This article first appeared on GuruFocus .
Release Date: July 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Foxtons Group PLC ( STU:FXG ) demonstrated business model resilience with group revenue declining only 3% despite a highly challenging market backdrop.
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The company successfully increased the proportion of non-cyclical and recurring revenue to 69% of total group revenue, up from 65% in the prior year.
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Lettings portfolio grew to 32,000 tenancies, with underlying organic growth driven by strong cross-sell of high-margin ancillary products and property management services.
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Financial services revenue grew 20% year-over-year, driven by higher refinance volumes and improved adviser productivity.
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The company executed its acquisition strategy, completing platform acquisitions in Milton Keynes and Birmingham, and has a strong pipeline of further bolt-on opportunities.
Negative Points
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Sales market was highly challenging with London exchange volumes down 13% year-over-year, leading to a 13% decline in sales revenue.
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The introduction of the Renters Rights Act caused short-term volatility in lettings, resulting in $3 million of revenue reversals from elevated tenant-led terminations.
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Adjusted operating profit declined 29% to $8.9 million, impacted by lower sales revenue and the high profit drop-through of lettings revenue reversals.
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Sales business reported an adjusted operating loss of $4.7 million, with no meaningful recovery in transaction volumes expected in the near term.
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Net free cash flow was low at $1.4 million, and the company faces a working capital outflow of an estimated $10 million over 2026-2027 due to transitioning to annual landlord billing.
Q & A Highlights
Here are the key highlights from the Foxtons Group PLC ( STU:FXG ) H1 2026 earnings call, focusing on the most significant Q&A exchanges.
Q: Can you give us more color on the run rate of tenant-led terminations now versus the peak in May and June, and how confident are you that this stabilizes further in H2? A: (Chris Hough, Group CFO) In May going into June, we saw half the level of terminations, and in July, a similar level to June. We expect this to stabilize further as we move into Q3. The initial May levels were higher value, reflecting a pent-up demand from certain tenants to exit their tenancies. We are expecting termination levels to exist under the new regulations, but we are certainly expecting them to moderate.
Q: There is 4 million of annualized savings weighted into H2 alongside the sales operational review. Can you help us bridge how much of the H2 profit improvement is expected from cost-driven initiatives versus a pickup in sales market activity? A: (Chris Hough, Group CFO) We have been relatively conservative on how we think the sales market will play out, positioning it similarly to the market conditions we saw in 2023. On cost savings, we had 1.3 million of benefits in H1, which should increase to around 2.2 million in H2, giving us a total of 3.5 million in benefits for 2026. This will annualize to the full 4.5 million figure in 2027.
Q: Could you talk more about the M&A pipeline and what you expect in terms of the pace of M&A over the remainder of the financial year? A: (Guy Gittins, CEO) Continuing to invest in high-quality businesses is core to strengthening the Foxtons operating model. We have a great pipeline, and we are now focused on adding bolt-on acquisitions in locations like Birmingham and Milton Keynes, where we have already bought the hub businesses. We are very confident we can continue to spend the allotted cash on acquisitions this year.
Q: In organic growth in lettings, have you seen any evidence of new landlords coming over as a result of the RRA, or has the primary benefit been existing landlords seeking a managed service? A: (Guy Gittins, CEO) We are seeing a small number of new landlords coming in, encouraged by very compelling net yields (8% or 9%) that are the highest I've seen in my career. However, the larger opportunity is the conversion of historically self-managed landlords to our fully managed service, which is a very important growth lever that performed well even during the challenging period of rental reform.
Q: With no natural endpoint to a tenancy contract now, how do you proactively engage with landlords to get them to come over to Foxtons? A: (Guy Gittins, CEO) The new rules are a benefit. We now have an annualized discussion over rental values, and we have seen a very strong upside on rental price inflation. We believe existing landlords will be stickier and locked in for longer. We are also using our enormous data set for propensity modeling to start conversations earlier with competitor landlords, using external data to ascertain when tenancies may be coming to an end.
Q: What is Foxtons' exposure to the student market, and do you think landlords will be able to modify leases with students to mitigate the impact of the RRA? A: (Guy Gittins, CEO) Our exposure is location-dependent. In areas like South Kensington, it is high, but across the entire London portfolio, about 15% of our units are let entirely to students. We are already seeing a shift where students who previously had a tenancy from September to September are giving notice in May/June to save rent. However, new students coming in for September are now having to pull forward their start dates to June/July, so the frequency of lettings remains the same.
Q: What is the outlook for the sales market, and what actions are you taking to improve profitability in that segment? A: (Guy Gittins, CEO) The sales market remains highly challenging with weak consumer confidence and higher borrowing costs. We acted decisively by implementing right-sizing actions that delivered 3 million of annual savings. We are also modernizing the operating model by simplifying processes, reshaping teams, and making greater use of technology, data, and AI. This is about improving productivity and the customer experience, not just a cost-cutting program.
Q: What is the expected impact of the Renters Rights Act (RRA) on the lettings business in the medium term? A: (Guy Gittins, CEO) While there has been short-term volatility from tenant-led terminations, we are already seeing the medium-term opportunities. The new regulations increase complexity and compliance requirements, which increases the value of our professional advice. We are seeing increased demand for our property management services and build-to-rent services as more landlords turn to Foxtons for expertise. We remain highly positive about the medium-term opportunity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
