Realogy Holdings Corporation, the largest residential real estate company in the U.S. by sales volume through its brokerage brands Better Homes and Gardens Real Estate, Coldwell Banker, Corcoran, Century 21, Sotheby’s International Realty, ERA, Citi Habitats, Climb Real Estate and ZipRealty, reported $1.68 billion in revenue in the third quarter of 2018, a year-over-year increase of $2 million according to its third-quarter earnings report released Friday.
The company’s earnings per share value was $0.84, below the Zacks Consensus Estimate of $0.91 per share (adjusted for non-recurring items), a miss of 7.69 percent. However, it was still up from earnings of $0.71 in the third quarter of 2017.
In a conference call covering the earnings on Friday morning, the company announced Anthony Hull, chief financial officer and executive president, is retiring.
“[Hull] has had a tremendous positive impact on Realogy over the past 15 years,” Ryan Schneider, the president and CEO of Realogy Holdings Corp said, in a statement. “He has helped Realogy navigate through both market booms and downturns, including the Great Recession. He led Realogy’s successful 2012 IPO, and since then has guided Realogy as a public company.”
Hull will remain on as a senior advisor until March 31, 2019. In the interim, longtime finance leader Timothy Gustavson will serve as interim CFO and treasurer while the company begins the search for a longterm replacement.
Last quarter, Realogy announced it would begin standardizing its commission plan – with less branch level differentiation – in a move designed to attract more top talent and accelerate growth. The new commission plan is now live in California, Texas and Colorado and being piloted in three other markets. Realogy experts to pilot the new plan in “more than a dozen” other markets by the end of 2018.
“This initiative is all about growth,” said Schneider. “We are leveraging these new plans to attract more agents quickly while allowing our existing agents to continues on their existing plans or explore the new plans where appropriate.”
The real estate franchisor increased its transaction volume by 1 percent, which was the industry average for the same time period according to the National Association of Realtors (NAR).
Realogy’s 193,600 affiliated agents closed 403,000 home sale transaction sides, for a transaction volume of approximately $143 billion.
However, due to a slowdown in home sales, transaction volume was still two percentage points below the low end of the guidance range provided in August.
Overall, Realogy finished the quarter with a net income of $103 million, compared to $95 million in the third quarter of 2017. Operating earnings before interest, tax, depreciation and amortization fell to $242 million, a decrease of $16 million compared with the third quarter of 2017.
“This quarter we generated substantial revenue, operating EBITDA and free cash flow, as well as maintained our market share, all despite the past few months of housing market softness,” Schneider said in a release. “We remain optimistic about the future and continue to invest to drive top and bottom line growth. We are launching two new franchise brands to grow our franchise revenue, enhancing our value to agents with new products and expanding our use of technology and data.”
Listing concierge, a product where agents can pay Realogy per listing to provide a “white-glove” marketing plan – including aerial photography and video, professional copywriting and social media boosts – is now live in California, Texas and Colorado. Agents in those markets are electing these packages on more than one-third of the listings.
In September, Realogy announced a partnership with Home Partners of America, to launch “cataLIST Cash Offer,” an iBuyer program where agents can provide listing clients with an all-cash offer from Home Partners of America, which uses Realogy agents in both the purchase and resale of the home. It’s live in Dallas and will be live in Atlanta and Tampa as well, by the end of the year.
“It’s designed from start to finish to keep real estate agents in the transaction and equip them with another product to ensure they can serve all potential customer needs,” Schneider said.
