PEXA revenue up 27% in FY22 with more than $900bn settled

In an announcement made to the ASX last Friday, 26 August, PEXA revealed that its pro forma net profit after tax (NPAT) for FY22 was $38 million, up $43 million from a small loss of $5 million last year, and boasted an 80 per cent employee engagement score. More than $900 billion was settled through the Exchange in FY22.

The Exchange also experienced a 12 per cent growth in total market volumes from FY21, with refinancing volumes up 31 per cent from the previous year and a 50 per cent increase in usage of the platform.

PEXA also delivered “strong customer engagement”, according to the PEXA Group managing director and chief executive Glenn King, with a net promoter score of 74 and a brand trust rating of 8.9 out of 10.

“Our team continues to deliver for the practitioners, financial institutions and homebuyers and sellers who have used the PEXA Exchange over the past 12 months in Australia, driving strong transaction volume growth on our Exchange platform that maintained 99.9 per cent availability across FY22,” he said.

“We continue to execute on our strategy to build on PEXA’s position as the operator of Australia’s leading digital property settlements platform. With further enhancements made, and a new jurisdiction entered, we recognise the key and unique custodial role we play in managing this critical infrastructure that supports the safe and secure settlement of the majority of land transactions in Australia.”

Since its launch, PEXA has facilitated more than 12 million property transactions worth more than $2.4 trillion, and the Exchange is now supporting over 9,700 practitioner firms, over 160 financial institutions and over 1.1 million consumers per year. The growth in underlying business drivers enabled PEXA to increase revenue by 27 per cent to $279.8 million. With product mix stabilising, gross margin improved to 88 per cent (from 87 per cent) and pro forma group earnings before interest, tax, depreciation and amortisation (EBITDA) increased 28 per cent to $130.6 million.

“In addition to growing the PEXA Exchange in Australia, we have made meaningful progress on two primary growth initiatives. PEXA International’s market entry in the UK is on track, with PEXA Pay being approved as the seventh net settlement payment scheme to clear through the Bank of England, technology development advancing and customer sign-ups commencing. We have signed up the first lenders onto our platform for mortgage refinances, with ‘go live’ to occur with the first lender next month, and we continue to explore and identify potential opportunities to further progress our development,” Mr King said.

“As PEXA continues to build its reputation as a trusted source of robust, real-time property data, we continue to identify opportunities to extend our offering and meet market needs. Over the past 12 months, PEXA Insights launched two products, and invested in two relevant businesses, Landchecker and Elula. This continued in the new financial year, with an investment in Slate Analytics and the acquisition of .id. Likewise, PX Ventures is continuing to pursue opportunities across the property ecosystem.”

FY22 saw PEXA drive a 22 per cent increase in PEXA Exchange volumes to 4.05 million, reaching a 59 per cent transfer market penetration less than a year after launching in the ACT, and saw volumes more than double from FY21 to FY22 in Queensland.

PEXA also drove growth through a number of strategic partnerships and mergers and acquisitions during FY22, including acquiring a 38 per cent stake in property information leader, Landchecker, acquiring up to 25 per cent of AI software leader Elula, acquiring a 70 per cent stake in Slate Analytics, a progressive property analytics and technology solution co-developed by the UNSW Sydney and FrontierSI and acquiring Australian demographics company .id — PEXA Insights’ first 100 per cent acquisition.

Commenting on the company’s FY23 outlook, Mr King said that PEXA had started FY23 in a strong position.

“Volumes on the PEXA Exchange platform in Australia remain robust, and we are targeting an Exchange EBITDA margin in the 50 per cent to 55 per cent range. To drive future growth of the PEXA Exchange, we continue to invest in our core business, with PEXA Exchange technology investment expected to be circa 20 per cent of revenue in FY23 with a focus on API development, customer-facing enhancements, and cyber security and platform resilience,” he said.

“We are excited by the opportunities for PEXA to grow its world-leading digital property settlement platform internationally, while also appropriately expanding data services in Australia to facilitate a more informed and efficient property industry at home. Our UK business will ‘go live’ next month, and by the end of FY23 we aim to have four lenders transacting on the platform.

“To support this, we plan to invest circa $45 million in international expansion over the next 12 months. In addition, with the growth opportunities we see for PEXA Insights, we plan to invest circa $15 million in FY23 into this business unit to support organic growth.”

Is international expansion stalling Aussie interoperability? 

Not all are impressed by the release of the figures or PEXA’s upcoming plans, with e-settlements business Sympli expressing that the financial year results “clearly demonstrate its monopoly status”.

“It is disappointing to see that progress on expansion into international markets is being delivered at the expense of progress on critical competition reform in Australia,” it reported.

Despite its in-roads on international expansion, Sympli said that PEXA remains largely silent on critical industry reform set to introduce interoperability in the Australian market.

According to the group, while PEXA is “assuring investors it is playing a ‘constructive role’ in the development of the new regulatory framework to support interoperability, key stakeholders involved in the process know PEXA has demonstrated an unwillingness to remain engaged, and progress to date has been significantly delayed by the monopoly.”

Philip Joyce is the CEO of Sympli and calls PEXA’s intent a clear move “to stronghold its monopoly position”.

“Rather than spending $45 million overseas, how about PEXA focus it here to make sure Australian businesses and consumers have a fair, competitive eConveyancing market as soon as possible?” he queried.

The CEO expressed: “We are now at a critical point in time where all industry stakeholders must come together to collaborate and deliver. The interoperability targets for mid-2023 represent a golden opportunity to implement a safer, more secure, more competitive and resilient ecosystem — to benefit home buyers and sellers and the banks and practitioners that support them.

“Competition, through interoperability, will enable better outcomes for banks, practitioners and their clients.”