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Purplebricks slides as loss widens despite revenue growth in UK and Australia

The online estate agent reported a pre-tax loss on ordinary activities of £26.1mln, up from £6.05mln last year, while group revenues climbed to £93.6mln from £46.7mln in 2017
Purple brick wall cracking
Expansion costs have caused some cracks in the company's balance sheet

Purplebricks Group PLC (LON:PURP) shares slid in early trading Thursday after it reported a wider pre-tax loss in its full-year results despite strong revenue growth in its UK and Australia markets and a doubling of group revenue.

The AIM-listed online estate agent reported a pre-tax loss on ordinary activities of £26.1mln, up from £6.05mln last year, while group revenues climbed to £93.6mln from £46.7mln in 2017.

READ: Purplebricks receives £125mln injection from German digital publisher Axel Springer

Regionally, the firm saw adjusted underlying earnings (EBITDA) in the UK increase to £8.1mln from £1.7mln in 2017 as revenues climbed to £78.1mln from 43.2mln, while in Australia the group’s adjusted underlying loss widened to £11.8mln from £6.1mln despite revenues jumping to £13.5mln from £3.5mln in 2017.

The newer US market, which Purplebricks expanded into in September last year, reported an adjusted underlying loss of £16mln while revenues stood at £2mln, with the loss reported as reflecting launch costs in the region.

The firm also attributed an increase in operating activity losses, which widened to £24.7mln from £6mln in 2017, to share-based payment charges stemming from its focus on building an operational and marketing footprint to support international expansion.

In its outlook, the group’s chairman Paul Pindar said full year group revenue for the current financial year was expected to be in the range of £165mln-£185mln, adding that the company could exceed a minimum of 10% total UK market share in the medium term.

READ: Purplebricks to venture into Canadian market for first time with £30mln acquisition of DPCF

The company also said its expansion into Canada through the acquisition of digital real estate brand DuProprio would help extend its market penetration in the country as well as expanding its offering into areas including buy-side services.

Purplebricks group chief executive Michael Bruce said: “Whilst the markets in the UK and Australia have been and continue to be challenging for the industry, with overall transaction volume and sentiment down year on year, we have managed to gain market share, increase revenues and grow customer engagement in all three countries in which we operate. 

He added: “As we previously announced, we have invested for growth by developing our infrastructure, increasing our management team and technical expertise and adding to our compliance, legal and PR resource. We will start to see the benefits and operational gearing arising from this investment as we grow across the UK, Australia, the US and now Canada.”

Shares in Purplebricks were down 7% at 296p.

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