PropTech Group (ASX:PTG) FY21 results & outlook


by Lauren Evans

PropTech Group Limited (ASX:PTG) CEO and Managing Director Joe Hanna introduces the company's suite of market-leading real estate software solutions, discussing FY21 results and outlook.

Lauren Evans: Hi. This is Lauren Evans for the Finance News Network. Joining me from PropTech Group (ASX:PTG) is CEO and Managing Director Joe Hanna. Joe, welcome to FNN, and it's nice to meet you.

Joe Hanna: Thanks Lauren, thank you for having me, and great to be here.

Lauren Evans: So first start, can you start with an introduction to the company?

Joe Hanna: Sure. So, let me start with the definition of PropTech. So, in the same way that FinTech has used technology to address the needs of the finance industry, PropTech is the use of technology to address the needs of the property industry. More specifically, the PropTech Group is a software business that provides a market-leading technology that helps real estate agencies streamline, optimise and, wherever possible, automate the way their back office runs. Now, this is true for both sales and rental divisions of real estate agencies in Australia, New Zealand and increasingly the UK.

Our flagship products are VaultRE and Eagle Software, which address the needs of both the sales, CRM capabilities. So, this is everything from prospecting, vendor management, listing management, advertising management, trust accounting, and settlement management as well as property management. So, these are things like helping people find properties, helping manage rentals for real estate agencies, landlords. And, in doing so, we're able to provide data and insights that streamline and optimise the effectiveness and efficiency of real estate agencies.

So, our addressable market just in the core systems for running an agency, it's about 90 per cent of the agents in Australia and New Zealand, which is roughly about 11,000 agencies in those two markets. In the UK, there are about 25,000 agencies, of which most of them are also using a CRM.

Lauren Evans: So, now to your FY21 results, can you tell us more about this, starting with the financials?

Joe Hanna: Absolutely. So, it's important to note that PTG or PropTech Group really listed or got back on the stock exchange in November of last year of 2020, and since then we've been fairly aggressive in terms of our growth. We've grown our market share, we've also grown our revenues. So, at the end of last year, we finished the year with $11.6 million in revenue top line, with an underlying EBITDA margin of about 17 per cent or $1.9 million. And what that's done is enabled us to really grow the business profitably, but also look at continuing that fast growth into FY22 and beyond. It's important to note that we've also made a number of acquisitions throughout the year, with the most recent being Eagle Software, which actually settled in July of this year. So, if we take Eagle Software, include Eagle Software, so take July back through to June last year, we've actually grown by 65 per cent.

Operationally we've had a number of key successes. The acquisitions I've mentioned, not only VaultRE, MyDesktop, H1, Eagle Software and Website Blue and Designly, but we've also made acquisitions that enabled us to secure some of the key clients. So, we've got the largest real estate agencies in Australia and New Zealand using our core products. We have over 41 per cent market share in Australia and New Zealand. And, increasingly, we've started to grow organically in the UK, with about 1 per cent market share in the UK as well.

And, looking ahead, we've essentially now, with about 85 per cent of our revenues coming from SaaS, so monthly recurring revenues for long contract periods, are running at an annualised monthly recurring revenue rate, taking July, of about $15.6 million. Now, remember that's about 80-odd per cent of our revenue. So, FY22 and beyond, we expect the same type of growth that we've had over the last 13 months continue out into this year and beyond.

Lauren Evans: So, now to your latest joint venture, PropPay, what was the rationale there?

Joe Hanna: We know that only about 20 per cent of real estate agencies have credit card payment capabilities. So, really PropPay seeks to service real estate agencies' cashflow solutions, as well as vendors' and landlords' cashflow solutions. So, we do this through three mechanisms. One is a payment solution for real estate agents. Being able to pay bills with credit cards, which are pretty typical in most other industries, but we're not finding very popular within the real estate up until now. And then, more importantly, buy now pay later solutions, both for vendors and landlords, for things like vendor-paid advertising. We know that vendor-paid advertising is around a $2 billion industry in Australia. Now, typically, that marketing solution can cost anywhere from $3,500 to upwards of $10,000 or $20,000 for that one-off payment. So, what our solution does, amongst other things, is enable vendors to factor in or loan out their VPA. So, they could actually buy the best and most appropriate agency advertising solution for that property, but not have to pay for it until the property actually sells.

For agents, there's also things like cashflow solutions, such as early release of commissions -- again, not having to wait until the property settles before you get your commissions. And, for vendors, early release of deposits.

There's a swag of other products that will also address the needs of cashflow solutions both for agents as well as landlords and vendors. And that's ultimately what PropPay is addressing.

Lauren Evans: Is there anything else that you'd like to add today before we wrap up?

Joe Hanna: I think we're just getting started. I mean, the PropTech industry is huge. PropTech Group, in its infancy, only been listed for less than one year, is certainly on the right track in terms of our growth trajectory. We certainly see ourselves as a revenue growth multiple, and we see ourselves as a high-growth business. When you look at the value of our stock, we believe at this point it's very well valued as a multiple of revenue. So, certainly, as we look out into the next few years, our strategy is really centred around owning that centralised agency desktop, and then growing our market share or suite of products by making them more efficient and ultimately more profitable.

Lauren Evans: Well, Joe Hanna, thanks for the introduction, and we look forward to hearing from you later again this year.

Joe Hanna: Excellent. Thank you, Lauren. I appreciate your time.


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