(Reuters) - Purplebricks Group Plc (PURP.L) reported a doubling of revenue and gross profit in the year to April 30, but a quadrupling of its operating losses spooked investors, sending shares of the British online estate agent down 6.1 percent.
The company has been spending heavily on marketing and an overseas expansion which saw it launch in the United States last September - its third market after Britain and Australia. The UK-based company said that as of June it was operating in six U.S. states.
In Britain, Purplebricks and other online estate agents have challenged traditional operators such as Countrywide (CWD.L) and Foxtons (FOXT.L), which are struggling to cope as people remain cautious amid Brexit uncertainties.
That fuelled a rise in revenue to 93.7 million pounds from 46.7 million pounds a year earlier.
At the same time, its adjusted operating loss and adjusted loss before interest, tax, depreciation and amortisation rose from 5.1 million and 4.5 million pounds to 21.3 and 19.6 million pounds.
“It seems odd to us that if Purplebricks really is the lifeboat for a sinking high street why are there fewer people in the boat? Does the lifeboat itself have a leak?” analysts at Jefferies wrote in a note on Thursday.
“Purplebricks continues to tell us it sells lots of houses, without backing up that rhetoric with actual figures,” added the brokerage, which already has an “underperform” rating on the stock.
Britain’s largest estate-agency group Countrywide last week issued its fourth profit warning in eight months citing a “subdued” market, and said it planned to halve its debt with an equity sale. Its share hit a record low on the news.
In contrast, Purplebricks revenue has continued to grow strongly, helped by its low-fee model of local experts who provide valuations and online systems that handle selling and buying of properties.
The company forecast revenue for the current year to roughly double again to between 165 million pounds and 185 million pounds, and said it believed it could secure at least 10 percent of total UK market share in the medium term.
Purplebricks also said it expected the U.S. market to contribute the most to total revenue after the UK in the current year. U.S. revenue made up just 2.1 percent of the total in 2017.
Reporting by Muvija M in Bengaluru