Purplebricks’s core UK business is still growing and remains profitable with instructions up again in the last year.
But, says portals analyst Mike DelPrete, the more difficult market is causing mounting headwinds.
While instructions rose, the rate of growth is still impressive but has slowed and the UK finances have taken a hit in the second half of its financial year – last December to this April.
Compared with the first six months, marketing costs were steady while revenue dropped £6.5m.
DelPrete says: “With a soft property market in the UK, at least partially driven by the uncertainty around Brexit, it is becoming more difficult and expensive for Purplebricks to acquire customers.
“For the first time in its history, Purplebricks customer acquisition cost (or cost per instruction) has increased from the previous year.
“The trend of increased economics of scale has taken a pause – perhaps temporary, perhaps not.”
DelPrete concludes: “Purplebricks’ continued – albeit slowing – growth in the UK highlights the importance of customer acquisition costs in the new world of hybrid and online brokers.
“Having fantastic technology and a great team will only get you so far; at the end of the day, massive advertising expenditures are required to reach scale, and then, profitability.”
Meanwhile in Australia where Purplebricks is winding down its business with the aim of a total exit by the end of the year, it is separately reported that there are now just 182 listings, compared with 800 back in July.
Comments (15)
Purplebricks still growing? …..Potatoes!
Grow up you ignoramus GPL
Six Chardonnays in by this stage is my guess.
Part of a poorly written article in Forbes last week, in which DelPrete goes on to highlight the high margins in the US 🙂 and implies that UK margins are racing ahead( they are not – as he would know if he read the notes to the published accounts !)
The real issues around the results are the dramatic fall from expected revenue of £165-£185million forecast for the year at the end of October 2018 to actual revenue of £136million at the end of April 2019. Coincidentally, PB sacked Grant Thornton in October 2018 and appointed Deloitte as auditors.
Head still in the ground Ostrich17??
Back on the liquid diet Michelle ?
In case you missed it the last time, it’s an urban myth. Ostriches only do that in the nesting season – they are simply turning their eggs.
MDP really does need to keep up
Sept 11th
“Tech-driven real estate brokerage Purplebricks released its 2019 results last week”
No -they were released on the 3rd July
I lost confidence in anything this guys says a long time ago from his previous stories. Always putting spin onto the sunny side. He is missing out the forthcoming litigation that PB declared they are open to, if it ever materialises and the current HMRC investigation with potential for severe penalties. Therefore his story as usual is very much an attempted polished one sided view point that does not reflect PB as of today and brings into question … should anyone listen to him.
Considering the number of years PB have now been going, still no porofit for investors unless you exit the party at the right moment. Just look at all those £M’s used and lost!!!!!!!!!!!!! Can you realy call that a success?
Your customers lost confidence in you a long time ago Woodentop. Just seen your last 10 reviews (2/10)
Ha ha ha. I’m not on Google or any other review sites. Try again Michelle.
I wonder does that qulaify as defamatory of an individual using false information?
A post you made public earlier in the year 16th Januaryr 2019: “Hybrid agents have introduced honesty, integrity and transparency”
How things have changed!
Noted that out of 5 post on this one thread you recieved TEN dislikes and not one like. Seems you live in your own world.
Bricks must be getting desperate wheeling MDP out for a cheer lead
“Purplebricks’s core UK business is still growing and remains profitable with instructions up again in the last year.” Well unfortunately FY19 is last years news . Misleading at best . Certainly this current financial year FY 20 Instructions are not growing . Firmly in reverse. Instructions well down in August and further deterioration continued into September.
With their haphazard handling of shutdowns overseas with ratcheting costs the autumn trading update is going to be grim
Looks like one of their Oz agents so disillusioned with the game has left the profession
https://www.linkedin.com/in/chase-bradshaw-7956ab14b/?originalSubdomain=au
Keep up Hillofwad71
Oz is no longer operational
If purplebricks were under the same disclaimers as the car industry, there would be no purplebricks.
Asa have failed honest agents and the public.
Blah, blah, blah, blah
Stop your noise ‘bless you’
Once the customer acquisition costs increase then you have a serious issue.
Either profits are impacted or prices have to increase to accommodate the additional cost. Wouldn’t think there is any scope in further cost reduction so this is not a good scenario for PB.