Online estate agent Purplebricks enjoyed a boost in fees as more home-owners took advantage of the stamp duty holiday introduced at the height of the pandemic.
Bosses also said they expect adjusted earnings for the full year to exceed the top end of current estimates, sending shares soaring more than 21% in early trading on Tuesday.
Revenues fell 6% to £44.2 million in the six months to October 31 but pre-tax profits hit £4.3 million compared with a loss of £2.3 million in the same period a year earlier.
This morning, Purplebricks has announced a strong set of half year results which, as CEO Vic Darvey says, “demonstrates the strength of our technology-led business model and our ability to adapt quickly to a changing market”. See here:
— Purplebricks UK (@PurplebricksUK) December 15, 2020
But the company’s preferred measure of total fee income rose 6% to £49.1 million and there was an 8% boost in the number of instructions from home-owners to start the selling process.
Average revenue per instruction rose 3% to £1,392 with a gross profit margin increase from 63.7% to 67%. In the five months since May – when the housing market was reopened after the first lockdown in the spring – instructions jumped 20%.
Purplebricks said: “Whilst there are reasons to remain cautious on the economic outlook, we are confident in the levers which are under our control, and we currently expect adjusted Ebitda (earnings before interest, taxes, depreciation and amortisation) for the full year to exceed the upper end of the current range of consensus.”
Chief executive Vic Darvey added: “This period has shown that our technology-led business model is now more relevant than ever, as customers continue to shift to being more comfortable buying and selling their homes digitally.”
The stamp duty holiday, which sees no tax paid on properties bought for up to £500,000, is set to run until the end of March next year and was one of the first tax breaks introduced by Chancellor Rishi Sunak as Covid-19 took hold in March.
Julie Palmer, partner at Begbies Traynor, said: “There were some apocalyptic predictions around prospects for the housing market after the pandemic initially broke but these simply haven’t materialised so far.
“The reopening of the property sector after the first lockdown alongside the stamp duty holiday unleashed a wave of pent-up demand into the market, which sent property sales soaring.
“Technology is increasingly an intrinsic part of the house-buying process and the company’s digital model has been perfectly placed to serve customers throughout the crisis.”