Purplebricks cuts revenue forecast in tough conditions

The firm is not expecting  any respite from 'challenging market conditions'
The firm is not expecting any respite from 'challenging market conditions'

Online estate agent Purplebricks has trimmed its full-year revenue guidance amid a sluggish UK property sector.

The AIM-listed company, owned by Co Antrim-born brothers Kenny and Michael Bruce, expects revenue for the financial year ending in April to be between £165 million and £175m, against previous forecasts of £165m to £185m.

Purplebricks cautioned it does not expect any short-term improvement to “challenging market conditions” in the UK, although it does anticipate taking further market share from its competitors in the second half of the financial year.

It came as the firm reported pre-tax losses of £27.3m in the six months to October 31, up from £11.4m a year earlier on higher costs as the group continues to expand internationally.

Marketing costs more than doubled to £39m from £18.3m, but revenue increased 75% to £70.1m, driven by 39% sales growth in the UK business to £48.3m.

Backed by fund manager Neil Woodford and media giant Axel Springer, it has expanded rapidly since it floated in 2015 three years after being founded.

The company also has operations in the US, Canada and Australia.

In March, German media publisher Axel Springer bought an 11.5% stake in the firm through a £125m investment, which includes a £100m subscription of new shares to help with the firm’s US expansion.

“Our UK business continues to make good progress, with strong sales growth, market share gains and a step-up in both profitability and positive cash flow,” said CEO Michael Bruce.

“It is this strength that will see Purplebricks emerge stronger from the ongoing industry shakeout, which is expected to continue to expose undercapitalised traditional and online competitors.”