Purplebricks shares went up yesterday, despite announcing losses and a decision to close its business in the US.
Despite the apparently negative news, the shares went up from 93p at the start of trading to as high as 98p, before closing at 95p.
The City seemed undismayed by Purplebricks’ pre-tax losses of almost £56m in the year to the end of April, and looked to have been more impressed by Purplebricks’ performance in the UK.
Here, Purplebricks said it had revenues of £90.1m and an operating profit of £5.3m.
Closing the American and Australian operations is going to cost Purplebricks £10-12m.
Industry figures were unimpressed.
On EYE’s busy comments section yesterday, there were repeated questions asked about how many sales Purplebricks had actually completed on, and in how many cases people who had paid upfront went on to instruct another agent who did sell their property.
There were also questions asked about the £1,243 Purplebricks reported as making per instruction, split between listing fee and ancillary income.
Away from EYE, City analyst William Packer of Exane, calculated that the revenue per instruction represented a fee of 0.6%, against the industry average of around 1.1%.
While it was not clear how he calculated this, he said that the critical cost per instruction was £382, up 15%.
Colby Short, of comparison site GetAgent, also criticised the results posted yesterday as being heavily spun.
He said: “Purplebricks has put more gloss on their UK performance than a drunk decorator, and no wonder, considering the monumental failures elsewhere around the world.
“Now that they’ve returned from their international crusades with their tails between their legs, they will no doubt be lining the City up for further investment to support their focus on the UK.
“However, whilst they’ve grown revenue and claim they are ‘successful’ at selling, you just need to read between the lines to see that this success isn’t all it’s cracked up to be.
“Although they are very vocal about their figures up until the sold subject to contract stage, their performance when actually getting a sale over the line remains shrouded in mystery.
“There is a good reason for this, and at a top level they have failed to gain any meaningful ground when it comes to the number of properties listed despite huge marketing spend.”
Marc von Grundherr, director of London agent Benham and Reeves, said: “Unfortunately for Purplebricks, the figures and the failure of their international escapades will have left them feeling a little blue. That’s if the colour hasn’t drained from them completely.
“A retreat from the US being announced as well as its previous admission that their Australian project has also flopped will come as a real blow to the validity of their business model and certainly raises questions about their future on a domestic level.
“While the losses are eye-watering enough, they’ve actually burnt £90m which is a story all too familiar with the online model, and one has to wonder when enough is enough.”
Comments (43)
Except that PURP are not growing. Stats from Gavin Brazg at The Advisory show that the call-centre sector share of the market shrank by over 1.25 percentage points in the last few months with #purp having a slightly higher share of that shrinking sector.
What has been predicted by many on here is now staring PB investors in the face. The call-centre model has a place in the market but, it is a niche sector, not a mass market offering. Once the inevitable question of actual list:sold is definitively answered in court (which I believe it will be within two years) and the highly questionable employment status of the ‘LPEs’ is tested, PURP will have to face up to the facts. Something they have a track record of being rather poor at.
This is what KB posted on PB own web site …….
Estate agents are right up there with bankers, when it comes to the UK public choosing which professions they dislike the most.
Greed is a common gripe about bankers – paying themselves massive bonuses, even when the bank they are working for has made a huge loss. Where is the logic in that?
Kenny Bruce – 20 March 2014
Was he actually talking about himself and his business? Love the bit about bankers paying themselves, how much has Bruce and Co made for themselves with huge losses !!!!!!
I know many agents who do not mark a property sold STC until cash funds are proven or a mortgage offer is received. This may take a while, perhaps this is why PB purport to sell more quickly?
Combine this with seller/buyer referrals to truly dreadful conveyancers and I suspect that their quoted sold STC ratio is hugely misleading?
Are re-sales counted twice?
Does this include sales by other agents?
As a pay any way platform are these the questions the regulators need to be asking to help safeguard their users and investors from spin?
Ever noticed we never hear anything about regulators …. they are not looking.
PB is not an estate agent, it is a branded web outlet. The estate agents are self employed LPE’s, not employees of PB!
Share price continued to fall this afternoon to close.
You do all realise that the average vendor won’t give a flying one about their share price or the fact they’ve had to withdraw from the US? In fact, they won’t even know! When was the last time you checked Sainsbury’s share price before you went shopping? Or had a look at BMW’s sales performance in Canada before choosing your new car? And if Tesco were to jump in and say ‘ooh, I wouldn’t shop at Sainsbury’s if I were you, their share price has dropped’ would that stop you going? No. Same for 99% of vendors.
As long as Pb continue to list and sell properties, get good reviews and continue with their status as one of the best known and most trusted brands in the UK, they’ll continue to grow here.
The only thing I would say is that it was a mistake going to Oz and the US so soon, which they would probably admit in hindsight behind closed doors. Pulling out of those market places has clearly been done to protect the UK business and to ensure it does continue to grow.
All very valid, I wish to caveat the following musings with fact that I am passing no moral judgement on the way that PB conducts itself, merely dispensing my advice.
There have always been and always will be those vendors who don’t see the value in what the traditional estate agent does and they will try to get you to drop your fee as low as they can. PB are the go to for most of those vendors now as well as those who are prepared to take the gamble to save a few grand and those who have bought the hype and marketing. Some of those vendors where the LPE is effective and prices it and presents it well will sell and think PB are ace and what a load they have saved. In contrast those that get a less effective LPE will not sell and that vendor will be disappointed they took the gamble/believed the hype.
This is the same for the high street as well, I can use a branch of a high street agent and get a great experience whereas you may use the same company whose branch is two towns over and get an awful experience (for the obvious poster who like to shout the loudest, I do acknowledge that in the second example you would not have lost out financially on the high street).
I don’t think PB are going away as there are enough of those vendors prepared to take the risk/believe the hype to keep them more than profitable so stick to what you do best folks, offer great service at a fee that offers value for money to the vendor, don’t get bitter and twisted about PB but be there to pick up the pieces for those vendors when it doesn’t work, smile more and trust me on the sun screen.
….”merely dispensing my advice”
Excellent ARC, I’m glad you clarified that. I wouldn’t want to be pedantic and ask why you felt the need to point out the obvious.
Commenting about Purplebricks doesn’t need to mean that those commenting are, as you say “bitter & twisted” ……it simply means some of us try to provide a degree of balance & question re what is said or portrayed by PB.
In my particular case, I have no personal issue with PB as they don’t rate with the vendor who understands the value of their home/assest, and seek a professional to market/sell their home.
I could dispense loads of advice however one may view that in a negative light, so I’ll keep commenting when I feel the need.
…..and smile? …..EVERY Day I awake. Life is the MOST important thing.
Your positivity is welcome and refreshing, thank you for taking the time to add your thoughts.
The consumer will only have confidence in PB if they are a success at selling. Something they have smoked screened. You are correct there will always be a vendor looking for the cheap model (private sale by owner) and that is what PB are and rely on. BUT it is exactly these skin flint’s who don’t like paying object to, pay for a sale they don’t get and can easily rebound on PB once they releasie they have to pay £1k or so with a 50/50 chance of success and stay away from them. Some say the figure is likely to be below 50% success at sold. The public are starting to learn this without the need for high street agents saying anything. Just look at all those bad reviews!
The cracks are starting to show with PB business model in the UK, arguably a high risk venture for any investor to stay with them, let alone get into bed with them any further. The investement banks are saying SELL for a very good reason, the honeymoon ended a long time ago and a divorce is pending. PB can try and spin and gloss over the cracks but facts are facts, share price has continued to drop this afternoon. PB are not offering anything a high street agent doesn’t do, FACT is less service than the high street (many are just as competitive of fees) and they have less than 95% of the UK market after how many years and meggar HUNDREDS of £m’s spent on progoganda! PB is not a self sufficienet business,period. It has to have investor injections to stay afloat. All that money Springers put in has nearly dissapeared and it still hasn’t finished as it has to pay out the lossess in the USA.
To claim as a success revenues of £90.1m and to make an operating profit of £5.3m, is this net or gross? either way it is a joke.
“As long as Pb continue to list and sell properties, get good reviews and continue with their status as one of the best known and most trusted brands in the UK, they’ll continue to grow here.”
Except that they are not growing. Stats from Gavin Brazg at The Advisory show that the call-centre sector share of the market shrank by over 1.25 percentage points in the last few months with #purp having a slightly higher share of that shrinking sector.
What has been predicted by many on here is now staring PB investors in the face. The call-centre model has a place in the market but, it is a niche sector, not a mass market offering. Once the inevitable question of actual list:sold is definitively answered in court (which I believe it will be within two years) and the highly questionable employment status of the ‘LPEs’ is tested, PURP will have to face up to the facts. Something they have a track record of being rather poor at.
I’m still confused how they/others believe they can sell their property quicker than other agents. They only list on some portals and their own site.
Their pictures are usually terrible, the properties are often comically priced, they don’t have proactive salespeople pushing the property, it’s hard to book viewings, constantly hearing the site is useless. Doesn’t take a genius to know a combination of these things does not make for a good agent.
Reading through Purplebricks Annual Report it seems clear that Purplebricks Customers are being overcharged for the service which they actually receive.
This statement from Purplebricks only serves to confirm that their focus is not on selling their customers homes, its all about selling additional products/services to their customers…
“Revenue was split 56:44 between instruction and ancillary revenue respectively (FY 2018: 57:43). We have seen a further shift towards a greater proportion of ancillary revenue as we successfully sell more products to our customers”
….that statement alone highlights that all references to the perceived value/savings that Purplebricks consistently promote, compared to traditional High Street/Local Estate Agency, are undermined by the fact that they target their own customers as fodder to sell other products too.
If any consumer is considering Purplebricks or any other Online Only Property Listing Service it should be on the basis of the well known “99p Burger Offering”, that they (the consumer) opt to pay for a basic service, they know its cheap (which Purplebricks are not) and they are getting what they paid for – Purplebricks cheap property listing, a psuedo “sales service”, the likelihood of a less successful result or indeed no result, however they (the consumer) thought that is what they had purchased. Instead Purplebricks own Annual Report states that their customers are merely “hooked” to then be subjected to targeted efforts to sell additional products/services.
Purplebricks DON’T want to sell your home, they WANT TO SELL STUFF TO YOU!
Another concerning aspect of Purplebricks is the “hidden” referral fees however I assume either Purplebricks or a fellow “PIE Onian” can provide a copy of a Purplebricks Terms of Business that proves my assumption is wrong and that Purplebricks clearly state on their T.O.B. exactly what “referral/hidden” fees are being shuffled around as part of that customer’s contract with Purplebricks.
Moving to July 2017 we witness a Purplebricks Share Price just short of £5, and in July 2019, Purplebricks have successfully reduced this by around 80% to under £1 – one can only assume that it hasn’t dived further because there are shareholders clinging on in the hope that their original investment funds which are well in the red, eventually nudge into the black …..we watched Countrywide slide, and I think we are witnessing a skilful slide by Purplebricks which will end up in the same manner.
An additional conundrum for me is the “self-employed” business model that Purplebricks sits on, and the implications of that when Purplebricks tries to match itself with High Street/Local Estate Agency Professionals – it’s simply a sham in my view, a artful play of smoke n’ mirrors, at the expense of the consumer – when one pulls away the magic purple curtain, they are a “house of cards”.
One thing is clear though, that despite MILLIONS of Pounds spent by Purplebricks and their investors, Purplebricks have a fraction of the UK Property Market.
In reality it’s clear that if you want a “Cheeseburger Service” for your most valuable asset and you don’t care about how successful the final result is, then cheap/online only may be your choice – just make sure you pay cheap and don’t be fooled into buying any other products/services!
If however, you value your home/most valuable asset, choose a Professional – your Local/High Street Estate Agent, and only pay for success!
You contradict yourself a fair bit there as you say they have no interest in selling the property, only in selling stuff to the vendor but unless I am wrong, if the house doesn’t sell then the vendor has no need for a conveyancer, a mortgage broker, removal firms, utility switching service etc so you can’t ‘sell them stuff’ unless the house is sold is first you can’t have it both ways.
I’ll clarify ARC…..
Purplebricks sole focus is NOT on acheiving the best result when selling their customers homes. As long as they get a sale, that’s all that matters in terms of the “house sale” ……it’s bolting on the extra income products/services that matters most to Purplebricks.
It’s why when one sees a property for sale through Purplebricks any buyer should be rubbing their hands in glee, safe in the knowledge that they will most likely pay less to buy that property through Purplebricks, than they would through a good Local/High Street Estate Agent.
Sadly Vendors can’t count the cost of underselling through Purplebricks.
You see that’s not what you originally said,
“This statement from Purplebricks only serves to confirm that their focus is not on selling their customers homes, its all about selling additional products/services to their customers…”,
so thank you for the clarification.
Ok ARC, as I can multi-task I’ll engage….
Let’s play the exciting game of “Pedantic”.
Sole – Fish or Focus?
I’ll put up the prize – A Day Out at Beachy Head!
Your turn…..
Nah, you’re alright I’m not as interested when it’s trivial.
All agents sell “add ons” and most get a decent referral fee. I’ve worked online and the pressure to sell other services is nowhere near the pressure it is in the high street.
Might be connected to not taking money up-front. Just a thought.
Don’t assume all agents do. We don’t.
Am I the only one who is genuinely baffled as to how this company keeps obtaining funding from investors?!
I mean, it has just failed in two markets, consistently requires additional investment to ensure that the push on marketing can be maintained, and seems to be shrouded in mystery as to whether it actually manages to sell (in the true sense of the word, i.e. completed sale) as many properties as it claims?!
Say what you like about DurpleWicks, you have to credit them as being the worlds best snake oil merchants…
If Springer wants a cheap entry into the UK property listings market, they must be looking at OTM. PB will be hard work and even if it can really produce £5m profit ( really?) as a solos UK operation, how much more can it grow and how much will be needed?
If there’s one thing you should take away from this article….It’s that Colby has no idea what he’s talking about.
The future is bright, the future is Purple.
Buy buy buy those shares and watch them rocket north.
Bye bye.
Dont forget to switch your answering machine on at 5pm and then go and post the mail
fat lads 101, you’re just like the ancient Mayans – their prophecy didn’t come true either!
From the revue that really launched the ‘satire’ boom, the 1961 Beyond The Fringe. The cast: Peter Cook, Jonathan Miller, Dudley Moore and Alan Bennett. They are seated, huddled, on the top of a mountain…
Jon : How will it be, this end of which you have spoken, Brother Enim?
Omnes: Yes, how will it be?
Peter : Well, it will be, as ’twere a mighty rending in the sky, you see, and the mountains shall sink, you see, and the valleys shall rise, you see, and great shall be the tumult thereof.
Jon : Will the veil of the temple be rent in twain?
Peter : The veil of the temple will be rent in twain about two minutes before we see the sign of the manifest flying beast-head in the sky.
Alan : And will there be a mighty wind, Brother Enim?
Peter : Certainly there will be a mighty wind, if the word of God is anything to go by…
Dudley : And will this wind be so mighty as to lay low the mountains of the earth?
Peter : No – it will not be quite as mighty as that – that is why we have come up on the mountain, you stupid nit – to be safe from it. Up here on the mountain we shall be safe – safe as houses.
Alan : And what will happen to the houses?
Peter : Well, naturally, the houses will be swept away and the tents of the ungodly with them, and they will all be consuméd by the power of the heavens and on earth – and serve them right!
Alan : And shall we be consumed?
Peter : Con..sum..éd? No, we shall not be consuméd – we shall be up on the mountain here, you see, while millions burn, having a bit of a giggle.
Jon : When will it be, this end of which you have spoken?
Omnes : Aye, when will it be – when will it be?
Peter : In about thirty seconds time, according to the ancient pyramidic scrolls… and my Ingersoll watch.
Jon : Shall we compose ourselves, then?
Peter : Good plan, Brother Pithy. Prepare for the End of the World! Fifteen seconds…
Alan : Have we got the tinned food?
Dudley : Yes.
Peter : Ten seconds…
Jon : And the tin-opener?
Dudley : Yes.
Peter : Five – four – three – two – one – Zero!
Omnes : (Chanting) Now is the end – Perish The World!
A pause
Peter : It was GMT, wasn’t it?
Jon : Yes.
Peter : Well, it’s not quite the conflagration I’d been banking on. Never mind, lads, same time tomorrow… we must get a winner one day.
Keep it up Sdaltaf. Keep it up.
A brilliant and much underrated sketch. Re done for the secret policeman’s ball a few years later with Rowan Atkinson.
Dropping all afternoon, your tosh “Buy buy buy those shares and watch them rocket north” just isn’t happening and you promised they would on 3rd July! Oh so wrong, your just as good at predicting as PB are being at attempting to be real estate agents.
Sdaltaf101: 12.37 June 3, 2019
They will retreat from the US and Oz and implement their high street hub model in the UK
Watch those shares fly north on 03rd July.
June 26: 7days to go before the Purple Bricks shares rocket north.
I wonder if you have noticed that you do a Purple Bricks story everyday – is this a Betelgeuse kind of thing – ‘say it three times’?
Now here’s a clever trick…
According to my NOT- A-proxy, the total number of listings on Zoopla for PB increased by 258 yesterday.
That’s the highest single daily increase since I started collecting the data – and not a bad result on what was otherwise a day of pretty awful results.
But what makes it a REALLY clever trick is that according to the same website, the number of properties added in the same 24 hour period was 220.
PB’s statistical f*ckwittery (credit: Jonnie) seems to be catching – and like any transmittable disease, those closest are of course most likely to fall victim first…
There’s definitely smarter wags here in the city, than on these pages…
With no oversea markets sucking the life out of the business, one can only imagine how successful this company is going to be, now its focus is solely the UK.
That 5.3 million operating profit is going to look pretty good sooner than you think. (Here’s a clue: it’s going to skyrocket).
It won’t, because they are 5hite at what they do, smarter wags in the city? Please, shysters and manipulators maybe, a la Madoff perfect bedfellows with PB.
Says an estate agent…
Tea just came out of my nose.
Yes, a bona fide estate agent, not an accusation I would throw at purple bricks.
Sure it wasn’t soy latte?
6 years, never made a profit, currently losing £1million every week. Go ahead Londonbound invest and watch your money burn.
Did PB just effectively say ” We have a model that just doesn’t work in some of the world’s largest property markets ” Yet investors aren’t asking so just how do we recoup our investment. Amazing, hope over experience.
People aren’t idiots, the ‘strategic review’ of US in May basically meant it was shutting but they didn’t want to announce both simultaneously, so it wasn’t a shock yesterday.
UK performing stronger and profitable. Understandable that cost per instruction has increased a bit when the market is so flat. I’m sure a lot of agents are feeling an impact, they just aren’t PLCs to have to publicise it.
TwentyCi confirming the sales conversion higher than 20 biggest competitors is interesting, even if it does include SSTC.
Canadian acquisition seems to be a success, so expect future expansions to be purchases/mergers rather than cold starts
The problem with any press release TwentyCi produce is that the data behind it in not disclosed, so for all we know they could be making it up.
There will in the near future be a place in the market for PB, but it is up to us to educate vendors as to the quality of service that we offer compared to the paper thin service that PB offer.
Share trading volume was fairly light yesterday .The current daily machinations of the share price can be ignored until the big cheeses Woodford ,Axel and the shakers and movers who have taken a position get busy
Yesterday’s announcement very much had a feel that some of the present BODS are just keeping the seats warm until Axel step up to the plate later this month
The new CEO was very uninspiring .You would have thought he would have a pocketful of new ideas and reveue streams to make up for the overseas disasters
Time will tell if Axel can make a better fist of it .To be honest the previous management were never quite up to it !!!!
My prediction is Axel will make a formal winning offer for the company at 125p and put this ghost to rest !!
‘Purplebricks has put more gloss on their UK performance than a drunk decorator’
Love it.
Only in the UK do rightmove. Zoopla, trading standards , naea. Mortgage advice bureau etc support their ‘ activities ‘ .
Disgrace.
Oh. Value of business = 100 million tops. = 50p a share not 100.
Some say Woodford is stoking the price up with the money he has locked in from those poor investors.
————— ¥ ————-
You actually meant that the 5.3 op profits will look like peanuts once they only have the UK to eventually finance,surely?
And you could be right, unless we get the message across of how good we are with actual services and not just lip service and knocking PB then PB’s pr will continue to hit our stock and profit levels, you have been warned!