Parkingeye accounts: £61m turnover, 65% gross profit margin, 27% net operating margin

LoveParkingFirms

Not exactly a post on a specific parking charge, but still relevant to the topic.

I wanted to bring to the forum's attention the financials of Parkingeye ltd, as per public records on Companies House. The website doesn't let me post links, but searching "Parkingeye" on Companies House official website will show the Full accounts made up to 31 December 2024

turnover £61m

gross profit margin: 64.6%

net operating margin 27.4%

Adjusted EBITDA £28.8m

I am not an accountant, but my understanding is that these margins are very rare in legitimate, legal businesses, and tend to suggest a position of market dominance which makes the business somewhat immune to competition.

There is a lot I could say but which I would rather not, as I don't want to be sued for libel. I think we can all draw our conclusions. How the UK allows this kind of business model still beggars belief.

Exodi

LoveParkingFirms

I am not an accountant, but my understanding is that these margins are very rare in legitimate, legal businesses, and tend to suggest a position of market dominance which makes the business somewhat immune to competition.

I think it depends on the type of business. In my experience, businesses that product physical products commonly have much lower margins, a fraction of the figures you've posted, however businesses that are service/software based, where the bulk of the cost is usually in R&D outside of the gross calculation, can commonly have much higher margins. Airbnb has a GPM of over 80%, Google and Microsoft have GPM's around 60-70%, etc.

That said, I totally agree with the premise of your post given the type of business they each do.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6671603/parkingeye-accounts-61m-turnover-65-gross-profit-margin-27-net-operating-margin

27.4% net operating margin wouldnt be particularly exceptional in the service industry, RightMove is 70%, Royalty Pharma 68%, AutoTrader 63%, Global Ship Leasing 54.8%

This website had a 86% net operating margin immediately before it was sold to MoneySupermarket, it now doesnt publish full accounts instead doing it at group level.

So you are saying Martin is dodgy? Or you are just not appreciating the fact that certain net margins will be much lower for those handling physical goods but can be vastly higher for services, even more so if its mainly digital services.

LoveParkingFirms

You are talking about digital businesses, for which costs are mostly fixed. A website with 2 million users will have higher costs than one with 1 million users, but its costs will not be twice as much.

Yes, I do appreciate the difference - thank you for the needlessly abrasive comment.

The Supreme Court, with its ruling in Parkingeye vs Beavis, has effectively allowed a predatory business model, which extracts as much money from motorists as possible, without any link to any financial loss for the operator.

Yes, I get it that my opinion, and that of the many legal scholars who disagreed with the ruling, is irrelevant and won't change things. I get that very, very well.

Still, I figured it would have been interesting to bring to the forum's attention what kind of profit margins that ruling has de facto legalised.

The comparison with this website is irrelevant, because no one is forced to visit this website nor to buy the products or services advertised here.

These parking firms, instead, make money from motorists who in many cases tend to have limited to no alternatives.

I struggle to see how this self-evident difference even needs to be pointed out.

imtiazahmad

Those figures do show Parkingeye is very profitable but high margins alone do not automatically mean anything illegal or unusual in a legal sense. A lot of the profitability can come from low overheads and automated systems like ANPR cameras plus large scale contracts with landowners. The private parking industry is regulated in the UK so the business model itself is allowed even if people disagree with how it operates. The real discussion is more about fairness transparency and how reasonable the charges and appeals process are rather than profitability on its own

LoveParkingFirms

I never said nor implied the business model is illegal. I know very well it is not.

Again, I figured it would be interesting to bring to the forum's attention what kind of turnover and profit margin the Supreme Court ruling on Parkingeye vs Beavis has legalised.

For what little it may be worth, I couldn't care less about the profit margins of businesses whose customers are under no obligation whatsoever to buy their products or services.

However, when the customers in question have little to no alternative, let's say that this piques my interest - even if the business in question may be perfectly legal.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82027367#Comment_82027367

You stated those sorts of margins are very rare in legitimate/ legal businesses therefore implying they arent and yet there are many firms making more than double the margin that are generally considered legitimate and legal businesses.

Parking Eye is a digital business, it predominately uses ANPR and apps so as you say some up front costs to setup but low running costs that dont increase proportionally as the volume of sites increase.

Im not commenting on the legitimacy or legality of the business but your implied statement that this type of margin is a sign of something dodgy is total rubbish. For a digital business it's nothing unusual at all, well within the bounds of normal expectations, many legitimate and legal businesses do much higher rate.

1505grandad

https://forums.moneysavingexpert.com/discussion/comment/82027380#Comment_82027380

"The private parking industry is regulated in the UK….."

As per the government doc:-

"Is the government going to regulate ‘cowboy’ parking enforcement companies?"

https://commonslibrary.parliament.uk/research-briefings/cbp-8736/

"Without the Code, private parking companies remain largely unregulated with little redress for consumers to poor behaviour by private parking companies. The Act set out to address this issue."

This unregulated industry also has the huge benefit given to them by the DVLA to obtain motorists private data without human checks and also a "nuclear button" from the Courts which they can press a minute after any late court papers to inflict a potentially life changing CCJ again with no human intervention.

Car1980

Surprised it's that low considering the business model is nothing but issuing invoices.

Must be the cost of those ANPR cameras!

Further use of AI in future will also make the use of humans redundant. Cameras will be able to automatically post out PCNs before you know it.

LoveParkingFirms

@Car1980 , they also spent more than £15m to acquire another business.

@MyRealNameToo , I struggle to see what your point is, and what compels you to be so aggressive and abrasive.

I didn't say that those margins are proof of any illegality. I linked them to market dominance.

Being digital does not guarantee success and high margins. The world is full of digital businesses which failed miserably.

Also, I disagree that Parkingeye is a digital business. It is a physical business which uses a lot of technology. Unlike a digital business, it cannot sell its products or services to a vast number of users at little to no marginal cost. It can make money only from the vehicles which physically enter the premises it controls. Big, big difference.

The ethically questionable, however legal, part is that it makes money from captive users, who have limited to no choice. Students or staff or patients  are not going to choose another university or another hospital because the company which manages its parking is better.

The charges bear no link whatsoever to their real costs.

For example, a security company monitoring the parking space with lots of technology would not achieve comparable margins. Why? Because the company would be appointed by the landowner paying, the landowner would want the best deal, and there would be more competition.

However, this country has legalised a business model whereby the landowner has no incentive in choosing a parking firm which applies reasonable charges (if anything, the opposite, if there is a revenue sharing agreement), the parking firm has no incentive in keeping its charges reasonable (the opposite), and the people actually paying these charges have no say in the matter and limited to no alternatives.

I know it is not illegal, but I still find it questionable.

My point is : if you manage to achieve high profit margins in a highly competitive business, you deserve my praise. If you manage to achieve high profit margins operating the above business model, you don't - and I'll leave it at that.

Tell me, what exactly do you disagree on and why? What exactly is "rubbish" about my statement?

You are of course welcome to disagree with me, but can you do so in a more civilised, more respectful, less aggressive way? Thank you!

Gr1pr

https://forums.moneysavingexpert.com/discussion/comment/82027380#Comment_82027380

The private parking companies here in the UK definitely do not operate in a regulated industry, because its currently UNREGULATED !