Pexa Group (PXA) $6.68

PXA -17.13%: Sold off today after FY27 guidance fell short of expectations, overshadowing a FY26 result that was actually reasonable at the earnings line. The issue is the Australian property market: softer transaction volumes are now expected to weigh on both revenue and margins, while the range provided for FY27 leaves plenty of room for further disappointment. For a business that enjoys attractive operating leverage when volumes are rising, the reverse is proving equally true as activity slows.

Key results:

• FY26 revenue of A$406.9m, up 3.4% and broadly in line with A$408m expected.
• Underlying earnings (EBITDA) was ~4% ahead of consensus, providing one of the few bright spots.
• Statutory net loss improved to A$15.9m, from a A$76.1m loss last year.
• FY27 revenue guidance of A$385-415m, putting the midpoint below FY26.
• FY27earnings (EBITDA) guidance of A$121-139m, with the top end still below consensus of A$143m.

The problem is that FY27 now looks like a backwards step before PXA can get moving again. Management has explicitly called out uncertainty around Australian property transactions, and with revenue heavily linked to settlement volumes, there isn’t an easy way to sidestep a weaker housing market. The width of the guidance ranges doesn’t help either — A$385-415m of revenue and A$5-20m of core NPAT aren’t numbers that provide much confidence around an earnings floor.

 MM’s view: It’s difficult to argue with the direction of travel. FY26 wasn’t the problem – it’s the reset to FY27 expectations and the lack of visibility around when conditions improve. PXA remains a high-quality piece of infrastructure embedded in Australian property settlements, but that doesn’t make earnings immune to transaction volumes. We think the market will need evidence of housing activity stabilising before getting enthusiastic again. After today’s reset, expectations are certainly lower, but cheapening expectations and having an earnings catalyst are two different things.