A leading proptech consultant has scrutinised Purplebricks’ published financial figures since it launched in 2015 and uncovered some shocking results that its glossy annual reports, for obvious reasons, tend to bury.
The research, which has been completed by Andrew Stanton for The Negotiator, reveals that £481 million has been spent on running the company over the past five years while it has generated £363 million in revenue, raised £187 million from investors but still lost £117.3 million.
Stanton also estimates that the company currently has £35.2 million cash left in the bank, down from its publicly-stated bank balance of £41.6 million published in October last year.
But what the figures reveal is that Purplebricks is likely to be in a race to reduce its costs and increase its revenues before this cash at the bank runs out.
Stanton’s says its latest half-year results in October 2019 show that Purplebricks must drastically reduced its losses when it reports at the end of its financial year in April.
Losses
At that time, he expects it to post a turnover of £120 million, for the UK and Canada operations combined but with loses of around £20 million, which would be a significant improvement on its previous year’s losses of £54.32 million.
But this would still burn much of the cash left at the bank, which by April 2020 may be as low as £30 million, after having been a cash mountain of over £152 million in April 2018.
These figures may be based on interpreting Purplebricks’ current and past performance, but they explain why CEO Vic Darvey recently revealed several drastic cost-cutting measures including the reduction of its territory owners from 100 to 40.
But Stanton says the most baffling aspect of the hybrid agency’s finances is that, as it battles to make a Group profit, it has committed to a multi-million pound official sponsorship of Team GB for this year’s Olympics, a package which is rumoured to be costing the company up to £14 million.
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