Resi brokerages’ big quarter: Record revenue, new CEOs and major acquisitions
eXp surpasses $1B in revenue; Redfin names new RentPath chief executive
The second quarter was a strong one for a number of brokerages. Records were broken, acquisitions were finalized and new executives entered the C-suite.
Redfin saw its revenue rise 121 percent year-over-year to $471 million during the quarter. It also saw its largest market share gain since its IPO in 2017, reaching 1.18 percent of U.S. existing-home sales by value.
The brokerage started the quarter by finalizing its acquisition of RentPath and ended it by naming RentPath’s new CEO: Jon Ziglar, who was previously the CEO and board director of ParkMobile. During his six years there, the company increased its customer base by 800 percent.
But it wasn’t all roses for the brokerage. It lost $27.9 million in the second quarter, compared to a $6.6 million net loss a year ago. It also said Redfin Mortgage, its direct lending arm, would not make money this year because many of its customers don’t end up buying anything.
“In order to establish our buyers’ credentials for bidding wars that the buyers only sometimes win, Redfin Mortgage is underwriting more borrowers who don’t close on a home,” Kelman said. “For these reasons, Redfin Mortgage no longer expects to turn a full year gross profit.”
Still, he predicted it would become more efficient and a major source of profit over time.
At eXp and RE/MAX, revenue reached new highs. The former, a virtual brokerage, saw revenue increase 183 percent to a record $1 billion, powered by 87 percent agent growth in the quarter.
In another step forward, eXp declared its first cash dividend: 4 cents per share on its common stock. Shareholders as of Aug. 16 will begin seeing the payments Aug. 30.
It was an unexpected move by the brokerage, but eXp World Holdings founder and CEO Glenn Sanford said it was the proper next step given the company’s emphasis on agent value and the company’s profitability since late 2019.
“Obviously the board will look at this quarterly, but it would be my goal to make this a relatively permanent part of the infrastructure of eXp going forward,” Sanford said during an earnings call last week.
RE/MAX Holdings also saw record-breaking revenue, taking in $77.2 million in the second quarter, up 48 percent from last year. It attributed the growth to an increase in broker fees, more transactions per agent, rising home prices, less spending on recruitment and year-ago revenue being depressed by the pandemic.
But perhaps one major contributor to its revenue was the addition of RE/MAX INTEGRA’s North American Operations, which CEO Adam Contos called the most significant acquisition in the company’s history. The company closed on the deal last month and added more than 19,000 agents to its company-owned operations in the U.S. and Canada.
“Acquiring independent RE/MAX regions and extending our company-owned footprint remains a top priority for capital allocation,” Contos said during the company’s earnings call. The company aims to double its revenue and profit, and the acquisition gets them 20-25 percent of the way there.
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