Despite a topsy-turvy real estate market marred by inflation, increasing mortgage rates and rock-bottom inventory levels, Realogy reported $8 billion in revenue for 2021 — $2 billion of which the company earned in the fourth quarter.
From September to December, Realogy’s revenue increased four percent year over year to $2 billion — a slight decline from the previous quarter’s $2.2 billion. The franchisor’s net income also grew from $29 million in Q4 2020 to $47 million in Q4 2021. Likewise, the basic earnings per share rebounded from $0.24 per share to $0.40 per share.
However, the company’s operating earnings before interest taxes depreciation and amortization (EBITDA) decreased 24 percent year over year to $157 million in Q4, as the company navigated a slowing market and increased spending to bolster RealSure, the company’s iBuyer platform.
“Realogy delivered an extraordinary year of financial and operational results.,” Realogy Chief Executive Officer and President Ryan Schneider said of the company’s Q4 performance in a statement. “Powerful market share gains, greater profitability, consistent strategic execution and technology progress all combined to deliver the strongest financial results in Company history.” “We are carrying that momentum into 2022 as Realogy moves to the next chapter of our transformation: propelling growth and innovation.”
For full-year 2021 results, Realogy’s revenue topped $8 billion. Realogy’s net income also skyrocketed to $343 million from FY 2020, when the company reported a net loss of $360 million. Likewise, the basic earnings per share rebounded to $2.95 — up from a negative earnings per share of $3.13 during the height of the coronavirus pandemic.
Realogy Executive Vice President and Chief Financial Officer Charlotte Simonelli said the company’s impressive growth in 2021 was fueled by a 100 basis point increase in market share to 16.4 percent, a 29 percent annual increase in transactions, and a six percent year-over-year increase in agent count for Realogy’s brokerage-owned operations.
The company’s strategic spending and 2.4x net debt leverage ratio also contributed to creating one of the company’s best quarters ever, she said.
“Realogy achieved record financial performance in 2021, delivering $8 billion of revenue and $902 million in Operating EBITDA and massively transforming our balance sheet,” Simonelli said in a statement. “Our financial discipline enabled us to grow the top and bottom line and make strategic investments in the business, all while generating impressive free cash flow to fuel our future growth.”
In the company’s live earnings call, Schneider said the company is committed to increasing its profitability and making more strategic mergers and acquisitions that will help them streamline the digital real estate transaction process, as he sees Zillow and similar platforms as Realogy’s true competition, rather than other franchisors.
“As we start Realogy’s next chapter, one we believe will be headlined is a greater growth as we increasingly simplify and integrate the real estate transaction for consumers,” he said. “You’ll see a greater focus from Realogy on selective mergers and acquisitions to drive growth, and we see opportunities for strategic mergers and acquisitions in core business, adjacent businesses and in technology to further accelerate our transformation.”
Schneider highlighted the company’s RealSure joint venture with Home Partners of America, planned title insurance underwriter joint venture with Centerbridge, and its new luxury auction joint venture with Sotheby’s through the acquisition of Concierge Auctions as prime examples of what the industry can expect from Realogy in the coming year.
In addition to a more aggressive merger and acquisition plan, Schneider said Realogy will continue to sharpen the blueprint for its vision of a totally digitized real estate transaction process. The company’s tech moves in 2021, he said, have already yielded impressive results at each of Realogy’s company-owned brands including Sotheby’s International Realty, Corcoran, Coldwell Banker and Better Homes and Gardens Real Estate.
“Our franchise brands have very high margin with strong cash flow generation and we really like the long-term franchise contracts with recurring royalties,” he said. “Over the past four years, these brands have delivered a very steady approximately 200 million in estimated operating EBITA with pretty consistent revenue — and all of our brands are powered by real innovation and technology.”
“We provide powerful technology to our agents and franchisees, as together we are delivering a better home buying and selling experience for customers,” he added. “Our industry differentiated open architecture approach, great virtual closing products, innovative marketing products and data insights are all examples of innovation and technology critical to our brand success.”