BAM Key Details:
- Five of the top players listed here reported increases in revenue
- All but Zillow and Rocket Companies reported a drop in their Adjusted EBITDA
- Redfin is cutting 13% of their workforce and shutting down their iBuying program
When you’re working in real estate, you need to know how the industry’s top performers are doing and what they’re doing to thrive in today’s market.
Today, we’re focusing on the Q3 2022 real estate financial results for the biggest names in real estate.
Zillow Group Third Quarter 2022 Financial Results
Zillow Group, Inc. (NASDAQ: Z and ZG), released its consolidated Q3 financial results for the three months ending September 30, 2022, including its acquisition of ShowingTime.
- Zillow’s Q3 consolidated results exceeded their outlook for both revenue and Adjusted EBITDA. Consolidated Q3 revenue was $483 million—above the high end of Zillow’s outlook range
- IMT (Internet, Media, Technology) segment revenue reached $457 million—down 5% from a year ago but above the high end of Zillow’s outlook range
- Premier Agent revenue dropped 13% from a year ago to $312 billion, standing above the high end of Zillow’s outlook range, thanks primarily to conversion rates, customer connections and retention rates that were better than expected. The decrease was due to macro housing market factors, including the interest rate and increases in home prices, as well as low inventory.
- Rentals revenue rose 10% year over year to $74 million
- Mortgages segment revenue was near the high end of Zillow’s outlook range at $26 million, with purchase loan origination up 24% compared to the previous quarter.
- The wind-down of Zillow’s own iBuying business was complete as of September 30, 2022.
- Consolidated GAAP net loss was $53 million, while consolidated net loss from Zillow’s continuing operations was $51 million.
- Consolidated Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $130 million, above the high end of Zillow’s outlook range for Q3.
- Adjusted EBITDA by segment for continuing operations for Q3 was $164 million for IMT and $(27) million for Mortgages.
- Segment income (loss) before taxes from continuing operations was $5 million for IMT and $(51) million for Mortgages.
- In Q3, Zillow launched real-time tours in Atlanta, demonstrating their continued progress with its touring growth strategy.
- Q3 also introduced ShowingTime+, the product of Zillow’s acquisition of ShowingTime, to integrate and simplify its top-of-the-line technology offerings for agents, brokerages, and MLS. To date, nearly 90% of ShowingTime users, across more than 300 markets, have enabled this feature.
- Q3 traffic to Zillow’s mobile apps and websites was 236 million average monthly unique users—up 4% from a year ago.
- Zillow’s cash and investments of $3.5 billion at the end of the third quarter matched those of the previous quarter, after $176 million in share repurchases during Q3.
- Convertible debt at the end of Q3 was $1.7 billion.
Through our many years helping people dream and shop on Zillow, we feel confident that customers want the end-to-end, integrated transaction experience we’re building in our housing super app. We’re making progress in each of our growth initiatives: touring, financing, seller solutions, enhancing our partner network and integrating our services. Having a well-capitalized business that produces operating cash flow gives us an advantage in navigating the choppiness of the current housing market.
Anywhere Third Quarter 2022 Financial Results
Formerly known as Realogy, Anywhere Real Estate Inc., the largest full-service real estate services company in the U.S., released its Q3 2022 financial results.
Here are the highlights:
- Generated Revenue, at $1.8 billion, is down 17% from a year ago, due to lower homesale transaction volume and the absence of $99 million in revenue at Title Group, a consequence of Anywhere’s sale of the Title Insurance Underwriter during Q1 2022.
- Reported Net income was $55 million—down $59 million from a year ago—with basic earnings per share of $0.49.
- Generated Operating EBITDA was $166 million—down $107 million from a year ago, mainly due to a drop in homesale transaction volume and an uptick in legal accruals.
- Anywhere is on track to deliver the previously committed cost savings of $140 million and raised their full year savings target to $150 million.
- Generated Cash Flow is at $99 million—down from $282 million for Q3 2021.
- Combined closed transaction volume dropped 17% year over year.
- Anywhere Advisors agent count increased by 7% year over year on a like for like basis, making this the ninth consecutive quarter of sequential growth.
- Anywhere was recognized by Forbes magazine as one of the World’s Best Employers for the second straight year.
In the third quarter Anywhere delivered meaningful profitability, even with an increasingly challenging housing backdrop. I believe Anywhere is well-positioned to lead through the current environment and into the future as we continue to strategically invest to grow our core business and simplify the consumer experience.
eXp World Holdings Third Quarter 2022 Financial Results
Closing out 2021 with its widely-known debt-free status, eXp World Holdings had a record third quarter with 12% revenue growth.
Here are the highlights from the report given by the holding company for eXp Realty® , Virbela and SUCCESS® Enterprises for the third quarter ending September 30:
- Q3 2022 Revenue increased 12% from Q3 2021 to $1.2 billion, with agent growth of 30%
- Gross profits surged 17% to $93.1 million
- Net income was $4.4 million, compared to the net income of $23.8million from Q3 2021.
- Earnings per diluted share amounted to $0.03 compared to $0.15 for Q3 2021.
- Adjusted EBITDA was $12.3 million, compared to $23.0 million for Q3 of 2021.
- Cash and cash equivalents totaled $134.5 million versus $98.1 million for Q3 2021.
- The Company repurchased about $59.8 million of common stock during Q3 2022.
- The Company also paid a cash dividend of $0.045 per share of common stock for Q3 2022.
- On October 27, 2022, the Company’s Board of Directors declared a $0.045 cash dividend per share of common stock for Q4 of 2022.
We continue to grow revenue and gain market share despite an increasingly challenging market. The third quarter reflects eXp’s resilient model and ability to grow through any market. We continued to strengthen our agent value proposition with new services, including Revenos and eXp Luxury as well as initiatives led by SUCCESS®, SUCCESS Health™ and SUCCESS Coaching™. Our scale enables us to provide a differentiated platform for agents with the extensive resources and tools they need to be successful, both professionally and personally. eXp continues to be an attractive model for leading teams and independent brokerages and we were pleased to welcome several during the quarter, helping drive agent count to over 85,000 today.
Offerpad Third Quarter 2022 Financial Results
A leading tech-enabled platform for residential real estate, Offerpad Solutions, Inc. (NYSE: OPAD) released their financial results for the third quarter of 2022. Here are the highlights:
- Revenue is at $821.7 million, up from $540.3 million for Q3 of 2021.
- Gross Profit is at $2.2 million, down from $53.1 million a year ago.
- Net Loss was $80.0 million, up from $15.3 million a year ago.
- Adjusted EBITDA was negative $64.3 million, compared to positive $6.1 million
- Offerpad achieved an average time from listing to sale of 97 days—below its 100-day target—and grew listing and buyer closings by 100% year over year.
- The company also earned a 93% customer satisfaction rating
Offerpad’s core strategy of providing a comprehensive suite of real estate solutions is more important than ever given the recent market volatility. Because of our diverse product offerings, including our asset-light listing service, Offerpad has continued to offer customers more certainty and control throughout this market transition. Our Flex listing and buying service increased from 7% of our transactions in the second quarter of 2020 to 29% of our transactions in the third quarter of 2022, highlighting the diversity of Offerpad’s business and the continued value we provide to customers. Despite the current market volatility, I firmly believe technology-enabled solutions that simplify the home ownership experience will define the future of real estate.
Opendoor Third Quarter 2022 Financial Results
As a leading e-commerce platform for residential real estate, Opendoor has had to repair its reputation after the FTC lawsuit. And its decision to partner with Zillow has no doubt helped with that. Meanwhile, its latest quarter financial results are available for skimming.
Here are the highlights:
- Revenue is at $3.4 billion—up 48% from Q3 2021
- With 8,520 total home sales—up 42% from Q3 2021.
- Gross (loss) profit of $(425) million—reflecting an inventory valuation adjustment of $573 million, compared to $202 million in Q3 2021—with a gross margin of (12.6%), compared to 8.9% in Q3 2021.
- Net loss is $(928) million—compared to $(57) million in Q3 2021.
- Adjusted Net Loss is $(328) million—compared to $(18) million in Q3 2021.
- Contributor (Loss) Profit is $(22) million—compared to $169 million in Q3 2021
- Contributor Margin is $(0.7)%, compared to 7.5% in Q3 2021.
- Adjusted EBITDA is $(211) million—compared to $35 million in Q3 2021
- Adjusted EBITDA Margin is (6.3)%, compared to 1.5% in 3Q21
- Opendoor’s inventory balance is 16,873 homes, totaling $6.1 billion in value—down (3)% compared to Q3 2021.
- Home purchases for Q3 2022 totaled 8,380—down (45)% from a year ago (Q3 2021)
- Opendoor ended the third quarter with 2,259 residential properties under contract—down (64)% compared to Q3 2021.
Navigating a once-in-forty-years market transition has required us to operate with urgency and discipline to manage risk and overall inventory health. In the third quarter, we accelerated the resale velocity of our existing inventory and have significantly increased spreads on new acquisitions. These actions ensure we are prioritizing sell-through to improve the health of our inventory on a resale basis, and that our post Q2 acquisition cohorts are positioned to perform inline with our contribution margin targets. Importantly, we are well-capitalized with the balance sheet to weather this rapid market transition and emerge even stronger. This moment has also enabled us to move aggressively towards our vision for the entire market, which is a trusted marketplace leveraging our platform to connect buyers and sellers. Today, we are launching that vision via Exclusives. Our belief is that by building a better, more efficient, and more transparent marketplace, we can improve the experience and outcomes for both buyers and sellers.
Redfin Third Quarter 2022 Financial Results
Redfin is cutting 13% of its workforce—a total of 862 positions—and pulling the plug on its iBuying division, Redfin Now. Their announcement came two days after Redfin stock plummeted to a record low.
That said, Redfin is certainly not alone in laying off staff or in shutting down its iBuyer program. As for its Q3 financial results, here are some of the highlights from Redfin’s report:
- Revenue was $600.5 million—an increase of 11% compared to Q3 2021.
- Gross profit was $58.1 million—a decrease of 54% compared to a year ago
- Real estate services gross profit was $54.9 million—a decrease of 43% compared to Q3 2021
- Real estate services gross margin was 26%, down from 37% in Q3 2021.
- Net loss was $90.2 million, compared to a net loss of $18.9 million in Q3 2021.
- Adjusted EBITDA loss was $51.0 million, compared to adjusted EBITDA income of $11.8 million for Q3 2021.
Laying off 862 colleagues and friends is heartbreaking. But I feel relief about closing RedfinNow with relatively low losses. We’re profoundly grateful for the dazzling entrepreneurs who built that business on a knife’s edge, but its appeal to consumers has waned as the market turned. Home prices will at some point stabilize but the cost of capital isn’t going back to 2021 levels any time soon, and this is a major why RedfinNow offers had already gotten so low. Redfin will have more cash and sell more properties by focusing on growth in our online audience, low fees, and better brokerage, mortgage and title service. Already, our share of real estate traffic and home sales is increasing. Loyalty sales and the rate at which Redfin customers stuck with us for a sale also both increased in the third quarter, as did mortgage and title attach rates. The year after we bought it in bankruptcy, our Rent business is growing instead of declining. Housing companies are in the jungle now, but Redfin has been there before and come out stronger. We’ll generate adjusted EBITDA in 2023 and net income in 2024.
Rocket Companies Third Quarter 2022 Financial Results
Rocket Companies, Inc. just released their financial results for the third quarter of 2023. The Detroit-based FinTech platform includes a full suite of real estate and financing services with Rocket Mortgage, Rocket Homes, Rocket Money, and Rocket Loans.
Here are the highlights of their latest report:
- Net revenue is $1.3 billion, delivering a net income of $96 million—or $0.04 per diluted share
- Mortgage origination closed loan volume hit $25.6 billion; gain on sale margin was 2.69%
- Total liquidity is up by $1.5 billion to $8.8 billion—including $4 in available cash, $3.1 billion of undrawn lines of credit, and $1.7 billion of undrawn MSR lines
- Their new loyalty program, Rocket Rewards, launched at the end of October, allows clients to bank points for taking specific actions; those points can then be redeemed on financial transactions with Rocket.
This period of change and reset in the mortgage industry creates significant opportunity for Rocket. The company operates from a position of strength, which is clear from our $8.8 billion of liquidity and differentiated competitive advantages in brand, technology, data insights, client experience and client engagement. We are actively investing in the Rocket Platform to attract more consumers, lift conversion and lower client acquisition cost. This week, we launched Rocket Rewards, our new loyalty program and a key component of our platform. We expect our new offerings and investments to unlock the true growth potential and scale of Rocket.
Re/Max Third Quarter 2022 Financial Results
RE/MAX Holdings, Inc. (NYSE: RMAX), the parent company of RE/MAX and Motto Mortgage, announced its operating results for the quarter ending September 30th. Here are the highlights:
- Total Revenue dropped 2.3% to $88.9 million
- Revenue excluding the Marketing Funds dropped 2.2% to $66.2 million, driven by negative 4.9% organic growth and adverse foreign currency movements of 0.5%, partially offset by 3.2% growth attributable to acquisitions
- Net income attributable to RE/MAX Holdings, Inc. of $0.1 million and income per diluted share (GAAP EPS) of $0.01
- Adjusted EBITDA dropped 9.5% to $31.5 million. Adjusted EBITDA margin of 35.4% and Adjusted earnings per diluted share (Adjusted EPS3) of $0.56
- Total agent count rose 2.4% to 144,300 agents
- U.S. and Canada combined agent count dropped 0.6% agents to 85,133 agents
Our third-quarter results showed solid performance, driven by our 2021 RE/MAX INTEGRA acquisition and growing mortgage business, which helped offset the impact from increasingly difficult housing market conditions. We expect our strategic growth initiatives to provide similar benefits in the coming quarters. While not immune to the impact of shifting housing conditions, we believe our 50-year track record amply shows we are insulated far better and are more resilient than most. Simply put, our business is built to last.
From 2010 to 2021, U.S. housing experienced markets at both ends of the spectrum…During this time period, the number of U.S. home sales went up and down as did the average transaction sides per agent. But RE/MAX agents consistently outproduced the competition at large brokerages more than 2 to 1, according to the REALTrends 500 survey citing transaction sides at the largest participating U.S. brokerages.
Fathom Third Quarter 2022 Financial Results
Fathom Holdings Inc., a national platform integrating residential brokerage, mortgage, title, insurance, and SaaS offerings, announced financial results for Q3 2022.
Here are the highlights:
- Total revenue increased 10.2% for the third quarter to $111.3 million, compared to $100.9 million for Q3 2021.
- GAAP net loss was $6.0 million, or a loss of $0.38 per share, compared to the previous year’s GAAP net loss of $3.4 million, or a loss of $0.24 per share for the third quarter.
- Adjusted EBITDA loss (a non-GAAP measure), was $2.3 million for Q3 2022, compared to $1.8 million for Q3 2021.
- Fathom completed 12,077 real estate transactions for Q3 2022, 5% more than Q3 2021
- Total agent count rose approximately 33% to 9,991 agents—up from 7,536 a year ago
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Prepare for the Future
Knowing how the big players in the real estate industry are doing and what they’re doing to adapt to today’s market can help you understand what it takes to be resilient in this business. Resilience is what makes these companies stand out.
Even when the numbers suggest a step or two back when it comes to profit, companies like Compass, eXp, and Redfin (to name just three) are still big players because they keep the long game in mind. Losses are as much a part of that game as gains are.
Pay close attention to the companies that showcase real resilience during this tough market. But don’t forget to also learn what you can from the companies and agents that fall too far behind.