• Revenue: $1.7 billion in Q2 2024, flat versus prior year.
• Operating EBITDA: $139 million, an increase of $13 million year over year.
• Cost Savings: Approximately $30 million in Q2; full-year target increased to $120 million.
• Transaction Volume Growth: 3% year over year.
• Free Cash Flow: $83 million in Q2, excluding a $20 million litigation settlement payment.
• Cash on Hand: $128 million at the end of Q2.
• Commission Splits: 80.5% in Q2, up 40 basis points year over year.
• Core Franchise Margins: Approximately 73% in Q2, the strongest performance over the last seven quarters.
• Luxury Portfolio Price Growth: 8% price growth in the portfolio versus the prior year.
• New Franchisees: Over 15 new franchisees joined in Q2.

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

Release Date: August 01, 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 $1.7 billion in revenue and $139 million in operating EBITDA for Q2 2024, demonstrating strong financial performance.
• The company achieved approximately $30 million in cost savings during the quarter and increased its full-year savings target to $120 million.
• Transaction volume grew by 3% year over year, consistent with market results, indicating resilience in a challenging market.
• Luxury segments, particularly Corcoran and Sotheby's International Realty brands, outperformed the market with positive year-over-year unit growth.
• The company generated $83 million in free cash flow in the quarter, excluding a $20 million litigation settlement payment, showcasing strong cash flow management.

Negative Points

• The real estate market remains challenging with macroeconomic uncertainties, including elevated mortgage rates and limited supply, impacting home sale transactions.
• 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.
• Unit transactions declined in about 40 states, including major markets like California, Texas, and Florida, due to high interest rates and supply constraints.
• The company's relocation business experienced lower client volumes, contributing to a decrease in operating EBITDA for the Anywhere brands segment.
• The average broker commission rate declined in Q2, driven by the outperformance of the luxury portfolio, which affected the overall average broker commission rate.

Q & A Highlights

Q: How does displaying commissions on your website change agent workflow or consumer behavior? A: Ryan Schneider, CEO: Displaying commissions is beneficial as it provides transparency. It aligns with past pushes for public display of such information. The future role of MLSs (Multiple Listing Services) is uncertain, and if they don't serve their customers well, companies like us may explore other options. We have a market-leading position, and any changes in inventory management will likely benefit us due to our scale.

Q: Can you explain the different types of buyer agreements you are implementing? A: Ryan Schneider, CEO: We offer flexible agreements. A "showing agreement" is for those just touring homes. A "specific home agreement" is for buyers targeting a particular property, allowing negotiation of compensation. A "long-term agreement" covers extended home searches. We aim for simplicity and flexibility, providing multiple templates to suit different needs.

Q: What are your thoughts on M&A and consolidation in the industry? A: Ryan Schneider, CEO: Consolidation is inevitable, and larger players like us will benefit. However, deals must be financially sound. We focus on margin rather than just growth. We have ample liquidity and are open to M&A, but only if it creates value.

Q: How are you preparing for upcoming business practice changes, and what is your role in ensuring agent compliance? A: Ryan Schneider, CEO: We take our duty to supervise agents seriously. We are actively training agents and franchisees, leveraging our nationwide network for insights. We are also publicly sharing our strategies to help the industry navigate changes. Our proactive approach positions us well for compliance and potential recruitment opportunities.

Q: Can you discuss the impact of luxury transactions on your commission rates? A: Ryan Schneider, CEO: The luxury segment significantly impacts our average broker commission rate (ABCR), especially in our advisors' business, which skews more luxury. Despite this, we haven't seen changes in seller offers of compensation or unrepresented buyers. The luxury success affects both our brands and advisors, with advisors experiencing a larger impact due to a higher luxury skew.

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