Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Foxtons Group PLC (FXTGY, Financial) delivered revenue and profit growth despite a flat London sales market, driven by operational improvements.
- The company achieved a substantial 30% increase in sales exchange market share and double-digit growth in lettings new business volumes.
- Productivity improved with a 6% increase in revenue per fee earner and a 15% increase in revenue per branch.
- Noncyclical and recurring activities generated nearly 70% of revenue, enhancing business robustness.
- Foxtons Group PLC (FXTGY) completed the integration of Ludlow Thompson ahead of schedule, reflecting strong operational capabilities.
Negative Points
- The London sales market remains flat and at historically low levels, 15% below the 10-year average.
- The company faces ongoing cost pressures, including wage inflation and other cost inflation items.
- There is an expected temporary reduction in the volume of existing tenancies re-transacting due to longer tenancy terms.
- Despite revenue growth, the adjusted operating loss in sales narrowed but still remains a loss.
- The mortgage market remains challenging with elevated interest rates impacting financial services growth.
Q & A Highlights
Q: Can you comment on market share in lettings and sales, and how are you faring in these areas?
A: Guy Gittins, CEO, explained that Foxtons has grown its market share at the fastest rate among UK estate agencies for both sales and lettings. The lettings market share is around 6%, and sales market share has increased significantly to 5.1% from 3.1% before his tenure. The company continues to focus on increasing market share through its data-driven platform and strong company culture.
Q: What are the underlying cost pressures in the business, particularly regarding wage inflation and other cost inflation items?
A: Chris Hough, CFO, mentioned that cost inflation for 2024 is expected to be in the range of 3% to 5%. The company is managing these pressures while maintaining a focus on growth and profitability.
Q: How high would you be willing to take leverage for the right acquisition deal?
A: Chris Hough stated that the company would consider leverage around 1 times EBITDA for the right acquisition. The focus remains on strategic acquisitions that align with Foxtons' growth objectives, particularly in the lettings market.
Q: Can you provide details on the success of the Ludlow Thompson acquisition?
A: Guy Gittins highlighted the integration of Ludlow Thompson into Foxtons' unique CRM platform, which allows for rapid integration and value extraction. The acquisition has been successful due to Foxtons' comprehensive training programs and the quality of the acquired business and its employees.
Q: What is the outlook for sales exchanged market share, and how far can it be pushed?
A: Guy Gittins noted that the sales exchanged market share is currently over 5%, with a peak of 5.8% in June. The company aims to continue pushing this figure higher, leveraging its strong pipeline and operational capabilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
