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ASX-listed The Agency is pulling the curtain on the strategy that’s fed the company’s exponential growth since going public in December 2016.
Speaking during a presentation to investors on 19 October, group CEO Geoff Lucas outlined the game plan that’s propelled the network’s rapid ability to scale up. Mr Lucas highlighted that the business had seen a 47.5 per cent increase in gross commission income in Q1 of FY22 over the same quarter last year, coming in at $24.5 million. Their revenue, too, saw a jump, rising 18 per cent in Q1 for a total income of $16 million.
Mr Lucas puts much of The Agency’s success down to a business plan that centres agents first and keeps office overheads low by operating in large metropolitan hubs rather than a multitude of satellite locations.
In FY22 already, Mr Lucas has reported an 8 per cent increase in the number of agents under the company’s umbrella, adding 26 new agents for a national total of 334.
Increasing their agent numbers has been key in being able to build from their FY20 EBITDA (earnings before interest, taxes, depreciation, and amortisation) of $700,000 to $4.57 million at the close of FY21.
And he expects those numbers to keep climbing, reporting a strong pipeline of listings despite the supply issues and an uptick in inquiries from agents interested in coming on board.
Back in an August presentation, managing director Paul Niardone reported that the business had spent the previous financial year strengthening their standing to create a scalable model that now allows them to welcome agents to the platform without significant outlays.
“In the last twelve months, due to COVID, we were able to stabilise our balance sheet. We’ve got our financing down to $8 million, this is against assets worth $25 million dollars,” Mr Niardone said.
Meanwhile, in January 2021, they were able to convert $3 million worth of debt into equity as a result of a “strong show of support” from Peters Investments.
In recognition of the significant improvements to their balance sheet, Mr Niardone reported the company’s primary lender, Macquarie Bank, agreed to reduce their interest rate from 4.75 per cent to 3.75 per cent.
“The important point now is that we have a scalable footprint, and that’s been demonstrated by the EBITDA we’re achieving. So that means now we can expand and grow and add agents to our platform without it costing us a great deal of money,” Mr Niardone said.
Their focus going forward? Double it.
“Transactions drive this business. To get transactions, you need good agents, and you need a lot of agents,” Mr Niardone said.
“We’ve gone from zero to 300. So the opportunities we have in all the states, in effect, is to grow the team, to double the size of the team. It’s achievable, and if we do that, we’ll have over 2 per cent of the Australian market.”
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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