Realogy, the nation’s largest real estate holding company, posted $1.7 billion in revenue, a year-over-year, five-percent decline in the second quarter of 2019, the company announced Thursday. It also posted a net income of $69 million, a year-over-year, 44-percent decline.
The company, which controls the own-side brokerage NRT plus franchise brands including Coldwell Banker, Century 21 and Better Homes and Gardens Real Estate, fell in line with revenue expectations and an earnings-per-share target of $0.83, as projected by financial analysis firm Zacks.
“In the second quarter of 2019, we delivered substantial profitability and progress on our strategy,” Ryan Schneider, Realogy’s chief executive officer and president, said in a statement. “In the quarter, we continued to enhance our value proposition with new products, new partnerships and new technology and data offerings, all designed to drive future top and bottom-line growth for Realogy.”
Realogy continues to be one of the few real estate company’s that is profitable, at a time when Zillow posted a net loss of $71.9 million, Redfin posted a net loss of $12.6 million and eXp World Holdings posted a net loss of $2.2 million.
Despite being consistently profitable, Realogy’s stock has suffered greatly in equity markets this year. It’s reached historic lows, trading in the low $5 range after trading around $22 a share at this time last year.
Wall Street, however, seems pleased with the company’s results, with its stock up more than 12 percent in pre-market trading.
Realogy also received a short-lived bump when it announced a new partnership with Amazon in late July. The partnership will provide select Realogy agents leads and referrals from Amazon, while consumers get value from Amazon in the form of smart home products and services.
Schneider said, on the second-quarter earnings calls, that the impetus behind the platform was to deliver higher-quality leads to Realogy agents.
“The world is awash in low quality, low conversion online leads, that the lead tends to be nothing but an email address,” Schneider said. “We’re really excited by Turnkey because we think it will be an incredibly high-quality lead because it’s both a live customer ready to talk to an agent, incubated by our Ojo Labs partnership, but its also a customer that’s excited about the value proposition of Amazon Home Services both on the smart home and the move-in support.”
The company’s transaction growth is starting to move back in line with last year’s results, despite an uneven housing market in the second quarter. Company-wide transaction growth was down 3 percent year-over-year, which was an improvement from last quarter when it was down 9 percent year-over-year.
NRT transaction volume, specifically, was down 5 percent, after being down 11 percent year-over-year last quarter.
The company is forecasting positive transaction volume growth in the third quarter, with sequential growth in the fourth quarter.
Realogy has started to realize some of those expected cost-savings as part of an effort to streamline its business and move more nimbly. Approximately $22 million of the expected $70 million in savings this year is reflected in the second-quarter results. Overall the company said 60 percent of the cost-savings have already been executed.
“The solid financial performance we delivered in the second quarter was driven by improving homesale transaction volume, moderating agent commission splits and strong cost management,” Realogy Chief Financial Officer Charlotte Simonelli said in a statement. “We continue to believe we will see sequential improvement with a return to positive transaction volume growth in the third and fourth quarters and are committed to using our strong free cash flow to reduce our debt and to invest in our business.”
Realogy is also expanding its agent tech and product offerings. The company launched its Social Ad Engine in the first quarter of 2019 and has already delivered 85,000 leads for its agents. The company also expanded its listing concierge platform to cover about 60 percent of NRT agents.
