Foxtons interim results: recurring revenue cushions a sharp profit fall

Foxtons Group PLC has reported a resilient top-line performance for the first half of 2026, but there is no disguising the pressure further down the income statement.

Revenue declined by a relatively modest 3% to £83.7 million. However, adjusted operating profit fell 29% to £8.9 million, while statutory profit before tax dropped 57% to £4.4 million.

The central theme is straightforward. Foxtons' shift towards recurring lettings income helped protect group revenue during a difficult London sales market. It could not fully shield profitability from weaker sales volumes and a £3.0 million lettings revenue reversal linked to the Renters' Rights Act.

Investors can read the original company announcement for the complete financial statements.

Foxtons' key H1 2026 figures

Metric	H1 2026	H1 2025	Change
Revenue	£83.7 million	£86.1 million	-3%
Adjusted EBITDA	£10.4 million	£13.9 million	-25%
Adjusted operating profit	£8.9 million	£12.5 million	-29%
Adjusted operating margin	10.6%	14.6%	-400 basis points
Profit before tax	£4.4 million	£10.2 million	-57%
Adjusted basic EPS	1.8p	2.8p	-36%
Net free cash flow	£1.4 million	£3.6 million	-62%
Interim dividend	0.24p	0.24p	Unchanged

Adjusted EBITDA means earnings before interest, tax, depreciation and amortisation, with Foxtons also making certain adjustments intended to show underlying performance.

The widening gap between the 3% revenue decline and the 29% fall in adjusted operating profit is important. It shows how relatively small changes in revenue can have a much larger effect on earnings when fixed operating costs remain in place.

Lettings provided the main defence

Lettings generated £54.7 million of revenue, broadly unchanged from £54.6 million a year earlier. It represented 65% of group revenue, while non-cyclical and recurring revenues increased to 69% of the total from 65%.

That recurring income is the strongest part of the investment case presented by these results. Foxtons is less dependent on property sales than it was previously, which gives the group more protection when transaction volumes fall.

There was encouraging operational progress within Lettings:

• Build to Rent revenue increased by 29%.
• Revenue from ancillary landlord and tenant services rose by 17%.
• Cross-selling of property management services increased by 10%.
• Total lettings volumes increased by 6% to 6,903.
• Acquisitions contributed £1.7 million of lettings revenue.

However, these gains were offset by a £3.0 million reversal of previously recognised revenue. This followed an increase in tenants ending tenancies early after the Renters' Rights Act came into force on 1 May 2026.

Foxtons said this amounted to an average of 150 additional terminations per week across a portfolio of 32,000 tenancies. The effect was most pronounced in May and has since moderated.

Management believes the legislation should ultimately favour larger professional agents by increasing the need for compliance advice, property management and related services. That is plausible within the logic set out by the company, but investors will want evidence that the anticipated medium-term benefits begin to outweigh the short-term disruption.

Sales remains the weak spot

Sales revenue declined by 13% to £23.5 million as transaction volumes fell 11% to 2,113. The comparison was made tougher by the stamp duty deadline, which supported activity in the first half of 2025.

Foxtons said activity across its core London markets was down 14%, with consumer confidence affected by domestic political uncertainty, Middle East conflict and higher-than-expected interest rates.

New homes revenue was particularly weak, falling 46% because of lower completions and softer buyer demand. The Sales division's adjusted operating loss widened from £2.0 million to £4.7 million.

There were some brighter details. Cross-sell and ancillary sales revenue increased by 33% to £2.4 million, while average revenue per transaction in Foxtons' core markets rose by 4% to £12,837.

Even so, management does not expect a meaningful improvement in sales activity in the near term. July buyer activity remained subdued, and the business is being reshaped for a lower-volume environment.

Financial Services delivered growth

Financial Services revenue increased by 20% to £5.4 million, helped by stronger refinancing activity, improved customer retention and growth in ancillary revenue.

Transaction volumes rose by 25% to 3,119, although average revenue per transaction decreased by 4% to £1,740.

This remains Foxtons' smallest division, accounting for 6% of group revenue, but its growth provided a useful counterweight to the sales decline. New purchase mortgage revenue also remained resilient despite weakness in the wider property sales market.

Cost savings should help in the second half

Foxtons implemented £4.5 million of annualised cost savings during the period. This included £3.0 million from a cost-reduction programme and £1.5 million from relocating its headquarters in January 2026.

Only £1.3 million of benefit was recognised in the first half, meaning the financial impact should be weighted towards H2.

The company has reduced costs and fee-earner headcount in Sales while also using automation, artificial intelligence and self-service technology to streamline processes. The balance to watch is whether Foxtons can improve productivity without weakening its customer service or ability to benefit when transaction volumes recover.

Net debt is moving in the wrong direction

Net free cash flow fell from £3.6 million to £1.4 million. Period-end net debt increased to £28.4 million, compared with £16.9 million at the end of 2025 and £18.2 million at the previous half year.

The increase reflected £8.8 million of acquisition spending, £2.7 million of dividends and £0.5 million of share buybacks, alongside working capital investment and weaker sales cash flows.

Foxtons increased its revolving credit facility from £40 million to £50 million to support organic growth and acquisitions. A revolving credit facility is a flexible borrowing arrangement that allows a company to draw and repay funds as required.

The group remained within its banking covenants, reporting a leverage ratio of 1.3 times and interest cover of 18 times. That provides some reassurance, but rising debt combined with weaker cash generation deserves attention if market conditions remain difficult.

Dividend maintained as guidance is reiterated

The interim dividend was maintained at 0.24p per share. It is due to be paid on 11 September 2026 to shareholders on the register at the close of business on 7 August.

Foxtons continues to expect full-year adjusted operating profit of between £17 million and £19 million. Management expects performance to benefit from lettings seasonality, stabilising tenant termination levels and the cost savings taking effect.

What Foxtons shareholders should watch in H2

These results demonstrate the value of Foxtons' recurring lettings strategy, but they also show that the business is not immune to a weak London property market.

The positives are the stable lettings revenue, Financial Services growth, rising ancillary income, maintained dividend and £4.5 million annualised cost-saving programme. The acquisitions in Birmingham and Milton Keynes also provide platforms for further expansion, with performance to date described as in line with expectations.

The negatives are the sharp profit decline, deeper Sales losses, reduced cash generation and higher net debt. The Renters' Rights Act may create long-term opportunities, but it has already caused a material short-term revenue reversal.

For the second half, the key tests will be whether early tenancy terminations continue to stabilise, whether the promised cost benefits reach the income statement and whether Foxtons can deliver its £17 million to £19 million profit guidance without taking on materially more debt.