Real estate disrupter The Agency surges as competitors shrink
Link copied to
Special Report: Another record quarter for The Agency Group Australia (ASX:AU1) – including a second consecutive quarter of positive cashflow — confirms that this high-growth real estate play is here to stay.
The three-year-old company’s ‘modus operandi’ is to disrupt the traditional real estate model — the franchise model — by providing agents with an enhanced fee offering, minus the administrative burden of a standalone operation.
And it appears to be working.
The Agency, which now has 280 agents across 10 offices in key markets on Australia’s east and west coast, just had a fantastic September quarter.
The $8.1m market cap company reported record quarterly results across revenue, gross commission income and exchanges while posting a second consecutive quarter of positive cashflow.
Revenue came in at a record $11.8 million, up 10 per cent on the previous quarter thanks to a record 701 exchanges and more than $630 million worth of property sold; the second highest quarter ever for the group.
Importantly, the group notched up its second consecutive quarter of positive cashflow of $73,000; up 66 per cent on the previous period.
Meanwhile, there were 883 new listings for the combined group, 15 per cent higher than the prior period.
Property management continued to be a growth area for the business. A record 4397 properties were under management for September Quarter, up 1.4 per cent on the previous quarter.
The company was growing from strength-to-strength while competitors, including those who use the outdated franchise model, were languishing, The Agency managing director Paul Niardone said.
“We have clearly disrupted the market, recruited some of the best agents in the industry and achieved industry leading results – which we know has grabbed the attention of our competitors who now realise The Agency is here to stay,” he said.
“We have a strong balance sheet and the funds needed to continue our sustained growth plans.
“Importantly our key shareholders, including those that have recently joined our share register, continue to back our model and, when provided with the opportunity, invest further.”
Despite some negative market sentiment, The Agency has strengthened its balance sheet, having raised a total of $5.6 million via a placement and rights issue as well as $5.8 million of debt converted to equity.
It also attracted two new strategic investors, Magnolia Capital and Honan Insurance Group; a further vote of confidence in the disruptive business model.
Commenting on the real estate market, Mr Niardone said he was optimistic of a sustained rebound in property prices.
“On the east coast, there is recent evidence of a turnaround in house prices in Sydney’s affluent eastern suburbs – The Agency’s primary market in Sydney – with CoreLogic data showing house prices have risen 4.2 per cent for the September quarter and are driving the market rebound,” he said.
“This bodes well for The Agency to continue on its growth trajectory.”