Foxtons Leans on Lettings Engine Amid Sales Weakness

Foxtons Group plc ((GB:FOXT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Foxtons Group’s latest earnings call struck a cautiously upbeat tone, with management leaning hard into a Lettings-led strategy that is delivering steady growth and cash generation. Revenue and EBITDA both rose 5%, acquisitions are beating return targets, and the balance sheet looks robust, even as sales weakness and higher costs kept overall operating profit flat.

Group revenue and EBITDA growth

Group revenue increased 5% year on year to £172.5m, or £8.6m higher, underscoring the resilience of the business in a tough housing market. Adjusted EBITDA also rose 5% to £25.3m, showing that Foxtons is still translating top-line progress into healthy underlying earnings.

Lettings-led business strength

Lettings remained the growth engine, with revenue up 5% to £111m and contribution climbing 6% to £82.9m. Adjusted operating profit from Lettings rose 9% to £29.8m and margins widened by 100 basis points to 26.9%, and the segment now accounts for about 64% of group revenue and over two-thirds of 2025 turnover.

Portfolio scale and market share gains

The group’s portfolio now exceeds 32,000 tenancies, more than 50% higher than five years ago, providing a broad base of recurring income. Foxtons also reported an 8% increase in Lettings market share in 2025, reinforcing its status as London’s largest agent and the country’s biggest Lettings brand.

Acquisition strategy delivering expansion

Acquisitions in Reading and Watford added materially to revenue and are generating first-year returns above target, with return on invested capital north of 20%. Newly acquired platforms in Milton Keynes and Birmingham extend Foxtons’ reach into high-value commuter and regional markets, while historic London deals are running at EBITDA margins above 50%.

Strong cash generation and balance sheet

Net free cash flow rose 14% to £11.2m, giving Foxtons more flexibility to invest and return cash to shareholders. Year-end net debt stood at £16.9m, supported by an enlarged £40m revolving credit facility out to June 2028 and very comfortable leverage and interest cover versus banking covenants.

Operational improvements and customer metrics

Management highlighted improving operational metrics, including a 7% increase in cross-selling property management and an actively managed portfolio now at 43% versus 32% in 2021. Customer satisfaction scores are above 80% with double-digit improvement, and internal surveys show robust employee sentiment on strategy and diversity.

Technology, AI and cost discipline

Foxtons is leaning on its in-house data and technology stack, deploying AI for lead scoring, sentiment analysis and training to lift productivity and shorten recruitment ramp-up times. Cost control remains a focus, with an early exit from the current HQ lease set to unlock £1.5m of annualised savings from January 2026 alongside continued scrutiny of overheads.

Flat adjusted operating profit and margin pressure

Despite revenue growth, adjusted operating profit was flat at £22.2m and the group margin slipped 60 basis points to 12.9%. Management pointed to external cost headwinds, including higher employer national insurance and living wage increases, as well as elevated overheads, which together compressed profitability.

Sales underperformance and market volatility

The sales business remained a drag, delivering a wider adjusted operating loss of £5.7m as like-for-like revenue dipped about 2%. Revenue per transaction fell roughly 11% amid a shift toward lower-value first-time-buyer and commuter deals, and activity was highly volatile, with a strong first quarter followed by sharp slowdowns later in the year.

Rising operating costs and non-recurring items

Direct costs were £3.0m higher and overheads increased by £4.2m, including £1.0m of non-recurring items that weighed on short-term earnings. Depreciation, amortisation and share-based payments rose by £1.2m, adding further pressure to reported profit even as underlying cash generation improved.

Working capital drag from billing transition

A £4.4m working capital outflow in the period stemmed from the shift to annual billing, which pulls cash receipts forward but requires upfront investment. Management expects the full transition to require around £10m of working capital between 2026 and 2027, creating a temporary drag on cash despite the long-term benefits.

Macro and policy uncertainty hitting demand

Speculation around the autumn budget, including potential changes to property taxes, dampened buyer confidence in the second half. Persistent stamp duty barriers further constrained demand, and with transactions taking four to five months to complete, management expects the softer environment to spill into the first half of 2026.

Pressure on per-transaction economics

Beyond volumes, Foxtons is seeing pressure on revenue per deal across sales and financial services as the mix tilts toward lower-value products. In financial services specifically, average revenue per transaction fell around 2%, reflecting a shift toward remortgages and other less lucrative business lines.

Need for strict cost discipline and integration focus

While recent acquisitions are outperforming, the company acknowledges that integrating the Milton Keynes and Birmingham businesses, and any further bolt-ons, carries execution risk. Management intends to redouble cost discipline in 2026 to protect margins, ensuring that synergy capture keeps pace with the expanding footprint.

Guidance and forward-looking outlook

For 2026, Foxtons is guiding to year-on-year revenue and profit growth, driven by its more than 32,000-tenancy Lettings portfolio and further share gains as market conditions normalise. The company plans to complete the annual-billing transition by 2027, invest around £10m of working capital over 2026–27, deliver £1.5m of annualised HQ savings from 2026, maintain tight cost control, pursue roughly 15 accretive deals targeting returns of at least 20% and keep leverage below 1.25 times EBITDA.

Foxtons’ earnings call painted a picture of a business successfully pivoting around a resilient Lettings platform while managing through sales headwinds and cost inflation. For investors, the key story is a strong cash-generative core, disciplined acquisitions and a solid balance sheet, set against near-term margin pressure and a still-uncertain U.K. housing backdrop.