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The network’s half-year financial results also revealed increases in its number of agents and total market share, despite testing market conditions categorising the period.
According to a statement to the ASX, The Agency Group Australia’s revenue rose 6 per cent from the first half of the 2021–22 financial year to the equivalent period this year’s $37.5 million figure, with a strong performance by payroll agents in Western Australia and increased management fees from national properties under management credited for driving this jump.
Other notable increases occurred in the network’s market share (+0.23 per cent), its number of listings, which rose 2 per cent to 3,124, and the number of agents The Agency boasts, up 19 per cent to 412.
Across the first half of the 2022–23 financial year, the network’s gross commission income (GCI) fell 17 per cent to $45.7 million. A 17 per cent reduction in gross value of properties sold was linked to a reduction in average selling prices across Australia’s east coast.
While The Agency managing director and chief executive officer, Geoff Lucas, expressed disappointment at the reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) loss of $0.95 million, he detailed it was for a good reason.
“We believe the investment activities undertaken are critical to set the business up for the next stage of growth and ensure a solid platform for execution of our strategic objectives,” he said.
Describing the business as “designed and built for scaling efficiencies from a critical mass”, he detailed how recent market conditions, categorised by an intense rising rate environment, have resulted in the company “dropp[ing] slightly below that scaled revenue level in this half.”
He added that The Agency’s “continued growth in agent numbers and market share will see a resumption to scaled earnings in the new term.”
Throughout the first half of the current financial year, Mr Lucas disclosed the network has undertaken “several cost reduction actions”, which are expected to take effect in the second half of this financial year and the first half of the next.
Aside from the EBITDA results, he outlined The Agency is pleased with agent growth, which was celebrated as helping deliver incredible performances.
With a mid-term target of 600 agents set by The Agency’s founders, Mr Lucas said the current 412 is pleasing, adding that this agent growth underpinned its national market increase.
Given the network’s GCI represents a small portion of the $7 billion total annual Australian residential real estate pool, he explained several “strategic initiatives” have been implemented to “ensure solid foundations to achieve a greater portion of this commission pool.”
Among these initiatives, The Agency has rolled out a “brand alignment, data consolidation strategy, data security review, establishment costs” relating to the MDC Trilogy group. Additionally, “fulfilment of key appointments for state manager roles to drive recruitment and market expansion were undertaken during the period.”
Mr Lucas concluded, “These growth initiatives, combined with general cost inflation and additional costs from new geographical premises, have resulted in increased operating expenses and an increase in the cost of doing business ratio, which we expect to reduce over time as our agent numbers and sales revenue grow.”
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