Purplebricks Group plc (LON:PURP), the UK’s leading tech-led estate agency business, announced today its results for the year ended 30 April 2021 and provides an update on its strategy execution.
|Group – continuing operations|
|Gross profit margin %||63.5%||64.1%||(60)bps|
|Operating profit /(loss)||8.2||(5.7)|
|Group – total operations|
|Profit/(loss) from total operations||6.8||(19.2)|
|Cash at year end||74.0||31.0||139%|
|KPIs – UK3|
|Total fee income4||87.1||71.4||22%|
|Average revenue per instruction6||£1,501||£1,401||7%|
Financial and operational performance
– Strong financial and operational performance, with revenue up 13% to £90.9m (FY20: £80.5m)
– Instructions increased by 14% to 58,043 (FY20: 50,948)
– 4.6%7 market share of properties sold by volume, down from 5.1% last year
– Average revenue per instruction (‘ARPI’) increased by 7% to £1,501 (FY20: £1,401)
– Total fee income increased by 22% to £87.1m (FY20: £71.4m)
– Adjusted EBITDA of £12.0m (FY20: £2.9m), up 314%
– Repayment of £1.0m furlough monies received
– Operating profit of £8.2m (FY20: loss £5.7m), including a benefit of £4.3m from non-trading items8
– Group profit from total operations of £6.8m (FY20: loss of £19.2m)
– Strong trading and sale of the Canadian business contributed to cash at 30 April 2021 of £74.0m (30 April 2020: £31.0m)
Pricing trials concluded with high confidence in results, launch of new pricing model in July
– Recent pricing and proposition trials successfully concluded in the North West
– New Money Back Guarantee (MBG) and simplified two-tier proposition being rolled out nationally later this month following successful in field research and trials.
Business in good health, launching refreshed strategy to deliver growth
– Strong foundations for further growth built during FY21 with investment in leadership, systems, and our people
– New leadership team in place and working at pace to deliver on our strategic initiatives
– Continued investment in technology to make it even easier for customers to do business with us
– Financial strength and refreshed strategy in place to support next phase of growth and to deliver on our medium-term target of 10% market share
Outlook & guidance
Purplebricks has started the new financial year in a strong position, with a very clear understanding of its operational barriers to success, and with multiple strategic levers in place to drive its growth. The Group’s new pricing structures, including a Money Back Guarantee and a simplified two-tier proposition, are launching in July 2021.
The market for sales is buoyant at the moment, with fall through rates at their lowest in a long time, but with the very healthy demand currently outstripping new supply volumes. We expect supply and demand to return to more of a balance post Summer.
As such, it is too early to quantify the benefit from the new pricing structures to the current financial year. Our current expectation is for FY22 EBITDA to be flat year-on-year, in line with market expectations9, with these strategies expected to accelerate revenue growth and drive progress towards the Group’s medium-term targets over the next few years. Once these initiatives have been successfully rolled out, the Group will accelerate its marketing strategy to grow instructions and share. As a result of these strategic changes, the Board expects Purplebricks to be able to deliver annual revenue growth in excess of 20% in the medium-term, with confidence in the Group’s ability to deliver against its growth strategy.
Vic Darvey, Purplebricks Group CEO, commented:
“We are excited to be announcing the conclusion of our pricing review this morning, following a successful trial in the North West. The Group has responded to a changing market and we are delighted to offer customers an option of reimbursement of their upfront fee payment if they do not sell their home. This illustrates our commitment to giving customers the best service at the best price and we are very excited about the growth opportunity this new initiative will drive over the next few years.
“We’ve had a strong year and I am particularly pleased with our revenue growth and operating profit, as the Group continues to grow from strength to strength. This great performance has been achieved in the shadow of the Covid-19 pandemic, and it remains a great source of pride that Purplebricks has come through the year stronger than ever.
“Most importantly, today we present Purplebricks 2.0 and I believe that we now have the right management team, right strategy and right technology to continue to grow the business.
“With a simplified proposition and our new pricing structure in place, I am confident that Purplebricks is well placed to gain market share and to accelerate revenue growth and drive progress towards our medium-term targets. I would like to thank all colleagues for their efforts over the last year and look to the future with considerable optimism.”
1 Continuing operations now represents the UK segment only, with FY 20 restated to present the results of our Canadian business up to its disposal on 15 July 2020 as discontinued. Our Australian and US operations for the prior period were already presented as discontinued. See notes 5 and 6.
2 The underlying performance of the Group is monitored internally using a number of alternative performance measures (“APMs”), which are not defined within IFRS. Such measures should be considered alongside the equivalent IFRS measures. For full definitions and reconciliations of APMs, please refer to note 4. Adjusted EBITDA is defined as operating profit, adding back depreciation, amortisation, share-based payment charges / credits, results of associates / joint ventures and exceptional items.
3 As detailed in the financial review, there have been changes to four KPIs (Instructions, ARPI, Total Fee Income and Cost Per Instruction) in the year, while the names of these KPIs remain the same. The current and previous definitions and year on year movements under both methods are set out in the financial review.
4 Total fee income is a KPI used by management to track income from current activity levels. Total fee income is a non-IFRS measure and represents fees receivable for instructions and mortgage referrals; and conveyancing fees due in relation to completed transactions. This definition has been amended since last year.
5 Instructions represents instructions net of refunds. This definition has been amended since last year.
6 Average revenue per instruction (ARPI) equates to total fee income, divided by instructions. This definition has been amended since last year.
7 Source: TwentyCi.
8 These non-trading items are a share-based payment credit of £2.3m and gains of £2.0m on deemed disposal relating to the investment in Homeday and are discussed in the financial review.
9 See Company compiled consensus on the investor website https://www.purplebricksplc.com/investors/analyst-and-consensus/
Results presentation and conference call
Vic Darvey, CEO and Andy Botha, CFO are streaming a pre-recorded video presentation of results via webcast at 9.00am today followed by a live Q&A session for analysts and investors.
The video webcast link is via the webcast registration page and on the website. A replay will also be available on the Purplebricks website following the Q&A session at http://www.purplebricksplc.com/investors/latest_results.