Results slightly ahead of revised expectations
Foxtons’ FY25 results were slightly better than our previously revised estimates,
having been boosted initially by stamp duty changes and held back latterly by the
uncertainty surrounding the UK Budget. Revenue rose by 5% to £172.5m, boosted by higher
activity levels in all three business lines. Non-cyclical and recurring revenue streams
now account for 67% of group revenue. Costs rose due to National Insurance and National
Living Wage increases as well as inflationary pressures. The net result was a very
modest increase in adjusted operating profit to £22.2m.
Reported PBT edged back by 3% to £16.9m and adjusted EPS was down 4% at 5.0p. Foxtons
proposed a final dividend of 0.93p, which implies that the total dividend for the
year was unchanged at 1.17p/share. Following the generation of £11.2m of free cash
flow, the investment of £5.3m in acquisitions and the return of £9.1m of shareholder
returns (dividends and share buy backs), net debt increased from £12.7m a year ago,
to £16.9m at the end of December 2025.
| Exhibit 1: Foxtons annual results summary |
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| Source: Foxtons Group |
Lettings revenue boosted by acquisitions
Lettings is the main revenue earning division, accounting for c 65% of group revenue.
In the period, Foxtons handled 20,089 lettings transactions, which was up 4% on the
previous year. In line with the increased volumes, revenue also rose by 5% to £111.0m.
Both of these growth rates were largely boosted by acquisitions. The figures included
an additional 10 months from Haslams Estate Agents and Imagine Property Group, acquired
in October 2024, and by 10 months of trading from Marshall Vizard, acquired in February
2025. This latter deal will add modestly to FY26 volumes, as will the January 2026
deals discussed elsewhere in this note.
The average revenue per transaction increased 1% to £5,524 reflecting improved property
management cross-selling activity, but this was slightly diluted by the move into
higher volume commuter markets where the average rental value is lower. The underlying
rental market price level was broadly flat after some significant raises in recent
years. The total divisional revenue included £5.7m of interest earned on client monies,
which was down from £6.6m in the previous year as interest rates declined.
Lettings adjusted operating profit increased 8.8% to £29.8m, implying that the adjusted
operating margin rose 100bp from 25.9% to 26.9%.
| Exhibit 2: Lettings |
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| Source: Foxtons Group |
Strong Sales in Q125 held back in H2 by government generated uncertainty
Foxtons started FY25 strongly as changes to stamp duty rules pulled volumes forward
into Q1. Overall, Foxtons handled 4,423 sales units, up 19% y-o-y, but demand was
negatively affected by the speculation surrounding the UK Budget, particularly in
Q4. Overall Sales revenue increased 6% to £51.3m with acquired revenues adding c 8%
to the top line, offset by a c 2% decline in like-for-like revenues as mentioned above.
Foxtons’ core sales volume decline of 2% was in line with the underlying market with
Foxtons’ market share remaining broadly flat at 4.8% (FY24: 4.9%).
Average revenue per transaction fell 11% to £11,589 largely due to the expansion into
higher volume/lower fee commuter markets. Excluding commuter markets, Foxtons witnessed
a 5% reduction in the average revenue per transaction driven largely by a 3% reduction
in the average price of properties sold to £574,000, again reflecting the March 2025
stamp duty deadline.
Divisional losses increased from £3.8m to £5.7m reflecting the allocation of shared
costs, which depend on issues such as front office headcount allocation. These ongoing
losses are the focus for the new sales managing director with a target to break even
over the medium term.
| Exhibit 3: Sales |
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| Source: Foxtons Group |
Financial Services grew revenue robustly
Divisional revenue increased 10% to £10.3m reflecting a 13% increase in volume to
5,776, offset by a 2% decline in the average revenue per transaction. The former was
driven by the expiry of five-year deals taken out at the start of the COVID-19 outbreak,
while the latter was driven by an increase in the mix of lower fee refinancing activity,
rather than higher fee new purchase transactions. In the period, 42% of revenue was
generated from the non-cyclical refinance activity, and 58% was generated by cyclical
new purchase activity.
| Exhibit 4: Financial services |
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| Source: Foxtons Group |
Adjustment to profit estimates and valuation
The combination of the continued subdued markets, offset by the positive impact of
the January 2026 acquisitions of Cauldwell and FleetMilne result in a modest uplift
in our estimates. We have assumed a slightly greater net positive impact in the current
year, and exercised a little more caution into FY27e estimates due to heightened uncertainty. Net debt also increases modestly due to expenditure, but our dividend forecasts are
unchanged.
| Exhibit 5: Revised estimates |
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| Source: Edison Investment Research |
Our EPS forecast in FY26e is unchanged, but a little more caution is reflected in
the FY27e, which leads out valuation, down modestly from 120p/share to 115p, which
is based on a 17.5x forward multiple and assumes that further M&A is carried out in
line with the average annual expenditure.
| Exhibit 6: Financial summary |
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| Source: Company data, Edison Investment Research |
