Disruptive online estate agent Purplebricks (PURP) is benefitting from continued momentum in the UK and Australia. UK sales soared 132% to £43.2m in the year to 30 April 23017. That's partly thanks to huge marketing spend but also because of faster recruitment of local property experts.
Purplebricks plans to raise marketing in the UK even more this year, with an extra £3.5m earmarked on top of its £14.4m UK budget in the year to 30 April 2017. Across the company Purplebricks spent £18.2m last year.
Bumper growth potential
That may seem like a lot of money considering last year's revenue of £43.2m. But, if all goes as management expect, investors will be looking at revenue nearly doubling in the current 12 months to around £80m.
Steve Liechti, an analyst at investment bank Investec, anticipates that the company will do even better thanks to strong UK momentum. He has £95.4m of sales pencilled in this year to 30 April 2018.
Plans to bolster sales staff with local property market knowledge are also going well. UK local property experts numbers more than doubled last year to 448.
Overseas opportunities
Aside from the rapid progress in the UK, investors are also understandably excited about nascent operations in Australia and in particular, the USA, due to launch later this year.
In Australia, Purplebricks has set up shop with coverage of five key states where 85% of all Australian property transactions happen. Sales down under hit £3.5m last year, close to breakeven on marketing costs of £3.8m, but revenues could triple in 2018. Estimates suggest £12m.
Purplebricks has had an incredible share price run this year with the stock nearly tripling in value from 143p to 413p today. The stock is up 3.5% on Thursday and investors see huge further upside from the company. But patience will be required with blanket advertising campaigns clearly vital.
With a marketing budget set to rise further this year, Investec sees operating losses of a little more than £6m last year soaring to £11m in the current 12 months.
