Purplebricks Group plc (LON: PURP), a world leading hybrid real estate agency, provided today an update in relation to current trading and changes to its non-Board leadership team.
Whilst the UK housing market has continued to be challenging for the estate agency industry, the Board still expects to report UK revenue for the current financial year of approximately 15-20% above the prior year. The Company also expects to maintain its 75% share of UK online instructions and for Purplebricks to continue to be the clear market leader in UK hybrid estate agency.
Although the Australian housing market has experienced a number of headwinds, the Board is encouraged by the new leadership team, the positive changes made in the model towards the end of 2018 and the current level and quality of activity. However, the anticipated amount of recognisable revenue will not be sufficient to meet expectations for this financial year.
In the US, the Company is making better than expected progress with conversion from opportunity to listing, listing to sale and sale to ancillary revenue, receiving positive reviews and feedback from customers. However, there has been a slower than expected response to the second US marketing initiative that concluded towards the end of January. There are some early positive signs from the third US marketing initiative and a recent change in business model to payment on completion. The vast majority of short-term investment will be focused on the Los Angeles and Florida markets. As a result of this, the Board does not expect the amount of US revenue to be sufficient to meet its expectations in this financial year.
The business in Canada has performed well and remains on track to meet management’s expectations. The Board continues to be encouraged by current and future opportunities in this market.
Management changes
The Company announces that Lee Wainwright, UK CEO, and Eric Eckardt, US CEO, will shortly be leaving the business.
After two years with Purplebricks, Lee Wainwright will leave the business for personal reasons. Lee played an important role in helping Purplebricks become the UK’s largest estate agent. His responsibilities will be taken on in the interim by Vic Darvey, Purplebricks’ Group Chief Operating Officer, who joined the business in January 2019 from MoneySuperMarket.com. Vic has extensive experience of leading strong tech-focused, customer-centric businesses and will play a key role in the future direction and next stage of growth for Purplebricks.
Eric Eckardt will also be leaving the Company after two years. Michael Bruce, Group CEO and co-founder who was instrumental in the growth of the Purplebricks business in the UK and has proven experience in bringing together marketing, technology and customer centric estate agency operations will take on day-to-day management of the US business with immediate effect.
The Board wishes to thank Lee and Eric for their contribution.
Guidance
As reported at the interim results, the Company updated its revenue guidance for the 2018/19 financial year to £165-175 million under IAS 18. Given the reasons noted above, the Board believes revenue for the current financial year will now be in the £130-140 million range under IFRS 15.
The Group expects that the UK will achieve an adjusted EBITDA margin in double-digits for the year. In Australia and the US, the Board will continue to keep tight management of capital allocation.
Cash balances at the end of January were £71.0 million.
Michael Bruce, CEO and co-founder of Purplebricks Group plc, said:
“Although there are macro and industry headwinds across markets we are well placed to capitalise on the significant opportunity for growth that exists in each country, albeit not entirely as we would have wanted before our year end. The UK is leading the way with continued profitable growth and a strategy to deliver greater success. I am also excited to be taking the reins of the US business. The team in Australia are building on the changes they implemented late last year and Canada is delivering on plan and expectations. The Board remains confident of the long-term growth potential of the business and the opportunity to deliver substantial value for shareholders.”
