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Purplebricks warns on revenue

Revenue for the current year will be ahead of the previous year but way down from earlier projections
February 21, 2019

Shares in Purplebricks (PURP) fell by nearly a third after the hybrid online estate agent admitted that revenue for the year to April 2019 would be around a fifth lower than previous guidance. Management expects revenue to come in at between £130m and £140m, which although 15-20 per cent ahead of the previous year, is behind the £165m-£175m previously expected.

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UK chief executive Lee Wainwright and US chief executive Eric Eckardt will both shortly be leaving the business, following a joint decision with the board. Mr Wainwright will be replaced by chief operating officer Vic Darvey in the interim, while group chief executive Michael Bruce will take the reins in the US. 

Management blamed disappointing revenue on sluggish housing markets in the UK and Australia and "a slower-than-expected response to the second US marketing initiative that concluded towards the end of January". In the UK, Purplebricks maintains that it still has around three-quarters of the online estate agency market – the trouble is that the market is shrinking as transactional volume declines. 

While there may be some belt tightening on investment spend, house broker Peel Hunt expects an adjusted cash loss of £50m, up from the £42m previously forecast. Cash balances stand at £71m, down from £103m at the end of October, following heavy investment in expanding across the US and Australia.