Election Day crunch-time for Purplebricks, when interim results are revealed

Share price is likely to tank even further if Purplebricks cannot demonstrate progress, gaining market share from traditional agents and increased revenue per instruction.

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Crunch time for Purplebricks is due to arrive on Thursday when, amid the hullabaloo of the General Election, the company reveals its interim results for the first half of its financial year ended 31st October.

The company has been accused of timing the results to coincide with both the Christmas wind-down and the day on which many City traders will be casting their votes; the decision was announced after the election date had been set.

Purplebricks has already said it hopes to announce an improvement in its marketing-to-revenue ratio following efficiency savings, and at the very minimum the maintenance of its 4% market share.

Investor grumbling will begin if the company’s market share dips below this; CEO Vic Darvey recently said he wants to see it increase to 10% in a bid to quell City worries over its recent exit from the US and Australia.

Russell Quirk, Emoov, imageRussell Quirk (left), former CEO of the old eMoov and now PR guru, is sceptical that the results will ignite City interest in Purplebricks’ shares.

“Even with hugely increased marketing spend of late, listings have flatlined and market share has plateaued,” he has said.

“To all but treble listings when you’re all tapped out on marketing investment and brand awareness? No chance.”.

Purplebricks will also update investors on the costs and progress of its international withdrawal, and its much-touted attempts to increase average revenue per customer.

Its most recent full financial year results showed an annual increase of 6.4% in revenue per instruction to £1,243. At same time it costs the company £382 to acquire each instruction.


2 Comments

  1. Online agents are very good at some key objectives, collectively they have burnt through 320M of investment capital, so they are good at spending peoples money.

    They also like having repeated rounds of further capital raising to keep them going, so they keep the financial world happy paying out large fees.

    They also like to close, once that the cost of the business running far exceeds the revenue they generate.

    For example Emoov 1, Tepilo, Hatched, Purplebricks in Australia, Upad, Easyproperty (in its original format – now morphed into a new and hopefully successful brand) House Network, Home Seller, there are others but I think you see the trend.

    Then there are the online agents who are still giving it a go, Purplebricks, about to deliver some results later today, they spent 7.5M a month in their last financial year keeping the doors open, a whopping 90M burn of capital in a year. I wonder how much cash they will have left in the bank this Christmas.

    Housesimple, who made a trading loss of around 30M last trading year, Yopa who made a similar loss, and Doorsteps who have raised over 1M in funding and to date have no accounts, so maybe they are bucking the trend and actually making money but keeping it a secret.

    Then we have 99Homes, Openhouse, imovehome, emoov 2, sellmyhome, easyproperty in its new format, all of whom may or may not be making profit (if you are please contact me and let me know).

    Forgetting for a moment the question of the businesses in the main never returning a profit, the biggest question is – do they offer the consumer a better model to transact property than the typical and established one? This is the vital point.

    I clearly think not, and that is why Housesimple for example is possibly really a free Lister service, seeking revenue from referrals, I wish them well, but I do not see the volume of referrals will ever outweigh the cost of marketing.

  2. How many times have we seen companies execute this plan:

    1) Gate crash the market with low fees claiming you can do it all cheaper and better and at all other agents are overpriced and poor service.
    2) Get a shed load of investors and make the directors rich/er.
    3) The original ones bail out laughing.
    4) The company realizes that it needs to put fees up.
    5) It tries to become more traditional agency and sell bolt ons.
    6) Shuts up shop.

    Mystic Meg

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