Company Reports

We expect Pexa’s strategic focus in the near term will be on convincing the regulator to allow it to earn a return on a larger capital base than is currently proposed by the Independent Pricing and Regulatory Tribunal of New South Wales. Ipart has suggested Pexa may only earn a return on a capital base of less than AUD 400 million, which we believe is half of what is a reasonable assessment of Pexa's asset base. Specifically, we believe Ipart unduly discards setup costs related to the technological infrastructure and onboarding of market participants.

Pexa shares fell 17% in response to its reporting full-year EBITDA growth for continuing operations of 12% to AUD 152 million. This was on a 7% increase in revenue and EBITDA margins expanding by 2 percentage points. Free cash flow was up 39%.

We expect Pexa’s strategic focus in the near term will be on convincing the regulator to allow it to earn a return on a larger capital base than is currently proposed by the Independent Pricing and Regulatory Tribunal of New South Wales, or Ipart. Ipart has suggested Pexa may only earn a return on a capital base of less than AUD 400 million, which we believe is half of what is a reasonable assessment of Pexa's asset base. Specifically, we believe Ipart unduly discards setup costs related to the technological infrastructure and onboarding of market participants.

The Independent Pricing and Regulatory Tribunal of New South Wales, or Ipart, has released its draft report, which proposes that Pexa significantly lower its pricing. Shares fell more than 20% following the announcement.

We expect Pexa’s strategic focus for the foreseeable future to be on its overseas expansion into the United Kingdom. Pexa’s exchange business is mostly saturated in Australia, leaving overseas expansion as the primary driver of growth. However, Pexa does not enjoy an equally supportive environment in the UK as it did in Australia. In Australia, the country's largest banks co-owned it and with a legal mandate from state governments to move to e-conveyancing, this helped drive adoption. Pexa will therefore have to invest heavily in product development, and especially sales and marketing, to drive adoption of its platform by sufficient market participants for network effects to kick in.

Shares in Pexa have fallen sharply following a proposal by the Independent Pricing and Regulatory Tribunal of New South Wales, or Ipart, to regulate pricing for the property exchange based on a building block model.

Pexa's first-half EBITDA was up 19% to AUD 86 million on a 10% increase in group revenue and EBITDA margin expanding 3 percentage points. Free cash flow was up 25%. The shares jumped on the result.

We expect Pexa’s strategic focus for the foreseeable future to be on its overseas expansion into the United Kingdom. Pexa’s exchange business is mostly saturated in Australia, leaving overseas expansion as the primary driver of growth. However, Pexa does not enjoy an equally supportive environment in the UK as it did in Australia. In Australia, the country's largest banks co-owned it and with a legal mandate from state governments to move to e-conveyancing, this helped drive adoption. Pexa will therefore have to invest heavily in product development, and especially sales and marketing, to drive adoption of its platform by sufficient market participants for network effects to kick in.

Pexa's first-quarter Australian transaction volumes rose 6% year on year, supported by a 16% increase in refinances. The company also reaffirmed its full-year guidance and reiterated plans to launch its UK remortgage service with NatWest in early 2026. Shares traded flat on the day.

We expect Pexa’s strategic focus for the foreseeable future to be on its overseas expansion into the United Kingdom. Pexa’s exchange business is mostly saturated in Australia, leaving overseas expansion as the primary driver of growth. However, Pexa does not enjoy an equally supportive environment in the UK as it did in Australia. In Australia, the country's largest banks co-owned it and with a legal mandate from state governments to move to e-conveyancing, this helped drive adoption. Pexa will therefore have to invest heavily into product development, and especially sales and marketing to drive adoption of its platform by sufficient market participants for network effects to kick in.

Pexa reported full-year 2025 free cash flow up more than 40% as profitability in the core Australian exchange business continued to tick up and cash outflows from adjacent businesses declined. The company guides for continued cash outflows for the international business.

We expect Pexa’s strategic focus for the foreseeable future to be on its overseas expansion into the United Kingdom. Pexa’s exchange business is mostly saturated in Australia, leaving overseas expansion as the primary driver of growth. However, Pexa does not enjoy an equally supportive environment in the UK as it did in Australia. In Australia, the country's largest banks co-owned it and with a legal mandate from state governments to move to e-conveyancing, this helped drive adoption. Pexa will therefore have to invest heavily into product development, and especially sales and marketing to drive adoption of its platform by sufficient market participants for network effects to kick in.

Pexa has secured a formal commitment from UK bank NatWest to implement both remortgaging and sale and purchase transactions on its platform. Remortgages are expected to go live in the second half of fiscal 2026, with sale and purchase transactions to follow.

We expect Pexa’s strategic focus for the foreseeable future to be on its overseas expansion into the United Kingdom. Pexa’s exchange business is mostly saturated in Australia, leaving overseas expansion as the primary driver of growth. However, Pexa does not enjoy an equally supportive environment in the UK as it did in Australia. In Australia, the country's largest banks co-owned it and with a legal mandate from state governments to move to e-conveyancing, this helped drive adoption. Pexa will therefore have to invest heavily into product development, and especially sales and marketing to drive adoption of its platform by sufficient market participants for network effects to kick in.

Pexa provided a third-quarter trading update, which reaffirmed prior operating guidance. The company, which recently changed CEOs, is also undertaking an assessment of the group's various businesses. This may affect guidance for significant items and depreciation and amortization.

We maintain our AUD 17.25 per share fair value estimate for wide-moat Pexa with half-year results. The shares rallied more than 7% intraday on the result but remain materially undervalued. We think the market is overly focused on the loss-making UK business, and we think it’s unrealistic to expect large losses to continue indefinitely without a resolution. Given time is starting to run out for this expansion and success being a relatively binary outcome, we are increasing our Morningstar Uncertainty Rating to High.

We expect Pexa’s strategic focus for the foreseeable future to be on its overseas expansion into the United Kingdom. Pexa’s exchange business is mostly saturated in Australia, leaving overseas expansion as the primary driver of growth. However, Pexa does not enjoy an equally supportive environment in the UK as it did in Australia. In Australia, the country's largest banks co-owned it and with a legal mandate from state governments to move to e-conveyancing, this helped drive adoption. Pexa will therefore have to invest heavily into product development, and especially sales and marketing to drive adoption of its platform by sufficient market participants for network effects to kick in.

We expect Pexa’s strategic focus for the foreseeable future to be on its overseas expansion into the United Kingdom. Pexa’s exchange business is mostly saturated in Australia, leaving overseas expansion as the primary driver of growth. However, Pexa does not enjoy an equally supportive environment in the UK as it did in Australia. In Australia, the country's largest banks co-owned it and with a legal mandate from state governments to move to e-conveyancing, this helped drive adoption. Pexa will therefore have to invest heavily into product development, and especially sales and marketing to drive adoption of its platform by sufficient market participants for network effects to kick in.

We maintain our AUD 17.25 per share fair value estimate for wide-moat Pexa following its first-quarter update. The exchange reaffirmed its fiscal 2025 guidance but cautioned investors of uncertainties due to the economic outlook in Australia and the United Kingdom. We read the note of caution as a slight softening of prior guidance.

We maintain our AUD 17.25 per share fair value estimate for wide-moat Pexa following its full-year results. The company reported modest improvements from the prior year, with group margins rising 3 points on a pro forma basis, which includes Smoove, or 2 points, when excluding Smoove. Margins for the Australian Exchange rose 1 point to 55%, despite ongoing investment into the platform.