Foxtons delivers strong H1 2025 results, cautions on market challenges ahead

Foxtons has released its trading update for the first half of 2025, reporting a 10% increase in revenue and a 31% rise in adjusted operating profit. Despite the strong performance, the agency’s CEO has signalled a more challenging outlook for the sales market in the second half of the year.

The Group is trading in line with management’s expectations:                

Guy Gittins, chief executive officer, said: “It’s been a strong start to the year, with revenue up 10% and adjusted operating profit growing 31%. The Lettings business has continued to perform well, providing steady, recurring revenues which underpin our growth, while the Sales business benefitted from a rebuilt market share position and increased market activity ahead of the stamp duty deadline.

“Last month, we hosted a Capital Markets Event to present the next phase of our growth plan. At the event, we introduced new financial targets, including an ambition to more than double profitability, by delivering £50m of adjusted operating profit in the medium term. Our strategy is clear and scalable, supported by a market-leading Operating Platform and a commitment to consistently deliver results for our customers.

Financial highlights

·    Group revenue up 10% to £86.1m:

–       Lettings revenue up 4%, supported by incremental contributions from recent acquisitions, the resilience of the core portfolio and growth in value-added property management services.

–       Sales revenue up 25%, with its strong market position enabling us to benefit from elevated market transaction volumes in the first quarter ahead of the stamp duty deadline. Growth was further supported by incremental acquisition revenues.

–       Financial Services revenue flat, as higher new purchase mortgage volumes were offset by the phasing of refinance activity, which is weighted towards H2.

–       Non-cyclical and recurring revenues generated 65% of total revenue in H1.

·    Adjusted EBITDA up 32% to £13.8m, adjusted operating profit up 31% to £12.3m and profit before tax up 35% to £10.2m.

·    Profit growth outpaced revenue, driving a 230 bps increase in adjusted operating profit margin to 14.3%, reflecting growth in higher margin property management revenues, acquisition synergy delivery, ongoing cost control initiatives and the operating leverage within the business model.

·    Improved net free cash flow (2025: £3.6m; 2024: (£0.9m)) reflecting increased profitability and improved cash conversion. Net debt at 30 June 2025 of £18.2m (31 December 2024: £12.7m) reflecting £3.6m of net free cash flow generation, £3.1m of earnings-accretive acquisitions, and £5.7m of shareholder returns.

·    Interim dividend up 9% to 0.24p per share (2024: 0.22p per share), in line with the Group’s progressive dividend policy.

Operational and strategic highlights

·    In Lettings:

–       Continued to deliver market share growth to further build on Foxtons’ perceived position as London’s number 1 lettings agent brand.

–       Robust core portfolio performance continues to underpin Group earnings.

–       9% growth in the uptake of value-add property management on new deals supported revenue and margin growth.

–       Progressed its buy, build and bolt-on strategy with the integration of Watford-based Imagine Properties onto the Foxtons Operating Platform (acquired October 2024) followed by the bolt-on acquisition of Marshall Vizard in Q1 2025 to create the leading local market agent. Previous acquisitions are performing in line with expectations. The Group has a strong pipeline of acquisition opportunities.

·    In Sales:

–       H1 2025 market share across Foxtons’ core addressable markets was robust at 5%, ahead of the 4.5% target set out in March 2023. This market position allowed the Group to benefit from the rapid growth in market transaction volumes in Q1 ahead of the stamp duty deadline.

–       Commuter market acquisitions performing well and delivered £2.2m of incremental Sales revenue in H1. Good early progress in growing the market share of instructions through leveraging the capabilities of the Foxtons Operating Platform.

·    Disciplined cost control to drive margin growth is a priority. In H1, delivered on a material future cost saving programme by negotiating an early exit from the Chiswick Park HQ lease and rightsizing HQ space. This proactive move, enabled by optimised branch space and a lower-cost property management centre outside London, will unlock meaningful savings from January 2026 onwards.

·    Continued to enhance its Operating Platform in the half:

–       Embedded real-time feedback and AI-driven sentiment analysis systems to enhance customer experience and proactively improve service delivery.

–       Launched a re-engineered version of Foxtons’ consumer website (www.foxtons.co.uk) in Q1, enhancing functionality and user experience. As the business’ largest lead source, the upgraded platform has boosted digital engagement and will support future growth.

·    Continued focus on, and investment in, its people and culture, with a near term focus on further embedding their Company values, enhancing training and broadening people management metrics.

·    Building on two years of strong momentum, the Group outlined the next phase of growth at the June 2025 Capital Markets Event, setting new medium-term targets to deliver growth including more than doubling adjusted operating profit to £50m in the medium-term. Growth will be driven by platform enhancements, operational efficiency and progression of the Lettings focused acquisition strategy.

July trading and outlook

·    Lettings trading in line with expectations in July, benefiting from the seasonal uplift in activity during the summer market. Looking ahead to the rest of H2, market conditions are expected to remain broadly consistent with the first half, with reasonable stock levels, robust tenant demand and inflation-linked rent increases. These market dynamics, coupled with higher property management revenues and further strategic acquisitions, are expected to drive continued momentum in Lettings.

·    In Sales, growth is more subdued than anticipated at the beginning of the year, primarily driven by borrowing costs not reducing at the pace initially forecast. In addition, weaker consumer confidence, concerns over the UK’s economic outlook and uncertainty ahead of the Autumn Statement are also weighing on demand, but it is the pace of future interest rate reductions that will influence demand levels.  

·    In Financial Services, refinance activity is expected to strengthen in H2, driven by the timing of mortgage expiries, whilst demand for new purchase mortgages will reflect sales market trends.

Management’s expectations for full year adjusted operating profit is unchanged, supported by continued delivery of the growth strategy and earnings largely underpinned by the portfolio of non-cyclical and recurring Lettings revenues.

Looking ahead, Gittins commented: “We expect a more challenging second half for the sales market compared to the first, and while we welcome the government’s new mortgage guarantee scheme as a constructive step, the property market also requires a comprehensive review of stamp duty to help stimulate growth and improve access to home ownership across all price points.

“Despite the wider macroeconomic uncertainty, the group’s strong financial profile is underpinned by stable and recurring earnings from lettings and gives us continued confidence in delivering our growth strategy.”

Read the orginal article: https://propertyindustryeye.com/foxtons-delivers-strong-h1-2025-results-cautions-on-market-challenges-ahead/