Realogy continued its strong business streak on Thursday when the company reported its highest first-quarter earnings ever. During the first quarter of 2021, Realogy took in $1.5 billion in revenue — a 32 percent year-over-year increase from 2020, when the company first experienced the impact of COVID-19.
Realogy’s net income bounced back to $33 million, after losing money in the same quarter in 2020, as the firm reported a basic earnings per share of $0.28, an increase of $495 million versus the prior year, or $4.31 per share.
The results show that the firm is still benefitting from the strength of the pandemic-driven acceleration in home buying. Realogy’s stock (NYSE: RLGY) has more than tripled in the past year and is up 16% in 2021 so far, versus an 11% rise in the S&P 500 as a whole.
“We are off to a phenomenal start to 2021, delivering the strongest first quarter top and bottom line results in Realogy’s history,” said Charlotte Simonelli, Realogy’s executive vice president, chief financial officer, and treasurer in a press release. “We delivered strong operational and financial execution, and we continued to drive cost efficiencies and reduced net leverage as we demonstrate continued success.”
The company’s operating earnings before interest taxes depreciation and amortization (EBITDA) increased 134 percent year-over-year to $162 million, with Realogy’s title and mortgage companies playing a growing role. Both divisions saw robust growth as homebuyers took advantage of record-low mortgage rates.
In the earnings call, President and CEO Ryan Schneider elaborated on Realogy’s 2021 growth strategy, which hinges on continued technology innovation, increased investment in its title and mortgage businesses, and continuing to lead the luxury market through Corcoran, Sotheby’s International Realty and Better Homes and Gardens Real Estate.
“We’ve delivered innovative marketing technology and data products to help agents and franchisees be more productive and drive better economics, and we’re seeing the benefits in our results, productivity, recruiting, winning more listings, selling homes at higher prices, and market share gains,” he said. “We will continue to invest in unique products like Listing Concierge, RealVitalize, the iProspect [developers portal] and many others to propel growth and make Realogy a more attractive place for agents and franchisees.”
In addition, the CEO said Realogy will accelerate the growth of its RealSure iBuying service, which he expects to be a “real winner and new growth vector” for the company as they aim to nearly double the service’s market reach.
“The most exciting thing about RealSure is how it’s helping us win listings,” he added. “We are accelerating our RealSure product for the rest of 2021.”
Realogy’s own-side and franchise business closed transaction volume increased 44 percent year over year, pushing its market share to 15.7 percent — up from 15.3 percent in 2020 — the third consecutive quarter of such gains. The company also increased its brokerage agent count 3 percent annually.
“We like the investments we are making in our agents and they are driving impressive results,” Simonelli said of increased commission splits and closed transaction volume across all of Realogy’s franchise brands.
Schneider the company’s “very powerful” first-quarter results were a result of increased closed transaction volume, credited in part to the strong housing market. Schneider also said Realogy’s continued financial management measures also boosted earnings, as the company posted its lowest ever net debt leverage ratio (3.1x) with an expected permanent cost savings of $80 million in 2021 due to the company’s COVID-induced virtual shift.
“Our strategic actions are enabling Realogy affiliated agents and franchise owners to better capitalize on the dynamic housing market as we continue to move fast, innovate, and invest for future growth,” Schneider said in a written statement.
Realogy has used the momentum to launch its RealSure iBuyer platform in Atlanta, take its revamped agent and broker-facing education platform mobile, stoke growth at each of its franchise brands, and double down on its tech strategy with a MoxiWorks partnership.
Realogy’s 2020 earnings calls were a rollercoaster with Q1 and Q2’s weakened net income, revenue and closed transaction volume reflecting a real estate market marred by COVID restrictions. However, Realogy grew in Q3 and Q4, with the company taking in $1.9 billion in revenue in both quarters as low mortgage rates spurred record buyer demand.
Realogy closed the day at $16.83 per share, which is 28 percent higher than Realogy’s 2020 year-to-date stock market performance.