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Anywhere Real Estate logged declining revenues for the third-consecutive quarter on Thursday, with the real estate holding company raking in $1.3 billion during the fourth quarter — 33 percent below the same period last year.
While the Madison, New Jersey-based company was able to hold on to its profitability in the third quarter of 2022, it could not say the same for Q4 with net losses ballooning 1,064 percent year over year to $453 million. Adjusted net losses, which exclude non-cash goodwill and non-cash accounting charges, clocked in at $93 million.
The company’s operating earnings before interest taxes depreciation and amortization (EBITDA) also declined 92 percent from $157 million in Q4 2021 to $12 million in Q4 2022.
Much like its competitors, Anywhere experienced declining transaction volume across all of its segments, including Anywhere Brands (-22 percent YoY), Anywhere Advisors (-14 percent YoY) and Anywhere Integrated Services.
The downturn was most acute with Anywhere Integrated Services, a mortgage, title and insurance division formerly known as Realogy Title Group that suffered under rising mortgage rates that pushed purchase title and closing units and refinance title and closing units down by double digits, according to the earnings call.
Title and closing united fell 36 percent year over year while refinance title and closing units plunged 79 percent over the same period, to 25,660 and 2,351 units, respectively, during the fourth quarter.
Despite a rough Q4, Anywhere President and CEO Ryan Schneider remained confident about the company’s long-term prospects, highlighting his executive team’s ability to make difficult cost-cutting decisions, the latest of which being the closure of iBuyer RealSure in January.
“Anywhere responded to a challenging 2022 housing market with agility to both prioritize our critical growth investments and continue to reengineer how we operate at a lower cost base,” Schneider said in a statement before an early morning earnings call Thursday. “We remain committed to our goals of growing our advantaged positions in franchise, luxury, and transaction services, along with our focus on simplifying the transaction for consumers and agents alike.”
Meanwhile, Anywhere Executive VP Charlotte Simonelli focused on the company’s full-year performance as a small silver lining, despite revenues declining 13 percent to $6.9 billion, a net loss of $287 million ($32 million net income after non-cash adjustments) and 14 percent decrease in combined closed transaction volume.
“In 2022, Anywhere executed a relentless focus on financial and operational performance, including $150 million in realized cost savings, with strategic actions to solidify our foundation for the future,” she said of the company’s balance sheet.
Even with sliding transaction volume, Simonelli said Anywhere Advisors achieved record retention and grew its agent count four percent from FY 2021.
“We continue to prioritize investing for growth while driving even greater efficiencies in our business to ensure that Anywhere continues to deliver on the roadmap we laid out during our 2022 Investor Day,” she said.
In the earnings call, Schneider said he believes the housing market is currently at the bottom and that a slow and steady recovery will start in late 2023, with long-term prospects for the industry remaining robust.
“We expect Q1 2023 market volumes to be down around 30 percent versus 2022,” he said. “We expect those year-over-year of quarterly comparisons to improve throughout the year, and I still believe the outlook for housing over the decade is strong.”
“And most importantly, and potentially excitingly right now, we may be at or near a bottom already,” he added. “We’re all seeing a number of the housing indicators in the macro economy exhibit more stability in our book from December 2021 to November 2022.”
However, to successfully navigate the bottom of the market, Schneider said the company will continue to take a conservative approach to its spending and growth with projected cost savings expected to reach $200 million in 2023.
“Our excitement in this area is not just about lower costs, it’s about re-architecting our business for greater success in the future,” he said. “We are reimagining our real estate brokerage offices to be more efficient, flexible and integrated with transaction services like title and mortgage, which means we can provide fewer but more impactful agent and consumer support by building on our past investments.”
He added, “To digitize our operations, we are automating processes across brokerage and title, removing work and friction for agents and consumers.”
Schneider said Anywhere will also be lowering its marketing spend for the upcoming year; however, the smaller budget will have no effect on the quality of digital advertising, recruiting and retention opportunities for its franchisees.
“While we’ve lowered our marketing spend for 2023 given market conditions, we are excited about how we’re using a more digital marketing mix to deliver greater value for agents and franchisees,” he said. “We are rigorously prioritizing our growth investments, which include continuing to expand our powerful franchise business, leaning into our luxury leadership position, and driving innovation and our nationally scaled title and mortgage businesses.”
Simonelli echoed Schneider’s remarks, saying that Anywhere will lean into tech and automation opportunities to lower costs while improving the transaction process for agents and consumers. “We are advancing our technology and product solutions which not only drive cost efficiencies for us but also improve the agent value proposition,” she said.
Looking forward, Anywhere expects further disruptions in its balance sheet with a projected 30 percent annual decline in Q1 2023 transaction volume. However, they expect the playing field to level out by the end of 2023 with transaction volumes slightly rebounding to a 15-to-20 percent decline from 2022.
“The first quarter is seasonally the slowest quarter, and combined with this anticipated volume decline, the Company expects to have significant negative Operating EBITDA for the first quarter of 2023,” the report read. “Driven by these projected volume declines, the Company expects full-year 2023 Operating EBITDA to be below 2022.”