Realogy defied analysts’ expectations during the third quarter of 2021 when the company raked in $2.2 billion in revenue, an increase of 15 percent year over year, the company reported during its Q3 2021 earnings call on Thursday.
Back in the second quarter, Realogy reported $2.3 billion in revenue, which had been an increase of more than 80 percent year over year.
“Realogy delivered excellent top and bottom lines this quarter as we innovate the future of real estate,” CEO Ryan Schneider said during the call.
The real estate holdings company also brought in just over $6 billion in revenue year to date, and its reported net income was $114 million with basic earnings per share of $0.98 ($16 million more than the previous year).
Realogy continued to increase its already sizable footprint in the industry during the third quarter, gaining market share for the fifth consecutive quarter. The company increased its transaction volume growth by 12 percent from the previous year, outpacing the National Association of Realtors’ reported 9 percent volume growth for the quarter.
Among the company’s owned brokerages, transaction volume saw even greater growth, with transaction volume increasing 17 percent year over year, largely driven by “an exciting comeback” in the New York City market led by Corcoran and Sotheby’s International Realty.
The company’s agent base also kept steady growth during this period, with agent numbers increasing 5 percent year over year.
“We are happy with the agent success we are seeing,” Charlotte Simonelli, executive vice president and chief financial officer, said during the call. She added that the company has almost doubled its number of recruited loan officers this past year.
Realogy maintained steady cash reserves during the third quarter, with a free cash flow of $282 million for the quarter, and $458 million year-to-date. Following a debt paydown of $435 million in September, the company still ended the quarter with about $700 million in cash and a 2.3x net debt leverage ratio. The company also brought in $273 million operating EBITDA during the quarter, a decrease of $40 million year over year.
“In the third quarter, Realogy drove excellent financial performance, delivering $273 million in Operating EBITDA and generating $282 million of free cash flow, as we significantly strengthened our capital structure,” Simonelli said in a statement. “Realogy is making incredible progress, proactively repaying $435 million of debt in September, consistently delivering quality financial results, and strategically investing to unlock additional value for shareholders.”
In addition, the company anticipates $80 million in permanent cost savings in 2021, with actions taken thus far for about 90 percent of target savings.
Schneider said the company was “enthusiastic about its RealSure progress” during the quarter, in which it appointed Katie Finnegan as CEO of RealSure JV with Home Partners of America. Within the next few months, the company plans to launch a new RealSure Product called RealSure Buy as it continues to expand the iBuyer service. Realogy also plans to increase its direct-to-consumer marketing of RealSure, with the hopes that the iBuyer service will draw in consumers directly, while also serving as a value proposition that agents can bring to the listing appointment.
“Realogy delivered excellent top and bottom lines this quarter as we innovate the future of real estate,” Schneider said. He noted that the company worked to shift corporate offices to collaboration and innovation hubs during the quarter.
The real estate holdings company also make a significant acquisition during the quarter, of Warburg Realty in New York City, which was brought under the Coldwell Banker brand.
As far as the future of the market, Schneider noted that “lack of supply is increasingly an issue, given the strong demand.” However, he remained cautiously optimistic about the company’s future growth.
“Looking forward, our September open volume and October month to date open and close volume are all basically flat versus 2020, but it’s a little too early to extrapolate from those numbers,” Schneider noted. Q4 growth this year is likely to be down from the strong fourth quarter volume seen in 2020, but “we remain excited about the housing market and our growth potential,” Schneider said.
Schneider added that he’s actually in the midst of helping a family member close on the sale of their home, which he did with the assistance of a Coldwell Banker agent. Witnessing the agent use a number of the company’s tech offerings throughout the process to ultimately get Schneider’s family member nine offers above asking encouraged Schneider, he said, that the company’s offerings have helped “simplify the transaction” for agents.
“All to drive change and lead into the future,” he said.
Update: This story was updated after publishing with additional commentary and data.