• Revenue: $1.5 billion for Q3 2024.
• Operating EBITDA: $94 million, a decrease of $13 million year-over-year.
• Free Cash Flow: $99 million for Q3 2024.
• Cost Savings: $30 million realized in Q3; $90 million year-to-date, on track for $120 million for the full year.
• Agent Commission Splits: 80.4%, up 15 basis points year-over-year.
• Term Loan A Repayment: $196 million repaid using cash and revolver borrowings.
• Senior Notes Repurchase: $26 million repurchased for $19 million, capturing $7 million of discount.
• Franchise Expansion: 17 new franchisees added in Q3.
• Luxury Portfolio Performance: 5% volume growth in Q3.
• Title Purchase Closings: Down 3% year-over-year; refinancing increased 15%.

• Warning! GuruFocus has detected 4 Warning Signs with HOUS.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Anywhere Real Estate Inc (NYSE:HOUS) delivered strong EBITDA and free cash flow in a challenging housing market, with $1.5 billion in revenue and $94 million in operating EBITDA for Q3 2024.
• The company achieved $30 million in cost savings during Q3 and is on track to meet its $120 million cost savings target for the year.
• Anywhere Real Estate Inc (NYSE:HOUS) saw significant growth in its luxury portfolio, with a 5% volume increase and over 250 closed transactions above $10 million in Q3.
• The company expanded its high-margin franchise business by adding 17 new franchisees in Q3, further strengthening its network.
• The integration of brokerage and title services is on track, enhancing agent support and improving transaction efficiency, which is expected to increase agent and client satisfaction.

Negative Points

• Anywhere Real Estate Inc (NYSE:HOUS) faces significant one-time cash flow headwinds, including an $83.5 million litigation settlement and a $40 million legacy tax matter.
• Q3 operating EBITDA decreased by $13 million year-over-year due to lower revenue and increased legal expenses.
• The company's closed transaction volume was flat year-over-year, with a decline in units offset by rising prices.
• Certain geographic markets, such as Florida and New York City, experienced tougher conditions in Q3, impacting overall performance.
• The company incurred higher operating expenses in Q3, partly due to employee-related costs and legal expenses, which were called out as material.

Q & A Highlights

Q: Can you provide your perspective on the current state of the housing market and the clear cooperation policy? A: Ryan Schneider, CEO, expressed excitement about the housing market, noting that October's closed volume was up 9% year-over-year, with open volume up 16%. He highlighted that this growth is better than current forecasts. Regarding the clear cooperation policy, Schneider stated that Anywhere Real Estate does not support rescinding it, as it ensures equal access to inventory. He acknowledged that repealing it could advantage large brokers but emphasized that Anywhere Real Estate would be well-positioned to benefit if changes occur.

Q: What are you observing regarding buy-side commission rates following the August 17 change? A: Ryan Schneider noted that Anywhere Real Estate is transparent about commission rates, which were down 4 to 5 basis points this quarter. He mentioned that the decrease is consistent with previous quarters and is influenced by various factors, including prior year comparisons and business mix.

Q: Can you elaborate on the October trends and the impact of mortgage rates on home sale demand? A: Ryan Schneider observed that despite mortgage rates rising above 6.5%, October showed consistent positive trends across the month. He highlighted improvements in markets like Florida and California, with strong performance in both units and prices, suggesting a potential positive shift in the housing market.

Q: How do you see AI impacting the real estate industry, particularly regarding fees and agent efficiency? A: Ryan Schneider believes AI will integrate across all operations, driving substantial operational efficiency, lower costs, and better experiences. He anticipates AI will enable agents to focus more on generating business and expects it to contribute to a reduction in the number of agents in the industry.

Q: Could you clarify the nature of the employee and legal expenses in the quarter? A: Charlotte Simonelli, CFO, explained that employee-related expenses were consistent with expectations, with a prior year comp issue affecting comparisons. Legal expenses were higher than anticipated and considered one-time in nature, prompting her to highlight them in the earnings call.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.