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Real estate franchisor Anywhere’s revenue decreased 3 percent year over year to $1.3 billion, as market headwinds continued to stifle transaction growth during the third quarter.
From July 1 to September 30, Anywhere’s annual closed transaction volume growth remained flat, with units down 5 percent and prices up 6 percent compared to Q3 2023. The period breaks a two-quarter transaction volume growth streak.
However, a rebound is possible, executives said, as preliminary adjusted performance for October showed a 9 percent year-over-year increase in closed transaction volume and a 16 percent year-over-year increase in open transaction volume.
Anywhere’s annual net income and adjusted net income declined by double-digits during the quarter. Net income declined 95 percent to $7 million while adjusted net income declined 65 percent to $6 million, executive said.
Despite a weakened Q3 performance, which was impacted by continued payments toward its approved commission lawsuit settlement and a 1999 legacy tax matter involving its former parent company, Cendant, Anywhere President and CEO Ryan Schneider said he’s still bullish about the company’s future growth.
Ryan Schneider
“I am proud of our third quarter performance as Anywhere delivered strong Operating EBITDA and free cash flow, invested meaningfully in the business for future growth, gained luxury share, and strengthened our balance sheet,” Schneider said in a statement. “Anywhere stands out because of our strategic strengths and profitability, along with our outstanding affiliated agents, franchisees, and employees who continue to deliver great value to consumers as we move real estate to what’s next.”
Anywhere Executive Vice President, Chief Financial Officer and Treasurer Charlotte Simonelli echoed Schneider’s sentiments, noting $99 million in free cash flow (+4 percent y-o-y), realized cost savings of $30 million, and an operating earnings before interest, taxes, depreciation and amortization (EBITDA) of $94 million (-12 percent y-o-y).
Anywhere was one of the first major real estate companies to settle in the commission lawsuits, agreeing to pay $83.5 million. The franchisor paid $10 million toward the settlement in Q4 2023 and another $20 million in Q2 2024. The company will pay the remaining $53.5 million when appeals are resolved, Simonelli said.
Charlotte Simonelli
“Anywhere delivered differentiated profitability, optimized our balance sheet, and drove efficiencies to fuel even greater financial octane and flexibility for the future,” she said in a statement. “We are capitalizing on this moment to accelerate our strategic progress, invest in our future and set Anywhere up for growth and further competitive differentiation as the housing market improves.”
During the earnings call, Schneider dialed in on the company’s preliminary adjusted performance results for October, which is the first month of Q4. The CEO said he was surprised by strong closed and open transaction volume, despite mortgage rates creeping back to the 7 percent range.
“One month doesn’t make a trend. We hope these strong results are the first step in an improving trend that the U.S. housing market clearly needs,” he said. “We are in a strong position to capitalize on both near-term and medium-term improvements in the housing market. We’ve demonstrated our ability to generate meaningful EBITDA and free cash flow in this very difficult market, and are excited by our financial octane as the market improves.”
Schneider praised Sotheby’s International Realty and Anywhere’s corporate luxury brands for outperforming the market with 5 percent volume growth. The luxury segment helped bolster agent commission splits to 80.4 percent — the 10th-straight quarter of stable commission splits at approximately 80 percent.
“Our Coldwell Banker global luxury agents continue to do great, including the highest sale ever in Miami at $122 million,” he said. “And we have over 250 closed transactions above $10 million in the quarter, with multiple record sales in different geographies, and we currently have over 1,100 listings above $10 million.”
The CEO said the company will continue to deliver on its promise of creating a seamless, digitized transaction experience with bundled title, mortgage and insurance services, integrated transaction coordination, and a huge investment in generative artificial intelligence. The company already added generative AI capabilities to its Listing Concierge platform, which generated successful marketing plans for 12,000 listings during the quarter.
“We also continue to use generative AI to improve our operational efficiency,” he said. “…We believe nearly every area of our operations can benefit from generative AI to deliver these better experiences for our customers, both faster than we can today and at lower costs. We’re excited to see our teams experiment with these opportunities in brokerage and title operations, in our lead generation business, in our relocation business, and in functional areas like [human resources] and finance.”
As 2024 draws to a close, Schneider said Anywhere is still confident about transaction and commission trends, as the company sees a resurgence in buyer demand and activity across the East and West Coasts. As for the brewing battle over the National Association of Realtors’ Clear Cooperation Policy, Schneider said the company supports making amendments but rejects calls to repeal the rule, which requires brokers to place a listing to their multiple listing services within one business day of marketing a property to the public.
Getting rid of CCP, he said, would restrict consumer choice and give certain brokerages an unfair competitive advantage.
“The real industry debate is who’s going to win if this thing gets repealed. The reality is we have more listings than anybody does and so if this thing got repealed, we could be the biggest beneficiary, even if we don’t think that’s the right answer,” he said. “But the message I share with my team, my agents, my franchisees is if it does get repealed and the market shifts, we will be advantaged because of our scale in listings and our networks. And bluntly, I’m not going to sit here and let someone else have an advantage and put our agents and franchisees at a disadvantage.”
English (US) · 