BAM Key Details:
- As we hit the middle of the third quarter, BAM presents the highlights of the Q2 2023 financial results for ten of the biggest names in the real estate industry.
We’re over halfway through 2023, and ten of the biggest names in the industry have released their Q2 financial results:
- Black Knight
- Real Brokerage
Read on for the highlights, some of which might surprise you.
Zillow shared its Q2 2023 financial results within a week of announcing a strategic partnership with Redfin to help builders and buyers connect. Zillow Group’s Q2 results exceeded their own outlook for revenue and Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).
- Q2 revenue totaled $506 million, rising above the midpoint of Zillow’s outlook range by $41 million.
- Residential revenue declined 3% year over year to $380 million, outperforming the high end of the company’s expectations and the industry’s total transaction dollar decline of 22%, as Zillow delivered a higher-than-expected number of connections to Premier Agent partners.
- Rentals revenue increased 28% from Q2 2022 to $91 million as Zillow continued to see strong growth and traffic in multifamily properties.
- Mortgages revenue of $24 million fell 17% year over year due to the impact of higher interest rates on demand. Q2 purchase loan origination volumes rose 30% sequentially from the previous quarter (Q1 2023) and 73% from a year ago (Q2 2022).
- On a GAAP basis, net loss amounted to $35 million in Q2.
- Q2 Adjusted EBITDA was $111 million—$40 million above the midpoint of Zillow’s outlook range, primarily due to higher-than-expected residential revenue.
- During the second quarter, Jeremy Hofmann was promoted to Chief Financial Officer.
- Zillow also announced a new Appointment Center by ShowingTime+SM and Listing ShowcaseSM.
- Cash and investments amounted to $3.3 billion at the end of Q2 (June 30th), marking a slight drop from $3.4 billion at the end of the previous quarter (Q1 2023), after $150 million in share repurchases in the second quarter. Zillow just announced an additional repurchase authorization of $750 million, which brings the company’s available authorizations to a total of $1.0 billion.
- Traffic to Zillow mobile apps and websites in Q2 reached 226 million average monthly unique users—down 3% from a year earlier (Q2 2022). Visits during Q2 2023 were 2.7 billion—down 8% year over year.
Zillow outperformed the broader industry for the fourth consecutive quarter as we navigate a tough real estate market. I’m pleased with our steady progress on improving and integrating our customer and partner experiences, especially in touring, financing, and renting. The housing super app is coming into focus, opening up significant transaction TAM for the company and our shareholders.
On August 3rd, Black Knight, Inc. (NYSE: BKI) shared its Q2 2023 financial results as compared to those of last year’s second quarter. Black Knight leadership remains confident in the face of uncertainty, viewing this quarter’s results as symptomatic of temporary challenges.
- Revenues fell 7% to $368.2 million. Organic revenue dropped 4%.
- Operating income fell 21% to $60.7 million, with an operating margin of 16.5%, down from 19.5%.
- Net earnings attributable to Black Knight rose from 40.3 million to $55.3 million; Diluted EPS (earnings per share) were $0.35 compared to $0.26; Net earnings margin rose to 15.0% from 10.2%
- Adjusted EBITDA fell 16% to $160.5 million, with an Adjusted EBITDA margin of 43.6%, down from 48.3%. Adjusted EBITDA for the 2022 period includes $6.1 million from the TitlePoint line of business sold in January 2023.
- Adjusted operating income fell 19% to $122.8 million. Adjusted operating margin dropped from 38.3% to 33.4%. Adjusted operating income for the 2022 period includes $5.7 million from the TitlePoint line of business sold in January 2023.
- Adjusted net earnings fell 31% to $69.2 million. Adjusted EPS fell 32% to $0.44.
Our second quarter results were solid in the face of a very challenging operating environment. As we look ahead to the balance of the year, we remain focused on executing our strategic initiatives and improving the company’s performance, yet we acknowledge that market conditions remain uncertain. As such, we remain steadfast in our focus to control what we can control and provide innovative solutions and exceptional service to our clients to drive shareholder value over the long-term.
Our second quarter results reflect a weaker than expected mortgage market coupled with the near-term effects of the proposed merger with Intercontinental Exchange. Revenue declined 4% on an organic basis driven by lower origination volumes as well as indirect effects of the mortgage market on our Originations Software business. We remain very optimistic about our long-term growth opportunities and commitment to creating value for all stakeholders. I want to thank my Black Knight colleagues for their focus and contributions and our clients for the trust they place in us to help them achieve their strategic goals.
RE/MAX Holdings, Inc. released its Q2 2023 financial results on August 2nd.
- Total revenue dropped 10.6% to $82.4 million.
- Revenue excluding the Marketing Funds dropped 11.4% to $61.4 million, thanks to negative 10.5% organic growth and unfavorable foreign currency movements of 0.9%.
- Net income attributable to RE/MAX Holdings, Inc. amounted to $2.0 million and earnings per diluted share (GAAP EPS) of $0.11.
- Adjusted EBITDA dropped 24.2% to $26.6 million, with an Adjusted EBITDA margin of 32.3% and Adjusted earnings per diluted share (Adjusted EPS) of $0.40.
- Total agent count rose 0.4% to 144,510
- Combined agent count for the U.S. and Canada dropped 4.1% to 82,205 agents.
- Total open Motto Mortgage franchises grew 17.5% to 235 offices.
We were pleased to see continued RE/MAX agent count growth in Canada and our global regions during the second quarter. Despite industry headwinds, agent count in Canada has increased each month since February, and our overall international agent growth also accelerated in the second quarter. In the U.S., we remain focused on our growth initiatives, and we continue to build our related pipelines. The combination of higher interest rates and tight inventory has made for a challenging housing market and agent-recruiting-and-retention environment. On a positive note, the pace of our U.S. agent count losses slowed quarter over quarter – which is encouraging, given the market conditions.
Redfin announced its Q2 2023 financial results, with a loss in market share due to agent layoffs and the closure of RedfinNow. Leadership remains optimistic about the company’s future.
- Q2 revenue dropped 21% (relative to Q2 2022) to $275.6 million.
- Gross profit fell 10% year over year to $100.2 million.
- Real estate services gross profit dropped 24% to $56.2 million, with a real estate services gross profit margin of 31%—up from 29% in Q2 2022.
- Net loss was $27.4 million, down from a $78.1 million net loss for Q2 2022. Net loss attributable to common stock was $27.7 million. Net loss per share attributable to common stock, diluted, was $0.25—down from $0.73 in Q2 2022.
In a declining market, Redfin improved our second-quarter net income by $50 million. We expect to break-even on an adjusted-EBITDA basis over the next 12 months rather than in 2023, which is a setback, but still we project that our adjusted EBITDA this year will improve by more than $140 million. We lost market share due to one-time setbacks from agent layoffs and the closure of RedfinNow, but we expect to return to quarter-over-quarter gains in the second half, as Redfin.com has been competing better for traffic. The year-over-year change in visitors to Redfin.com was 17 points better in the second quarter than it was for the two largest portals to for-sale listings, an acceleration from our first-quarter advantage of 12 points. Gross margins in our core real-estate-services business improved by nearly two percentage points. We believe Redfin is set up for profitable growth.
Compass shared its Q2 2023 financial results on the seventh of August, starting with some good news from founder and CEO Robert Reffkin.
- Second quarter revenue fell 26% year over year to $1.5 billion as transactions fell 19% due to macroeconomic factors, combined with a drop in the price of the average Compass transaction—partly attributable to the shift in mix with fewer sales in high-end markets like California.
- Q2 2023 GAAP Net loss fell to $48 million—improving 53% year over year from a net loss of $101 million. Net loss for Q2 2023 includes $39 million in non-cash stock-based compensation expenses, $22 million in depreciation and amortization, and a $16 million restructuring charge for continued efficiency improvements.
- Adjusted EBITDA (a non-GAAP measure) jumped to $30 million in Q2 2023, up from $4 million one year ago—an improvement of $26 million at the same time revenue dropped by 26% due to macroeconomic factors.
- Operating Cash Flow & Free Cash Flow (a non-GAAP measure): Operating cash flow for Q2 2023 was $53 million while free cash flow was $51 million.
- Cash and cash equivalents at the end of Q2 2023 totaled $335 million, which included $150 million in cash resulting from a draw of their revolving credit facility in Q4 2022. That draw was repaid in July 2023.
I am pleased to say we are free-cash-flow positive in the second quarter of 2023. Additionally, national market share in Q2 2023 was 4.6% which marks the third consecutive quarter of market share gains, increasing 45 basis points over the period.
Compass continued to enhance its proprietary end-to-end platform with the launch of new features like Performance Tracker, Compass GPT integration as well as 1-click Title & Escrow. The non-GAAP Commissions expense as a percentage of revenue improved by approximately 38 basis points from the second quarter of last year when excluding the impact of the Agent Equity Program on the year ago period. High levels of principal agent retention continued with over 90% annualized retention in Q2 2023. Every month in the first half of the year, the number of principal agents the Company lost was less than the month before.
We had operating cash flow of $53 million and free cash flow of $51 million in Q2 2023. We have made up most of the free cash flow deficit from Q1 2023 and we believe we are in position to achieve our goal of being free cash flow positive for 2023. We ended the second quarter with $335 million in cash and cash equivalents including a $150 million draw from our revolving credit facility. Given our conviction on being free cash flow positive, in July we repaid the entire $150 million balance outstanding on the facility.
Real Brokerage is one of the latest to announce its second-quarter financial results for 2023:
- Revenue increased 65% (compared to Q2 2022) to $185.3 million.
- Gross profit rose 91% year over year to $17.8 million.
- Adjusted EBITDA profit reached $2.6 million—compared to a $583,000 loss in Q2 2022.
- Net loss attributable to owners of the Company dropped to $4.1 million from a $4.2 million net loss in Q2 2022.
- At $0.02, loss per share was unchanged from a year ago.
- Unrestricted cash and investments rose by $8.6 million during Q2 2023. As of June 30th, the Company held $17.2 million in cash, plus $10.9 million in investments in financial assets—not including $29.6 million in restricted cash associated with customer deposits.
- Pursuant to its normal course issuer bid, the Company repurchased 601,000 common shares for $806,000.
The second quarter was an inflection point for our company, with the achievement of adjusted EBITDA profitability earlier than anticipated, and I’m enormously proud of the work that our employees and agents have put in to get us here. Real now has an agent base that is more than twice the size it was a year ago, placing us in a strong position in the back half of the year. We are focused on executing Real’s mission to reinvent the way that consumers purchase homes, and I am excited to announce that we plan to release the first version of our new consumer app at our annual RISE conference in October later this year.
Here are the Q2 2023 financial results for eXp World Holdings.
- Q2 revenue fell 13% to $1.2 billion (compared to Q2 2022)
- Gross profit dropped 10% to $96.5 million
- Net income amounted to $9.4 million, with earnings per diluted share (EPS) of $0.06, unchanged from one year ago.
- Adjusted EBITDA (a non-GAAP financial measure) was $24.7 million.
- Cash and cash equivalents—as of June 30, 2023—totaled $124.7 million, up from $121.6 million for Q4 2022. The company repurchased roughly $48.8 million of common stock in Q2 2023.
- The Company paid a cash dividend of $0.045 per share of common stock for Q2 2023 on May 31, 2023. On July 28, 2023, the eXp Board of Directors declared a cash dividend of $0.05 per share of common stock for Q3 2023, to be paid September 4, 2023 to stockholders of record on August 18, 2023.
We are continually raising the bar on what it means to be the most agent-centric brokerage on the planet by constantly iterating our agent value proposition that delivers the best support and tools. Our agents’ feedback is critical in helping to determine and enhance programs. We have prioritized agent support through our reimagined eXpert Care Desk, which provides live support to agents 24/7. And in May, we launched Luna, the GPT-4 powered generative AI support agent, in direct response to aNPS feedback.
By consistently iterating on our agent value proposition along with our agent feedback, we are seeing strengthened agent Net Promoter Scores (aNPS), with second quarter aNPS up four percentage points year over year despite the challenging market.
We know that in a slower housing market, productivity is at the top of everyone’s minds. As the largest and most efficient independent brokerage in the industry, we have the scale and financial resources to fund new investments in agent productivity while others scale back. During the quarter, we deployed several new agent support systems, increased our onboarding support coverage to 24/7 and established a white glove premier service desk for our top contributors. We also accelerated our initiative to get our agents paid faster and are making good progress toward our objective of near-real time agent payouts.
Anywhere Real Estate, Inc. released its Q2 2023 financial results on July 25th.
- Generated Q2 revenue totaled $1.7 billion, down 22% year over year, largely due to 23% declines in home sale transaction volume compared to Q2 2022.
- Net income amounted to $19 million, with an Adjusted net income of $27 million.
- Operating EBITDA fell by $76 million year over year to $126 million.
- Commission splits in Q2 2023 rose only 32 basis points year over year, mainly due to improved competitive environment and proactive actions on the part of the Company.
- Realized Q2 cost savings amounted to about $50 million and roughly $100 million year-to-date and are expected to deliver $200 million for the whole of 2023.
- Free Cash Flow amounted to $105 million, compared to $70 million for Q2 2022.
- Senior Secured Leverage Ratio was 1.04x, and Net Debt Leverage Ratio was 6.5x.
In the midst of a challenging housing market, we delivered results in line with our expectations and continue to invest to set Anywhere up for an even stronger future. We are accelerating our strategy, which includes growing our high-margin franchise business, expanding our luxury leadership, simplifying and integrating the consumer transaction experience, and further transforming our cost base as we position Anywhere to lead real estate to what’s next.
Opendoor released its Q2 2023 financial results on August 3rd.
- Q2 revenue totaled $2.0 billion, down 53% from Q2 2022 and down 37% from Q1 2023
- Total homes sold amounted to 5,383—down 49% from Q2 2022 and down 35% from Q1 2023.
- Gross profit was $149 million, with a Gross Margin of 7.5%, compared to 11.6% in Q2 2022 and 5.4% in Q1 2023.
- Net income (loss) was $23 million, compared to $(54) million in Q2 2022 and $(101) million in Q1 2023.
- Adjusted Net (Loss) income was $(197) million, compared to $122 million in Q2 2022 and $(409) million in Q1 2023.
- Contribution (Loss) Profit was $(90) million, compared to $422 million in Q2 2022 and $(241) million in Q1 2023. Contribution Margin was (4.6)%, compared to 10.1% in Q2 2022 and (7.7)% in Q1 2023.
- Adjusted EBITDA was $(168) million, compared to $218 million in Q2 2022 and $(341) million in Q1 2023. Adjusted EBITDA Margin was (8.5)%, compared to 5.2% in Q2 2022 and (10.9)% in Q1 2023.
- Inventory balance totaled $1.1 billion, representing 3,558 homes—down (83)% from Q2 2022 and down (46)% from Q1 2023.
- Home purchases totaled 2,680—down (81)% from Q2 2022 and up 53% compared to Q1 2023.
- Ended Q2 2023 with 1,390 homes under contract for purchase—down (82)% from Q2 2022 and up 22% from Q1 2023.
We exceeded the high end of our guidance in the second quarter as we continue to focus on what we can control and operate with discipline in this environment. Our results reflect the progress we’ve made in strengthening our offering, driving cost efficiencies and managing risk. We expect the third quarter to mark our return to positive contribution margin levels. As of quarter end, 99% of the homes we made offers on between March and June of last year were sold or under resale contract and our new book of inventory is generating positive unit economics in what continues to be an uncertain time in the U.S. housing market. We believe the actions we are taking will allow us to emerge from this cycle more resilient and positioned for market leadership and long-term profitability.
Offerpad’s Q2 2023 financial results landed on August 2nd and revealed a 205% quarterly increase in Gross Profit.
- At 9.7%, gross margin is at its highest since Q3 2021.
- Gross margin per home sold on homes purchased after September 1, 2022 reached 13.5%.
- Contribution margin after interest per home sold on homes purchased after September 1, 2022 reached 9.5%, well above Offerpad’s 3% to 6% target range.
- Inventory aged over 180 days dropped to less than 2%, well below Offerpad’s 10% target.
- Home acquisition volume increased from 364 homes in Q1 2023 to 840 in Q2.
The combination of completing the sale of our legacy inventory and the high-quality homes currently on our balance sheet provides a strong foundation for performance going forward. The favorable quarter-over-quarter trends we saw during the first half of this year support our expectation to achieve positive Adjusted EBITDA by year-end.