Purplebricks: adviser says the "odd detractor" doesn't diminish success

The research director of an investment firm which has advised Purplebricks says the “odd detractor” who doesn’t sell their home does not alter the fact that the agency is a success.

Robin Savage, research director of Zeus Capital - the firm which acted as nominated adviser and sole broker to Purplebricks when it launched on the London Stock Exchange - has told a financial podcast that the agencyy is growing fast at the cost of its competitors who “are not very happy” as a result.

“It’s now the largest UK estate agent by numbers of properties on Rightmove and seven months ahead of our estimate on Local Property Expert recruitment” Savage tells Directors’ Talk podcast.

He says this is good preparation for the spring market next year, when he expects competition to hot up further.

“There may be the odd detractor who has difficulty selling their house for all sorts of particular reasons, but there are considerably more happy customers than there are unhappy customers” Savage says.

When asked about Purplebricks share price having risen 30 per cent overall during the past six months - but also having fallen 20 per cent in the past two months - Savage said there were three elements to pricing the agency on the market: the UK, Australia and US.

“[Firstly] Purplebricks UK is clearly growing fast, it’s profitable and it’s clearly self-funding” he said, predicting that the agency’s domestic operations would hit an EBITDA of £15m this year, £30m next year and £45m in 2019.

EBITDA stands for earnings before interest, tax, depreciation and amortization - a key measure of a company’s performance.

Secondly, Savage says Purplebricks Australia is on track to break even this time next year; the company there will, in a short time, be roughly the equivalent of the UK because although there are only half the homes in the market, revenue-per-instruction is twice as much as in this country.

Thirdly there is Purplebricks US which Savage described as potentially promising because of the size of the market and because revenue-per-instruction exceeded both the UK and Australia.

Last week, in Purplebricks' latest trading statement, the agency claimed to have made "good progress" with revenue in the UK for the first half of 2017 likely to be double those of the same period in 2016. It now has some 640 Local Property Experts, up by 100 on the figure reported by the firm in June.

Zeus Capital is also now advising Agents’ Mutual on its launch of OnTheMarket to the stock market.