The first three months of the year proved to be a boon for Realogy Holdings Corp, which was able to carry some of its momentum from last year in the first quarter of 2021 and tally significant revenue growth in Q1 2022.
According to its latest earnings report, the company earned $1.6 billion in revenue in Q1 2022, tallying a 6% increase from the same period last year and a company record for first-quarter performance to boot.
“Realogy demonstrated continued momentum in our strategic transformation, delivering some of the best revenue and Operating EBITDA results for a first quarter in company history,” said Ryan Schneider, Realogy’s chief executive officer, and president. “Bolstered by our proven performance, industry-leading talent, and technology leadership, we continue to position Realogy for the future as we move real estate to what’s next,” Schneider said.
Realogy Brokerage Group and Realogy Franchise group proved to be the shining stars of the real estate giant’s significant revenue growth last quarter as both groups tallied increases in closed transaction volume.
The former reeled in $1.26 billion last quarter and recorded a 10% year-over-year uptick, while the Realogy Franchise Group brought in $267 million and experienced a 1% growth in transaction volume. Combined, both groups saw a 4% increase in transaction volume growth year-over-year.
Realogy also highlighted its growing pool of agents, which increased by 6% in the first quarter.
Realogy’s Title group also grossed $190 million in the first quarter, which was $11 million less than Q1 2021.
“This consistency of delivery, strong financial discipline, and continued momentum reflect the strength of our core business, positioning us to accelerate our growth and continue delivering value as we propel our transformation forward,” said Charlotte Simonelli, Realogy’s executive vice president, chief financial officer and treasurer.
Despite the record-level revenue growth in Q1, Realogy’s profits fell by $93 million compared to the first quarter of 2021. The company recorded a $69 million in operation EBITDA and a $275 million loss in free cash flow.
Realogy attributed the decline in year-over-year Operating EBITDA—at least in part—to the company’s mortgage origination joint venture, which lost $8 million in the first quarter compared to Q1 2021, when it recorded $30 million in earnings.
The decline was driven primarily by a significant shift in the mortgage environment under the rising rates and the shrinking refinancing volume, which has strained the lending industry overall.
During Realogy’s earnings call on Thursday morning, an upbeat Schneider highlighted a pair of strategic moves that the New Jersey-based company made that he expects to improve its profits this year.
In March, Realogy sold itstitle insurance underwriter venture to Centerbridge Partners for $210 million in cash and a 30% equity interest in the newly formed limited partnership joint venture that indirectly owns the title insurance underwriter.
Realogy is also planning to prioritize its iBuying venture RealSure—admittedly a product that Schieder and the company are skeptical about.
“We are compelled by the power of helping consumers buy and sell their homes in an easier way,” Scheider says. “We continue to invest in RealSure, expanding our RealSure Buy product through seven cities in the quarter. And our RealSure Sell product is now in 25 cities. We are pleased by what we’re learning from both our direct-to-consumer and our agent marketing and believe we are building a special thing in this part of the market.”
Scheider signaled that Realogy is looking to deliver between $750 million to $800 million in profits this year.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news to jgrice@rismedia.com.
