Purplebricks grows market share but losses double

However, the hybrid online estate agency delivered a performance in the six months to October that suggests that, despite tough trading, it is gaining market share. The founding UK business's performance was the strongest, but over time it expects to see similar progress in the US, Canada and Australia.

Group revenue in the six months rose by three-quarters, while gross profits nearly doubled to £42m as margins moved up to 59.9 per cent. Losses at the operating level reflected a continued drive to increase market awareness and set up in new areas. That meant that marketing and other expenses nearly doubled from £34.4m a year earlier to £67.6m.

The UK performance, where revenue grew by 39 per cent, demonstrated its ability to grow in a weak market by taking further market share. New instructions grew by a fifth, while average revenue per instruction was up 6 per cent. Adjusted cash profits jumped by 265 per cent and operating profit rose from £0.8m to £5.7m.

Purplebricks has also created a Home Purchase team, effectively replacing and enlarging its conveyancing sales team. Success in selling more conveyancing pushed ancillary revenue ahead by a quarter and some progress was made establishing a mortgage referrals business.

The Australian business was lossmaking, but a restructuring and repositioning as well as a new management team has led to a reduction in costs. That has substantially reduced the number of monthly instructions to reach break-even, and management expects second-half losses to be lower.

Progress in the US was encouraging, with revenue rising from £0.1m to £5.9m. It now has operations in seven states, and plans to roll out its mortgage business and insurance services next year.

Analysts at Peel Hunt are forecasting adjusted pre-tax losses for the year to April 2019 of £51m and a loss per share of 15.6p (from a £26.2m loss and a 9.8p loss per share in 2018).