Purplebricks shares surge as buyers shift to technology-led platforms

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.”

Iamproperty end of news story
x

Email the story to a friend



15 Comments

  1. Hillofwad71

    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?

     

     

    Report
  2. RussellQ

    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.

    Report
  3. Bless You

    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.

    Report
    1. Bless You

      Bricks payanyway business model should also be banned. 
      The end

      Report
  4. smile please

    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.

     

    Report
  5. juniorneg

    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.

    Report
  6. Andrew Stanton Proptech Real Estate Strategist

    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.

    Report
  7. AgentQ73

    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.

    Report
  8. That70sGuy

    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

    Report
  9. padymagic

    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

    Report
  10. Andrew Stanton Proptech Real Estate Strategist

    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.

    Report
  11. majortom1

    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.

    Report
  12. 40yearvetran08

    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.

    Report
X

You must be logged in to report this comment!

Comments are closed.

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.