Large publicly traded real estate companies are about to share their numbers from the most brutal quarter in years. Analysts are bracing for the worst — and watching to see who can thrive.

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It is, once again, the most wonderful time of the year. No, not Christmas. It’s earnings season.

Earnings season, when publicly traded companies disclose how much money they made, of course always matters. And sometimes it delivers bombshells, such as when Zillow ended its iBuying efforts.

But the trickle of earnings reports that begins today and continues for the next few weeks may ultimately be unlike anything we’ve seen in recent memory. That’s because the reports will offer a view of how companies did over the entirety of 2022, when the market soured relative to the preceding years, and because the fourth quarter of last year was especially slow in many housing markets.

In other words, the upcoming slew of earnings reports is likely to offer the most detailed look yet at the scope and scale of the housing downturn and how it impacted everyone from brokerages to iBuyers to portals.

To get a sense of the lay of the land going into earnings season, Inman poured over data from previous earnings reports and talked to analysts about what they’re expecting. And the consensus is that the rough housing market in the final months of 2022 is likely to produce a relatively rough earning season for many companies this month.

Analyst Mike DelPrete told Inman that if what happened in the market is any indication, fourth-quarter results “are going to be horrendous” for real estate companies.

“They’re just going to be really bad,” he said.

In that light, analysts are currently watching to see how companies will cut costs, continue recruiting agents and navigate an existential moment.

Revenue growth has ground to a halt

First up, let’s look at revenue, which is typically the top-line data point in every company’s earnings report. Revenue matters not just because it shows how much raw cash a company raked in, but also because it’s a key indicator of a company’s health and trajectory.

The graph below shows year-over-year quarterly percent growth in revenue of all the companies included in this story. (It does not show the absolute amount of revenue the companies brought in.)

Credit: Jim Dalrymple II

A few outliers — most notably Opendoor, and to a lesser extent Zillow and Offerpad — have such huge spikes at atypical times that the rest of the companies look relatively flat. We’ll break out some of these results in the graphs below, but first, it’s worth noting that even here, with every company plotted side-by-side, it’s clear that the entire industry was converging in more or less the same place. And that place was little, and in some cases negative, revenue growth in the most recent quarters.

That revenue was down for everyone isn’t necessarily surprising given the hardships of the late 2022 housing market. But it is interesting to see companies as disparate as Opendoor, Zillow, RE/MAX and others — which were performing differently during the headiest days of the pandemic — all experiencing the same trend at the same time.

So, mortgage rates really were the great equalizer.

If we remove some of the outliers, other trends become apparent. The graph below, for example, shows the same data but only includes brokerages and franchisors.

Credit: Jim Dalrymple II

What’s interesting here is that the downward trend started after the second quarter of 2021. At the time, the housing market was still on fire but the big brokerage firms were also seeing their year-over-year gains in revenue slow.

Significantly, the second quarter of 2021 was also when most real estate companies saw their share prices peak. As Inman has noted, real estate stocks have generally been on a downward trajectory since then, and the graph above suggests investors may have been scared off by slowing revenue growth.

For reference, here are the share prices of those same four companies plotted over the same period.

Credit: barchart

Not coincidentally, the trajectories of the two charts above look similar.

Next up, the graph below shows the tech-centric real estate firms plotted together. It’s worth noting that these companies have very different business models, but if nothing else the thing they have in common is a dissimilarity to the legacy companies and those that use legacy models.

Credit: Jim Dalrymple II


That huge spike that Opendoor experienced happened when its revenues jumped a whopping 1,400 percent year over year. The graph also includes the period during which Zillow ended its own iBuying program.

Ultimately, the tech firms have had a spikier ride in terms of revenue growth over the last couple of years, but as of the last earnings season they were in basically the same place as everyone else, with revenue growth nearly grinding to a halt.

Some companies have a steadier track record on profit than others

Of course, revenue offers a useful measure of how quickly a company is growing, and clearly influences investors’ appetite for stocks.

But at the end of the day, companies are supposed to turn a profit.

So, here are all the net incomes — losses or profits — of companies included in this story plotted together.

Credit: Jim Dalrymple II

Opendoor is once again the outlier, with a massive drop in the most recent quarter. That drop is due to the company losing nearly $1 billion in the third quarter of 2022. Much of the loss resulted from the falling value of homes Opendoor held in inventory.

Opendoor’s bad quarter aside, though, it’s apparent that some companies have managed to maintain profitability better than others. Anywhere and eXp, for instance, were both profitable every quarter included in this time range. RE/MAX was nearly as successful, only posting a loss once in the last two years.

On the other hand, Compass lost money every quarter. Redfin and Opendoor lost money in all but one of the quarters included.

Going into another earnings season, this means there’s significant pressure on some companies — Compass, Opendoor, etc. — to get their financial houses in order and that doing so will be a bigger lift given the existing trends. Alternatively, other companies have a track record of avoiding extreme volatility which may serve them well in a more volatile time.

Analysts are bracing for a rough earnings season

In light of the situation outlined above, the analysts who spoke with Inman for this piece generally agreed that this earnings season will be pivotal for understanding the challenges that lie ahead for the real estate industry. For instance Bernie McTernan, a senior analyst at Needham & Company, described the current moment as being of “paramount” importance.

Thomas McJoynt-Griffith

Thomas McJoynt-Griffith, director of equity research at KBW, is also keeping an eye on this earnings season and didn’t pull any punches when he described the fourth quarter of 2022 as “really tough.”

“We’re expecting some really kind of challenging results from all the brokers out there,” McJoynt-Griffith told Inman. “There’s only so much you can control.”

That sounds dire, and the numbers may well be. But analysts are also looking for specifics from companies to see how they might survive the rough patch. Here are some of the issues on their radars:

Agent count

As Inman has previously reported, agent count has been a major part of the story for some real estate companies over the past few years — though many see the total number of Realtors in the U.S. falling this year.

All of which means the battle for agents is likely to get more intense and that not everyone can win.

Tom White

Tom White, a managing director and senior analyst at D.A. Davidson, told Inman he’ll consequently be looking at recruiting and retention this earnings season. And it isn’t clear yet which models will thrive.

“One of the things I’m focused on is agent count,” White told Inman. “One of the theses, if you will, from investors over the years when it comes to these more disruptive models is, if the market did turn and soften could these platforms become relatively more attractive to agents?”

The caveat, though, is that so far that isn’t exactly happening.

“In eXp’s case, they’ve been stuck on this 86,000 agents for a couple months now,” White noted. “So it seems like this idea that these cloud players are going to see an acceleration of agents coming on probably isn’t going to play out.”

Time, and the upcoming earnings reports, will tell though how exactly recruiting looked in the final and economically slow months of 2022. But White added that even if agent count growth slows, that isn’t the end of the world.

“If agent growth slows, that’s okay,” White said. “It might result in the multiple that investors are willing to pay for eXp to contract a little bit. If it sort of flatlines or contracts, that would be a bigger issue and would probably take a little bit of sheen off the story.”

Key earnings to watch: 

RE/MAX: Thursday, Feb. 16

Anywhere: Thursday, Feb. 23

Compass: Tuesday, Feb. 28

eXp World Holdings: Tuesday, Feb. 28

Cost cutting

Cost cutting has been the name of the real estate game for nearly a year now, and resulted in widespread layoffs at brokerages, tech companies, iBuyers and more over the last year. And for the most part, analysts are still watching to see how lean real estate companies can get.

Bernie McTernan

“The biggest thing for Compass,” McTernan told Inman, “is how much cost can they cut.”

He made a similar point about Redfin, though he also noted that many companies have already made progress on this front so it’s an open question if they’ll still be moving to streamline.

White also pointed to cost cutting as a likely theme of this earnings season, though he noted that cloud-based brokerages such as eXp are already running fairly lean operations. Further cost cutting, then, could end up taking the form of slower geographic expansions or delayed spending on longer-term initiatives.

“Could they be more disciplined in some of the other areas?” White wondered aloud. “I think there are still probably costs they can cut if they have to.”

Ask for his take on cost cutting, McJoynt-Griffiths said he thinks there’s more in store for 2023.

“I tend to think it’s not over yet,” he concluded.

Key earnings to watch: 

Redfin: Thursday, Feb. 16

Offerpad: Wednesday, Feb. 22

eXp World Holdings: Thursday, Feb. 23

Opendoor: Thursday, Feb. 23

Compass: Tuesday, Feb. 28

The portal wars

The portals — namely Zillow and Redfin — have provided some of the biggest earnings season blockbusters in recent years, and this current earnings season is likely to provide insights into how they’ll grapple with the fallout of pivots away from iBuying.

But White noted that thanks to the possibility of Zillow antagonist CoStar buying, “the portal space is all of a sudden gotten a little bit more interesting.”

What this means is that companies like Zillow now have to show not just how they’re recovering from their own stumbles, but also how they’ll play defense against new and powerful rivals.

Beyond portal rivalries, White mentioned that he’ll be watching to see how a company like Redfin — which he said has underperformed in terms of gaining market share — can leverage its well-trafficked website into larger gains.

McTernan, meanwhile, said he’ll be watching Zillow for news about its post-iBuying pivot and its promise to build a housing “super app.”

“They’re in a difficult spot,” McTernan said of Zillow. “It seems like the plan is in place and forming but we still need to see proof.”

Key earnings to watch: 

Zillow: Wednesday, Feb. 15

Redfin: Thursday, Feb. 16

CoStar: Tuesday, Feb. 21

iBuyer existentialism

After the iBuyers reported massive losses in their previous earnings report, Inman reported that the sector was facing a kind of existential moment. Now, a mere one earnings season later, that moment is continuing.

Mike DelPrete

“This is a big earnings call for Opendoor,” real estate analyst Mike DelPrete told Inman.

He went on to note that it will be Opendoor’s first report after removing founder Eric Wu from the role of CEO. DelPrete described the shakeup as “a very significant leadership change for the business.”

“It’ll be interesting to see what that new regime is bringing in terms of transparency and focus,” he added.

More profoundly, DelPrete said Opendoor also needs to answer deeper questions about what it’s doing.

“What is Opendoor, what is the business?” DelPrete wondered. “Are they still all in on iBuying or are they diversifying into Opendoor Exclusives and power buying?”

Opendoor announced Exclusives during the previous earnings season. The program is meant to be a marketplace where consumers can connect with each other to buy and sell houses. It also represents a significantly more asset-light way for Opendoor to make money than via flipping houses. But despite the program’s recent debut, DelPrete thinks the company may benefit from focusing on other things during this month’s earnings report.

“I think what Opendoor needs to do is reassure investors and stake holders in the market that it knows what it’s doing and that its core operation is sound,” he said.

Asked about Offerpad, DelPrete said the biggest question the company needs to answer “is just about survival.”

“They need to prove that they can survive in this market,” he continued.

The good news for Opendoor, Offerpad and all the other companies reporting earnings in the coming days is that all of the numbers they’ll share are old, and come from a time a few months ago when the market was arguably worse. DelPrete pointed out that real estate stocks were bottoming out in December, people didn’t know what would happen with inflation and mortgage rates, and overall it “felt like the market was in free fall.”

But those conditions have since begun to shift, meaning that brutal earnings reports may not ultimately reflect the world as it currently exists.

“There’s a lot more certainty around interest rates and the Fed,” DelPrete concluded. “It seems like we found the bottom and there’s more confidence.”

Key earnings to watch: 

Offerpad: Wednesday, Feb. 22

Opendoor: Thursday, Feb. 23

Correction: eXp World Holdings reported earnings on Tuesday, Feb. 28. This post originally misstated the date of the company’s earnings report. 

Email Jim Dalrymple II

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