Proptech’s Q3 2020 Earnings Radar
Without further ado…
Zillow continues to blaze a trail with CEO Rich Barton speaking to the “Great Reshuffling” that 2020 has brought. The team is very much focused on adding “ecosystem economics” (aka ancillary services) to its massive audience. Zillow’s agile business model remains impressive, allowing them to capitalize on its monumental levels of engagement.
- Total consolidated revenue of $657 million and revenue for all three segments exceeded the high end of the company’s revenue outlook for the third quarter.
- Zillow’s “Homes” segment, which includes its home-buying and selling arm Zillow Offers, brought in $187.1 million in revenue with a loss of $75.6 million before income taxes.
- Revenue dropped 51% due to a pause on home-buying activities in early 2020 (because of the pandemic – they even stopped Zillow Offers) but the business is now active in all 25 markets.
- The company sold 583 homes, purchased 808 homes and ended the quarter with 665 homes on its balance sheet, an increase of 440 Q2.
- Zillow Offers also saw a streamlining of personnel with 80 people losing their positions in an effort to refine its management structure.
- Traffic reached a record 236 million average monthly unique users, an increase of 21% year over year, driving 2.8 billion visits during the quarter, an increase of 32% year over year.
- The company exited the quarter with the highest cash and investments balance in its history, growing cash and investments to $3.8 billion from $3.5 billion at the end of Q2 2020.
Newscorp maintained a sanguine tone in summarising this quarter, namely around their premium content which they believe allowed them to maintain a “robust balance sheet” according to Chief Exec, Robert Thomson. In reality, Move’s (owner of Realtor.com) revenues in the quarter were impacted by COVID-19 and dropped 2% ($3 million) in comparison to Q3, 2019. Real estate revenues accounted for the majority of Move’s revenues across the board, per below.
- Move’s revenues in the quarter decreased 2% to $118 million from $121 million in the prior year, due to an estimated $6 million negative impact from COVID-19
- Real estate revenues, which represented 81% of total Move revenues, were flat as growth in its performance-based Opcity product was offset by lower revenues from its lead generation product resulting from the transfer of leads to Opcity and customer billing relief measures instituted in March related to COVID-19.
- Based on Move’s internal data, average monthly unique users of realtor.com’s web and mobile sites for the fiscal third quarter grew 6% year-over-year to approximately 68 million.
Learn more:Press Release
Redfin’s reported gains in their march to increasing market share. Their mortgage business generated its first profit and they proudly boasted about the technology has been over a decade in the making. That’s important to note given there are a lot of “me-too” ancillary services plays being made.
- Revenue decreased 1% year-over-year to $237 million during the third quarter. Gross profit was $93 million, an increase of 74% from $53 million in the third quarter of 2019.
- Real estate services gross profit was $92 million, an increase of 70% from $54 million in the third quarter of 2019. Real estate services gross margin was 44%, compared to 35% in the third quarter of 2019.
- Reached market share of 1.04% of U.S. existing home sales by value in the third quarter of 2020, an increase of .08 percentage points from the third quarter of 2019.
- Grew visitors to their website and mobile application by 38% compared to the third quarter of 2019.
RE/MAX spoke to the strength of its strategy in Q3 and commented upon the “remarkable” nature of the US housing market currently. Their agent count outside the US and Canada passed the 50,000 mark, and has now doubled in just five years. $3.6 million in profit is a highlight in a down revenue quarter.
- Total agent count increased 5.1% to 134,769 agents.
- U.S. and Canada combined agent count decreased 0.3% to 83,802 agents.
- Total open Motto Mortgage franchises increased 27.9% to 133 offices.
- Total Revenue of $71.1 million; Revenue excluding the Marketing Funds increased 0.5% to $53.8 million.
- Net income attributable to RE/MAX Holdings, Inc. of $3.6 million and earnings per diluted share (GAAP EPS) of $0.19.
eXp World Holdings is the standout in the pack, with revenues increasing 100% in comparison to Q3, 2019. Founder & CEO Glenn Sanford spoke to their “long-held, agent-first and cloud-based approach to business” as the determining factor in a remarkable quarter for the company. With both transaction and sales volumes significantly up, the future looks bright.
- Revenue increased by 100% to a record $564.0 million in the third quarter of 2020, compared to $282.2 million in the third quarter of 2019.
- Gross profit increased 103% to $46.8 million in the third quarter of 2020, compared to $23.0 million in the third quarter of 2019.
- Net income was $14.9 million, or $0.20 per diluted share, in the third quarter of 2020, compared to a net loss of $1.8 million, or $(0.03) per diluted share, in the third quarter of 2019. The third quarter of 2020 represents the most profitable quarter in the Company’s history.
Realogy boasted its best revenues in Q3 in history while trying to reduce a considerable debt which blots their copybook. President and CEO Ryan Schneider remained stoic under the realities of a company that is doing its best to balance its books.
- Generated revenue of $1.9 billion, an increase of 20% or $307 million year-over-year.
- Reported Net income of $145 million from continuing operations and Net income of $98 million including discontinued operations.
- Title and mortgage continued to contribute meaningfully to our business results, generating approximately $95 million in third quarter Operating EBITDA.
- Strengthened the balance sheet reducing net debt by $276 million vs. third quarter 2019
CoStar reported a strong showing in Q3 which continues their strong Q2 performance. For the third quarter in a row, set record levels of traffic to their online platforms, no doubt indicative of the current climate and the remote world many are currently in. The acquisition of Emporis will bolster their international efforts for the CoStar Suite international platform.
- Q3 revenue of $426 million, an increase of 21% over revenue of $353 million for the third quarter of 2019.
- Net income for the third quarter of 2020 was $58 million, or $1.48 per diluted share.
- Completed the acquisition of Emporis, a Germany-based provider of international commercial real estate data and images.
Learn more: Press Release.
The marketplace remains undeniably countercyclical: As we remarked following Q2 results, the real estate space is buoyed by the simple facts of rent and mortgage payments being unavoidable financial obligations. The giant leaps in unique users on these platforms indicate the continued level of strong housing interest across the board. The success of eXp comes because they were built for the office-less world the pandemic has brought and Zillow is a trusted brand for those seeking value in uncertain times. Real estate made a big comeback this quarter.