Realogy posted $1.9 billion in revenue in the third quarter of 2020, its biggest third quarter in company history and an astounding 20 percent increase over the pre-pandemic third quarter of 2019. After posting a significant revenue decline in the second quarter, Realogy’s bold headline numbers illuminate just how scorching hot the housing market was in the third quarter of 2020.
“Our strategic progress, agent and brand power, and technology initiatives, amplified by the very strong housing market, drove Realogy’s results,” Realogy CEO Ryan Schneider said in a statement. “And with very strong preliminary October volumes, we are excited as we look ahead.”
Realogy posted a net income of $145 million from continuing operations and a net income of $98 million if you include discontinued operations — the company’s relocation services business, namely Cartus.
The company beat its estimated earnings per share and posted basic earnings of $0.85 per share, ahead of the $0.76 consensus estimate published by investment research firm Zacks. The company also beat revenue expectations by $188 million.
A surge in transactions led to Realogy’s largest third quarter in company history. The numbers are likely to serve as a prelude to high revenue numbers from competitors who are scheduled to reveal earnings in the weeks ahead. Combined closed transaction volume from the company’s own-side and franchise business increased 28 percent year-over-year in the third quarter.
Realogy was able to capture more market share, according to Schneider, as the industry’s transaction volume overall only grew by 23 percent, according to the National Association of Realtors (NAR).
Open volume — a signed contract where the home hasn’t yet closed — also previews what could be a massive fourth quarter. Open transaction volume was up 49 percent year over year in September and up 55 percent year over year in October.
Realogy, the parent company of Realogy Franchise Group and Realogy Brokerage group, is the nation’s largest real estate holding company. Its earnings frequently reflect the broader health of the real estate market.
In the second quarter, for example, the company saw transactions plummet dramatically, dropping 21 percent year over year for the franchise business and 25 percent for the brokerage business. But despite those precipitous drops, Schneider hinted that better results were on the horizon for Realogy’s portfolio of brands due to open transaction volume figures.
Brands under the Realogy umbrella include Coldwell Banker, Century 21, Better Homes and Garden Real Estate, Corcoran, Sotheby’s International Realty, ERA Real Estate.
The company was able to use the strong revenue generated in the third quarter to continue to pay down some of its corporate debt. Realogy reduced its corporate debt by $276 million versus the prior year and bettered its net debt leverage ratio.
“In the third quarter, Realogy continued to execute from a position of strength, delivering exceptional top-line and bottom-line growth,” Charlotte Simonelli, Realogy’s executive vice president, chief financial officer and treasurer, said in a statement. “We improved operating margins, captured greater share of transaction economics with our mortgage joint venture and title operations, stayed laser-focused on cost management and simplification, and strengthened our balance sheet.”
Realogy increased agent count for its owned-brokerage business on an annual basis for the sixth consecutive quarter, increasing overall agent count at Realogy Brokerage Group by 2 percent in the third quarter of 2020.