Househunters flock to Purplebricks in pandemic

The new, smaller Purplebricks (PURP) has recorded one its best interim results even during the Covid-19-dominated first half. The hybrid real estate company sold off its Canada business in July, leaving it with just its UK operation. It has now pulled back from the US, Australia and Canada.

Purplebricks said its full year adjusted cash profits would likely beat the upper end of company-compiled consensus of £5m-£10.6m. The interim adjusted cash profit was more than 50 per cent higher than last year at £8.4m. 

Chief executive Vic Darvey told us that househunters had adapted quickly to the pandemic conditions, showing trust in online walkthroughs and house visits run by vendors. Purplebricks’ share price rose by a fifth in response to the interim numbers.

The first half pre-tax profit and margin strength were helped by a cut to advertising spending, the previously-inflated size of which has historically hindered profitability, while Purplebricks also took in £700,000 in furlough payments from the UK government and £900,000 from the Canadian government. 

Purplebricks' existing online business has put it in the drivers' seat in this strange time. While some buyers might chafe at being shown around a potential new house by the owner, this lighter-touch real estate model has allowed the company to up its profits. This, combined with banks offering more mortgages, means we move Purplebricks to hold. 

Last IC View: Sell, 113p, 14 Dec 2019