- Purplebricks said group revenue for the six months to October 31 to was up 150% to £46.8 million, while UK revenue was up 118% to £39.9 million.
LONDON – Online estate agent Purplebricks said revenue jumped 150% since May, but analysts questioned why its statement didn’t specify how many homes are being sold on the platform.
A statement from Purplebricks said group revenue for the six months to October 31 to was up 150% to £46.8 million, while UK revenue was up 118% to £39.9 million.
Its UK business posted an operating profit of £3.2 million. The company spent £10.1 million on marketing aimed at touting the benefits of buying and selling houses online.
Questions remain over the PurpleBricks model, however, and several analysts think its shares are overpriced, with shares dropping nearly 3% in early trading on Wednesday. An emailed note from analysts Jefferies said the results statement didn’t make clear how many houses had actually been sold on the platform, which charged sellers’ fees of £1,138 on average.
The note said (emphasis ours):
“Once again, we find that Purplebricks continues to speak in riddles – ‘we sold and completed £4.6bn of property with a further £3.8bn in the pipeline’.
“However, we cannot tell how many homes that equates to. And that is the one thing we think potential customers should be asking: ‘If I pay you more than £1,000 what are the chances that you sell my home and how close will you get to the asking price?
“How many homes they sell … remains the key KPI by which, in our view, Purplebricks will succeed or fail.“
“We believe this early stage disruptor has yet to prove the efficacy of its business model. Should the model stumble, the share price may do likewise.”
The news comes in a year when shares in estate agents using the traditional branch model have fallen amid tough trading conditions and growing competition from “disruptor” firms like PurpleBricks.
Shares in Countrywide plummeted in July after it posted a 98% collapse in pre-tax profits, while Foxtons also said year-on-year revenues to October shrank due largely to challenging conditions in London.
Purplebricks, which has expanded its operation to the USA and Australia, said it now accounts for 74% of UK estate agents’ market, although total market share still only represents between 2.5% and 5% of all sales and transactions, a figure which has increased sharply in the past two years.
Shares were down 2.74% to 385p at 9.15 a.m. GMT: