Foxtons ups annual expectations despite 'less certain market'

Foxtons has upped its expectations for its full year financial performance despites acknowledging a “less certain market backdrop.”

A trading update from the listed agency brand this morning showed its revenue for the third quarter of 2022 was up 25% to £43.8m.

Revenue for the nine months ended 30 September 2022 was £108.9m, up £10.4m, or 11% on the prior year.

Sales revenue was up 44% annually in the third quarter to £11.9m – although it was down over nine months.

Lettings and financial services revenue was up 18% and 37% respectively.

On sales, the update said higher volumes were driven by a more normalised market in comparison to the prior year which was impacted by the pull forward effect of the 30 June 2021 Stamp Duty deadline. 

It said: “The increase in average revenue per transaction reflects early progress in targeting higher value properties in our addressable markets.”

Foxtons said its under offer pipeline was 15% higher than the same point last year, adding: “Despite a robust quarter and growth in the pipeline, we enter the fourth quarter with a less certain market backdrop and are alert to the macroeconomic and political challenges which may impact conversion to revenue.

Sales revenue for the nine months ended 30 September 2022 was £32.7m, down £0.8m, or 2% on the prior year.

The agent said its lettings revenue comprised £3.1m of organic growth and £1.3m of incremental revenues from the acquisitions of Gordon & Co and Stones Residential in May 2022. 

It said: “Both acquisitions are performing in line with our expectations and integration is well progressed. Organic growth was driven by a 23% increase in average revenue per transaction, as higher average rental prices and longer tenancies offset a 9% decrease in lettings volumes.

“Rental price growth was underpinned by strong domestic tenant demand and growth in international tenants and corporate relocations over the summer months, while rental stock levels remain constrained. Lettings revenue for the nine months ended 30 September 2022 was £68.6m, up £10.9m, or 19% on the prior year.”

Whilst mindful of the ongoing macroeconomic and political uncertainty, Foxtons said the strength of its performance in the third quarter provided confidence in the outlook for the full year.

The update said: “Accordingly, we now expect to deliver a result for the 2022 financial year ahead of our previous expectations.”

Guy Gittins, chief executive of Foxtons, added: "I'm delighted to be back at Foxtons and to have met with so many of the talented team since my arrival in September. 

“The business has significant unfulfilled potential and there is a shared understanding and vision of how we can deliver this. I am excited about leading this reset and determined we can get Foxtons back on the front foot.

“This quarter has seen continued positive momentum with growth across all areas of the business. Our lettings business performed strongly as we delivered both organic and acquisitive growth. Our investment in sales negotiators, combined with strong buyer demand and a renewed focus on sales intensity has benefitted our sales business. 

“We enter Q4 with a less certain sales market backdrop, but cost action taken in H1 and our resilient lettings and financial services businesses leave us positioned to weather further macroeconomic and political challenges."

https://www.londonstockexchange.com/news-article/FOXT/q3-trading-update/15689732