Proptech’s Q2 2020 Earnings Radar
The (second quarter) results are in for proptech’s public companies in 2020. We’re trying something new: synthesizing the most relevant topline information from the sector’s financial reports and balance sheets. It’s safe to say the market remains robust during this time of uncertainty, but the underlying message of “proceed with caution” isn’t lost on us…
Zillow reported a strong second quarter, with its total consolidated revenue growing 28% year over year to $768 million. With Zillow’s stock price nearly doubling since a slump in February, Zillow really is the trailblazer in the sector and has the numbers to back it up.
- Its Homes segment delivered $454 million in revenue. That’s up 82% compared to this time last year, but a drop of more than 40% from Q1 ($769,873).
- Premier Agent year-over-year revenue decreased 17% to $192 million, primarily due to the impact of COVID-19.
- Traffic to Zillow Group’s mobile app and websites reached a record 218 million average monthly unique users.
- The company exited the quarter with its highest cash balance in history, growing cash and investments from $2.6 billion to $3.5 billion.
Newscorp’s business has clearly been struck by COVID-19, with revenues declining by $1.92 billion, a 22% drop compared to $2.47 billion in the prior year. Move, (operator of realtor.com), reported an increase in its profit contribution in the fourth quarter and saw record traffic in June, with over 30% growth in unique users.
- Net loss for the quarter was $401 million compared to $42 million the prior year, reflecting $292 million of non-cash impairment charges, primarily related to fixed assets in the U.K. and Australia, higher restructuring costs due to COVID-19, and lower Total Segment EBITDA.
- Newscorp reported fourth quarter Total Segment EBITDA of $195 million, a 28% decline compared to $269 million in the prior year.
- Net loss per share attributable to News Corporation stockholders was $(0.67) as compared to $(0.09) in the prior year.
- Realtor.com reported a decline in revenue of 10 percent year over year, to $111 million.
- For 2020, Move’s real estate revenues, which represented 81 percent of all Move revenues, increased 2 percent from FY 2019. [SOURCE]
- News Corp.’s digital real estate services segment saw revenues decrease 4 percent year-over-year from $272 million to $261 million in Q2 2020. [SOURCE]
Redfin’s revenue increased 8% year over year to $214 million during the second quarter, as CEO Glenn Kelman remarked that the company “blew away” its quarterly targets. He added a note of caution about the market’s “tornado” like volatility and remarked that Redfin is “mindful that the bottom of the economy could fall out a second time.”
- Operating expenses were $50 million, a decrease of 17% from $61 million in Q1.
- Net loss was $6.6 million compared to $12.6 million in Q2 in 2019.
- Redfin reached market share of 0.93% of existing U.S. home sales by value in Q2.
RE/MAX reported a near $20 million dollar decrease in revenue compared to the second quarter of 2019—its $52.2 million Q2 2020 revenue represents a 26.9% drop from $71.4 million in Q2 2019. CEO Adam Cantos cited the “strength” of RE/MAX’s business model as why he believes they weather the impact of COVID-19 and continue to expand their value proposition.
- Total agent count increased by 3.8% (in comparison to Q2 2019) to 131,905.
- RE/MAX’s recurring revenue streams (which consist of continuing franchise fees and annual dues) decreased $8.2 million compared to the second quarter of 2019 and accounted for 63.0% of revenue.
- Adjusted basic and diluted EPS were each $0.38 compared to $0.65 per share each for the second quarter of 2019.
- Adjusted EBITDA was $18.9 million for the second quarter of 2020, a decrease of $11.0 million or 36.7% from the second quarter of 2019.
eXp World Holdings reported its most profitable quarter in the company’s history with net income of $8.3 million in the second quarter. Quarterly revenue also grew 33% year over year to $354 million due largely to its strength in agent count and transactions. Worth noting its cloud-based model operating on VirBELA, a platform perfectly suited to the socially distanced landscape that brokerages are now competing in.
- Net income was $8.3 million, or $0.11 per diluted share in the second quarter of 2020, compared to a net loss of $2.2 million, or $0.04 per diluted share, in the second quarter of 2019.
- Adjusted EBITDA (a non-GAAP financial measure) was $13.6 million in the second quarter of 2020, compared to $3.8 million in the second quarter of 2019.
- Cash flow from operations increased 57% to $28.5 million in the second quarter of 2020, compared to $18.1 million in the second quarter of 2019.
Realogy’s message was a stoic one as CEO Ryan Schenider remarked on their efforts to “enhance” their digital tech offerings and investment in “strategic priorities.” It’s clear the turbulent environment has impacted on Realogy’s revenue but their team has taken proactive steps to strengthen the company’s balance sheet.
- Realogy generated Revenue of $1.2 billion, a decrease of 27% or $457 million year-over-year.
- The GRA mortgage JV continued to contribute meaningfully to Realogy’s business results, generating $35 million in Operating EBITDA in the second quarter.
- The company strengthened the balance sheet and improved its debt maturity profile by refinancing its 2021 unsecured notes with new 2025 senior secured second-lien notes.
CoStar reported impressive revenue increases, up 16% year over year. A record sales month, $2.7 billion dollars raised in the equity and debt market and the acquisition of Ten-X are clear indicators of results that founder and CEO Andrew C. Florance describes as “countercyclical.” He also remarked on a13% increase in unique monthly users visiting Apartments.com and LoopNet marketplaces compared to Q1 (55 million users).
- Revenue was $397 million, an increase of 16% over the $344 million for Q2 of 2019.
- Net income for the second quarter of 2020 was $60 million, or $1.60 per diluted share.
- Adjusted EBITDA was $129 million, an increase of 17% compared to adjusted EBITDA of $110 million for the second quarter from a year ago.
With a number of these companies reporting impressive revenue and earnings, it’s clear that the real estate markets navigated the pandemic incredibly well. Notable trends for a number of these companies include the growth in online traffic, alongside impressive adjusted EBITDA numbers. The undoubted optimism that exists continues to buoy the sector, but it’s clear that a sense of caution remains important in such a volatile period for the market. Despite the nationwide impact of the pandemic, the market remains a stalwart of the American economy—the basic fact that people must continue to pay rent and mortgages means our industry will continue drumming along.