PEXA exceeds prospectus expectations: UK launch on-track

PEXA (ASX: PXA) has surprised to the upside in the first-half, exceeding its prospectus guidance and upgrading its earnings outlook for FY22.

For the uninitiated, PEXA stands for Property Exchange Australia, an electronic lodgement network for the lodgement and settlement of property transactions. 

Financials at a glance: 

• Revenue of $145.4m, up 46%

• Net profit of $25.9m versus -$3.8m loss a year ago 

• Gross margin of 87.6%, up 1.6 percentage points

Guidance upgrade 

PEXA achieved 2.1m exchange transactions in the first-half, up 37% compared to a year ago and equivalent to 60% of its full-year prospectus expectations. 

As a result, PEXA upgraded its guidance across key financial metrics for FY22 including: 

• Revenue between $265-275m from $246.9m

• Net profit between $55-65m from $37m

By comparison, PEXA delivered a net loss of -$9.8m in FY21. The upgraded guidance represents 21-26% growth.

Property market "exceptionally buoyant"

Positive property market conditions drove total transaction volumes up 24% to 2.5m. 

At the same time, PEXA continued to assert its market dominance in Australia, growing its transfer market share from 78% to 84% in the first-half. 

UK launch 

“Following successful Bank of England payments solution testing with seven lenders in January, we have signed up the first lenders onto our platform in the UK, making PEXA the UK’s 7th net settlement payment system to clear through the Bank of England,” CEO Glenn King said in a statement. 

“Our plans for the UK are on-track and we expect ‘go live’ later this calendar year.”

For perspective, the UK digital property settlement market is estimated to be worth $719m, according to PEXA’s prospectus. 

The Australian market was estimated to be worth $280m. 

Growth initiatives 

During the half, PEXA launched two products aimed at improving financial institution efficiency. Small paid proof-of-concept/trials have returned promising responses from major and regional financial institutions.

PEXA made its first significant strategic investment, taking a 38% stake in property-tech, Landchecker. The platform provides all-in-one source of property information, empowering homebuyers, developers and renovators.

The transaction is expected to settle around the end of February.