be people who rightly or wrongly feel they don’t need an Estate Agent.
Have online agents eaten much into the market share of High Street Agents or just taken all the FSBO market? In my opinion more of the latter than the former.
60,000 plus instructions again this year for Purplebricks – that is a huge validation from the consumer voting in what they want to use. It is only a tiny fraction of the 1.1M completions each year, but it is likely to be more than all the instructions that Countrywide Plc, Connells & Sequence group list – combined.
So, although relevant what agents feel about onliners – and everyone knows my views – is it not what the consumer wants/likes that agents need to look at? I would be very happy to be listing 1,153 properties every week of the year, especially 2020.
Time to look at that Big Data again and work out where the shift is coming, and yes totally agree in this market all agents should be filling their coffers, let us see post SDLT holiday, post Help to Buy changes and post Non-Dom changes, plus possible tax on investment housing by the government – what 2021 has in store for agents.
I guess for as long as PB are around there is always the possibility they get it right. Interesting to see the efforts in increasing the charges over the years. Forget all the proptech being thrown around, core agency is about service. Service is not cheap and can not be delivered on peanuts. We are likely to have a challenging market ahead, clients will be less likely to pay upfront in tough conditions.
Locally PB have all but disappeared.
If they cannot dominate in the market we have had for the last 6 months, they never will.
Other reason they have money tucked away is because of the massive drop off in media spend.
On industry p/e average of about 10x max. 6 million profit makes them worth 60m at best.
Give them a goodwill mkt cap of 100millon and its still x2 over priced.
Strange game, share dealing.
Bricks payanyway business model should also be banned.
The end
Rising tides float all boats….
Despite the gloss being spun by PB on their latest results, their market share hasn’t improved – it still sits at 4.8% and is the same as the prior period they’re comparing against. Vic Darvey’s promised ‘10% market share’ is not only implausible, but they’re making zero inroads towards it.
Oh the irony of Quirk criticising PB for their lack of market share.
When RQ was extracting money from gullible investors when crowdfunding for his now failed online Estate Agency he said this
“Estate agency is a draconian industry which is ripe for disruption and that treats its customers badly. We are leading that disruption. We are number one for customer service, we have the best platform, and we have the best team. For me, it’s not a question of if, but when online estate agency becomes mainstream. Online estate agency currently accounts for 5% of the market and we are forecasting it to reach 50% by 2020. This is an opportunity to invest now with a potential return of many multiples of today’s valuation.”
How did that work out for investors ? #shameless
Skin of a rhino that chap.
Reminds me of my school reports
“Satisfactory progress but could do better ”
A satisfactory set of results all things considered but falling well short of the original forecast 5 years ago when Bricks first listed
The frothy Hardmans report accompanying the listing lured the punters in to part with a £1 share .The share price a dizzying roller coaster ride since yet not one penny piece in dividends have the patient shareholders received since
Hardmans forecasted by April 2020 Bricks would achieve the following:
100,000 listings pa
7% market share
£130m revenue
Gross Profit of £78m
EBITDA profit of £51m
Missed targets on all counts .Instructions under 70kpa and market share under 5%
However a very tasty £75m in the Tommy doing SFA.That prize must be eagerly coveted elsewhere
The question is Vic able to apply any magic ?
Failed to reach out to the wider property community .Seems more comfortable under cover fiddling around with gadgetry when a myriad of opportunities are there to be mined .
Still dithering over the fee structure.
No new revenue streams .Missed a trick on bringing conveyancing services inhouse ,buying in some expertise and applying some tech and making them best in class.
LETTING
Doesn’t even warrant a mention anymore. Withered on the vine with the current inventory under 210 .instructions Putting that into perspective Foxtons Canary Wharf office has considerably more
OVERSEAS
Canada safely dispatched but what about their substantial investment In Homeday.Germany? No news there on performance apart from it being still loss making
In March 2109 Bricks Sales Director Paul Vickerstaff set sail to Germany to lick them into shape .That was shortlived.Came back in the September with his tail between his legs and now at Spicerhaart
Bricks investment today jointly with Axel Springer now looks to be a passive one. Homeday have been going since 2015 Acc .to the portal Immowelt they have less than 1040 instructions.
All very pedestrian
The jury is out but surely they can make that £75m sweat,can’t they?