Purplebricks claims 20% revenue growth despite “online shake out”

Purplebricks says it has seen year-on-year revenue growth of about 20 per cent despite what its chairman calls “a challenging UK housing market ... driving a shakeout in the industry.”

The agency says it has seen year-on-year revenue growth of about 20 per cent despite what its chairman calls “a challenging UK housing market ... driving a shakeout in the industry.”

In a trading statement this morning that is very light on specifics in terms of its UK activities, Purplebricks says it has seen “good progress in the six months ended October 31 2018 with year-on-year revenue growth of approximately 20 per cent driven by double-digit growth in instructions along with a continuation of increasing average revenue per instruction from improved attachment rates of traditional and new ancillary products.”

It says it continues to win market share against a challenging market backdrop in the UK. 

“The online/hybrid sector continues to grow and a market share of 74 per cent was achieved in the month of October. This is despite increased competition and total category media spend in the sector increasing 80 per cent” the statement says.

Purplebricks claims it leads the UK agency market in brand awareness with ‘aided awareness’ of 97 per cent and ‘unaided awareness’ of 48 per cent.  

In a nod to the highly-publicised financial difficulties for Emoov and the closure of Cornell’s’ online service Hatched, the Purplebricks group chief executive Michael Bruce tells shareholders this morning: "The challenging UK housing market is driving a shakeout in the industry, highlighting weaknesses in both some traditional and online agents business models. 

“Against this backdrop Purplebricks continues to grow and win market share. Longer term with the best known brand in the sector, our flexible business model and the strong balance sheet, Purplebricks is well placed to further strengthen its leading UK position and replicate this success overseas. We are confident about the future for our business."

Purplebricks shares fell almost nine per cent yesterday, ahead of today’s update, closing at 181.30p - in January this year the share price hit 498.80p. 

Purplebricks’ bullish claims about its UK performance are tempered by its overseas activities, however.  

It admits to having encountered “some challenges in Australia amid a tough market backdrop” but claims changes made to its fees and services to customers “have been well received and have resulted in a significant increase in conversion from valuation to instruction.” 

It says after a summer slowdown down under, October showed over 35 per cent growth in new instructions over the previous month.

The agency’s statement to the stock market this morning also claims that in the US it  “has established the foundations to realise the substantial market opportunity.” 

As at the end of October 2018 there were some 140 Local Real Estate Experts and sales consultants operating in seven states, it says, with more currently in training and going through the recruitment process. 

“While most of these states are in the very early stages of development, sellside listings are growing and buyside revenue is increasing. Attach rates on ancillary revenue streams from our independent escrow business are performing strongly and we see significant further opportunity to grow ancillary revenues in the US from existing and new income streams.”

The statement also repeats Purplebricks’ recently-announced moves into Canada and Germany. 

“The Canadian business is performing strongly, in line with our high expectations. With a structured plan now being implemented to drive further significant growth through 2019” says the firm.