Q1 2025 Anywhere Real Estate Inc Earnings Call
Good morning, and welcome to the anywhere real estate first quarter 'twenty 25 earnings conference call via webcast. Today's call is being recorded and a written transcript will be made available in the investor information section of the company's website tomorrow a webcast.
Replay will also be made available on the company's website at this time I would like to turn the conference over to anywhere Senior Vice President Alicia Swift. Please go ahead Alicia.
Alicia Swift: Thank you Rebecca good morning, and welcome to the first quarter 2025 earnings conference call for anywhere real estate.
Speaker Change: On the call with me today are anywhere CEO, and President Ryan Schneider, and Chief Financial Officer, Charlotte Simonelli.
Speaker Change: As shown on slide three of the presentation. The company will be making statements about its future results and other forward looking statements. During this call. These statements are based on current expectations and the current economic environment.
Speaker Change: Forward looking statements estimates and projections are inherently subject to significant economic competitive antitrust and other litigation regulatory and other uncertainties and contingencies, many of which are beyond the control of management, including among others industry and macroeconomic developments.
Speaker Change: Actual results may differ materially from those expressed or implied in the forward looking statements.
Speaker Change: References made to April month to date in these remarks are reflect data through April 25 2025.
Speaker Change: We have three large previously disclosed and expected one time free cash flow headwinds in 2025, which.
Speaker Change: Which total approximately $115 million.
Speaker Change: We have excluded from our free cash flow guidance and for further discussion of these matters. Please see our SEC periodic reports.
Speaker Change: Important assumptions and factors that could cause actual results to differ materially from those in the forward looking statements are specified in our earnings release issued today as well as in our annual and quarterly SEC filings.
Speaker Change: For those who listen to the rebroadcast of this presentation. We remind you that the remarks made herein are as of today April 29, and have not been updated subsequent to the initial earnings call.
Speaker Change: Now I will turn the call over to our CEO and President Ryan Schneider.
Alicia Swift: Alicia Theres no one in real estate like anywhere we have distinct advantages across our iconic brands luxury leadership franchise octane and end to end integrated business model.
Speaker Change: Strengths are evident when you look at what's happening in the brokerage ecosystem in the first quarter of 2025.
Speaker Change: We continue to sell more luxury real estate than anyone else gaining share even as others try to catch up to our industry leading position with.
Speaker Change: We generate very strong economics from our high margin franchise business. During a time when we saw private capital investing in this attractive market segment.
Speaker Change: Our integrated business model covers every step of the real estate transaction experience from brokerage to title and mortgage a strategic opportunity clearly resonating with others as you saw by their actions in the quarter and we are transforming our business at scale with the early adoption of emerging technologies like all leading companies.
Speaker Change: You can see our advantaged position in our Q1 performance. Despite a historically challenging housing market. We continue to demonstrate strong financial performance and strategically invest in the business to propel us for future success faster.
Speaker Change: We generated $1 2 billion of revenue and effectively breakeven operating EBITDA or 6% volume increase overwhelmingly organic substantially outperformed our 3% volume growth in the quarter our market share gain in the quarter was driven primarily by our luxury success, our luxury segment outperformed our portfolio and the <unk>.
Speaker Change: With share gains driven by growth in both units and price.
Speaker Change: April volumes are relatively flat softer than Q1 due to market and macroeconomic volatility and luxury continues to outperform in April.
Speaker Change: We launched <unk> 25 in Q1 to transform how we operate as a company re imagined twenty-five enables us as early adopters of new technologies to jumpstart, our more innovative future and will serve as the foundation of our continued efforts to deliver better experiences for our customers faster and at lower cost and speaking of cost.
Speaker Change: We delivered $14 million of cost savings in Q1 and continue to target full year 2025 cost savings of $100 million reinforcing our commitment to permanently lowering our cost base and enhancing our earnings power.
Strategic growth highlights in Q1 include we meaningfully expanded our luxury leadership across Sotheby's International Realty.
Speaker Change: <unk> and Coldwell banker global luxury.
Speaker Change: Your field by our unique value propositions and targeted talented agent networks are luxury volume was up 16% year over year in the quarter with both unit and price growth.
Speaker Change: <unk> listings increased 12% year over year.
Speaker Change: We saw more luxury homes than anyone across all luxury price points. For example in Q1, we sold 345 $10 million plus homes nearly doubling our Q1 2024 results and our best Q1 results since 2022.
Speaker Change: We sold 35% more $5 million plus homes in Q1 than in Q1 2024.
Speaker Change: Our contours auction business returns, both a buyer premium and a seller Commission ran successful auctions in New York City in Dubai in the quarter selling high end properties with an average sale price over $4 million.
Speaker Change: And our Corker and brand is leveraging its unparalleled expertise and new development to expand within its franchise network Excitingly. We are initiating our first new development project with a franchisee and 84 unit development in Nashville slated to launch this spring.
Speaker Change: Now both our owned brokerage and franchise value propositions are increasingly resonating and paying off in our recruiting results in Q1, our producing agent recruiting program in advisors delivered 30% year over year growth with growth over 100% versus some of our biggest competitors.
Speaker Change: And then franchise, we welcomed 11, new U S franchisees to our high margin franchise network and added a couple of new international franchisees.
Speaker Change: And we accelerated our aggressive AIA agenda deploying generative AI at scale across many parts of our business to drive better experiences faster and at lower cost, we expect it to increasingly shape, our culture employee training goal setting and daily operations, we shared with you before AI driven successes in different parts of our company customer face.
Speaker Change: Applications like listing concierge product strategy operational efficiency like brokerage document processing and employee productivity and since we last spoke a couple of our newer developments include piloting AI assistance to enhance productivity for both agents and employees.
Speaker Change: Experimenting with using AI to evaluate listing images to ensure the best photos are utilized for marketing in the hall.
Speaker Change: And piloting in the automating production of more complex documents like a first draft of a franchise agreement.
Speaker Change: And now as we approach the nine month, Mark sensitive can industry practice changes, we remain confident in our proactive approach to change and how our agents and franchisees are successfully navigated these shifts and consistently demonstrated their value to consumers. We are leveraging these changes to enhance our end to end capabilities for instance.
Speaker Change: We are beginning to pilot mortgage and title marketing within the buyer broker agreements, we use with customers to increase revenue capture opportunities and be a new avenue for future growth.
Speaker Change: Now speaking of industry change since we last spoke NAR released a slightly modified clearer cooperation policy.
Speaker Change: The debates about private listings have continued and both redfin and Zillow have announced that certain listings that start as private listings will ultimately not be permitted to be displayed on their websites.
Speaker Change: The implementation of all of these topics is deeply in flux and we expect a lot more change to occur. Let me tell you our current thinking and why anywhere agents and franchisees are well positioned for success.
Speaker Change: Anywhere real estate as aggressively advocating for transparency and the broad and public distribution of nearly all listings because we believe it is best for buyers to see all the inventory and most critically it helps sellers get the highest price for their home full stop.
Speaker Change: With the recent announcements by Zillow, redfin, and others intended to prevent certain private listings from ever appearing on their websites.
Speaker Change: We believe our strategic view gets even stronger specifically I do not think that advising the vast majority of sellers to do a private risk listing and risk their property not getting displayed on some of them are prominent public portals is a winning strategy.
Speaker Change: Now anywhere real estate is the world's largest network of trusted agents, who are incentivize only to do what's right for their customer even if a different action is more beneficial to the brokerage.
Speaker Change: And we remain committed to doing what's right for buyers and sellers, which we believe starts with advocating for transparency consumer choice and the broad public distribution of listings with that let me turn it over to Charlotte for more details on Q1 2025.
Charlotte Simonelli: Good morning, everyone.
Charlotte Simonelli: Anywhere delivered strong Q1, 2025 financial results achieving about breakeven Q1, operating EBITDA, which is our best Q1 since 2022 directly underscoring the power of having our core business that combines leading brands technology powered Hs and the.
Charlotte Simonelli: <unk> ability to deliver an end to end real estate transaction.
Charlotte Simonelli: Because of this solid foundation and our proactive approach we are actively executing on the offense as we embark on the next phase of our company's transformation.
Charlotte Simonelli: I will now highlight our Q1 2025 financial results.
Charlotte Simonelli: <unk> revenue was $1 2 billion up 7% versus prior year and operating EBITDA was negative $1 million, an increase of $12 million or <unk>, 92% versus prior year, primarily due to higher transaction volume and cost savings.
Charlotte Simonelli: We realized $14 million of cost savings and are on target to achieve $100 million of cost savings for 2025 with 85% of our savings already identified.
Charlotte Simonelli: Q1 free cash flow was negative $130 million of $15 million year over year improvement. Despite the third consecutive year of a challenging market and our slowest seasonal quarter each year.
Charlotte Simonelli: Consistent with our capital allocation priorities, we used our free cash flow to invest for the future.
Charlotte Simonelli: We continue to make selective investments to drive growth, including attracting new agents and franchisees at better margins.
Charlotte Simonelli: Spanning our technology platform with new products and services and streamlining our operations to deliver better experiences faster at lower cost.
Charlotte Simonelli: We will continue to proactively seek opportunities to strengthen our capital structure and I am confident in our position with no springing maturities due before March 2026, and ample liquidity available on our revolver.
Charlotte Simonelli: Now let me go into more detail on our first quarter business segment performance.
Charlotte Simonelli: Our anywhere brands business, which includes leads and relocation generated 97 million in operating EBITA.
Charlotte Simonelli: Operating EBITDA increased $7 million, primarily due to increases in transaction volume and lower expenses.
Charlotte Simonelli: Our franchise business expanded margins in the quarter, showing improved financial arcane with modest changes driven by the market.
Charlotte Simonelli: Our anywhere advisors operating EBITDA was negative 47 million, an improvement of $12 million versus prior year, driven by higher revenue and lower operating costs.
Charlotte Simonelli: This business generated $21 million and operating EBITDA before the transfer of intercompany royalties and marketing fees paid to our franchise business.
Charlotte Simonelli: Agent Commission splits were 84%, which marks 12 consecutive quarters with our agent Commission split right about 80% and this is all despite adding about 650 producing agents in Q1, underscoring our strong agent value proposition.
Charlotte Simonelli: Anywhere integrated services Q1, 2025, operating EBITDA of negative $18 million was down 3 million from Q1 'twenty four.
Charlotte Simonelli: Revenue was up $7 million, however that was offset by higher expenses due to volume, which included unfavorable commercial mix as well as timing of certain expenses and our continued investment and expansion of upwards.
Charlotte Simonelli: Our strong core business also allows us the financial freedom to continue to think about the next phase of transformation for anywhere.
Charlotte Simonelli: Years of financial discipline, and proactive planning have strengthened our position today and forced our competitors to play catch up and buying or building the attractive assets, we already have.
Charlotte Simonelli: We continue to enhance our operations through re imagined twenty-five an ambitious multiyear transformation effort designed to set us up for greater growth and success in the future.
Charlotte Simonelli: This comprehensive program encompasses all aspects of our enterprise and we expect it will significantly contribute to our savings target for 2025.
Charlotte Simonelli: By leveraging technology to reduce manual processes, we aim to enhance our value proposition and unlock growth opportunities.
Charlotte Simonelli: No area of our business is out of scope for this transformation.
Charlotte Simonelli: All of our core businesses and corporate teams are engaged finding new and innovative ways to deliver better experiences faster and at lower cost.
Charlotte Simonelli: Some of our most recent examples include entitle operations, we established a national Operation Center to seamlessly reassign specialists across states to cover surges in demand showcasing the power of our newly centralized and standardized team without requiring incremental resources.
Charlotte Simonelli: We are piloting a new AI driven process to automate Bank statement review and commission allocation.
Charlotte Simonelli: Improving efficiency and enabling faster payments to agents.
Charlotte Simonelli: And automation of journal entries and other manual accounting tasks has resulted in a reduction of about 35% of previously manual tasks with more to go.
Charlotte Simonelli: Our capital allocation priorities remain investing in the business and reducing debt.
Charlotte Simonelli: We plan to both reduce our gross debt and improve our earnings through the financial momentum we are building now.
Charlotte Simonelli: Using an illustrative 600 million operating EBITDA, our leverage would decrease by two nine turns based on EBITA improvement alone.
Charlotte Simonelli: At $750 million operating EBITA leverage would be reduced by three eight turns.
Charlotte Simonelli: This brings us much closer to our target three times leverage and we will not stop there as deleveraging remains a top priority for us.
Charlotte Simonelli: Now turning to our 2025 estimates.
Charlotte Simonelli: Given what we know today, we still expect operating EBITDA for the full year to be about $350 million with the biggest swing factor being the housing market itself, which is inherently volatile.
Charlotte Simonelli: Q2, operating EBITDA should look similar to prior year as we anticipate investments in the business will partially offset our savings delivery in the quarter.
Charlotte Simonelli: We have proven our free cash flow delivery remained strong in both good and bad markets and we anticipate our 2025 free cash flow, excluding one time items to be similar to 2020 for free.
Charlotte Simonelli: Free cash flow like EBITDA is driven by the overall housing market and May also be impacted by additional investments, we make to drive growth and advance our technology strategy.
Charlotte Simonelli: I am proud of what we have accomplished in the first quarter and even more excited for the future. We have demonstrated anywhere strength agility and resilience and I'm, even more excited for what comes next as our strong results afford us the ability to aggressively plan for tomorrow.
Charlotte Simonelli: We are transforming how we operate driving new efficiencies.
Charlotte Simonelli: We are going to continue to lead from the front and we will seize any opportunity to strengthen our market leading position.
Charlotte Simonelli: Let me now turn the call back to Ryan for some closing remarks. Thank you Charlotte anywhere has proven our ability to deliver results in a tough housing market and through changing industry dynamics, all while propelling our strategic progress forward and delivering better experiences faster and at lower costs as we accelerate our strategic growth and capitalize.
Charlotte Simonelli: And our competitive advantages we are ready to charge ahead with that we will take your questions.
Charlotte Simonelli: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad, we will pause for just a moment to compile the Q&A roster.
Speaker Change: Your first question comes from the line of Anthony <unk> with J P. Morgan.
Anthony: Hi, Thanks, good morning.
Speaker Change: Tony I guess, Brian you.
Speaker Change: You gave some views on your view unclear cooperation policy can you, maybe just talk a bit more about how it's being approach just within the system by like your franchisees in your owned.
Speaker Change: Brokers and also maybe just.
Speaker Change: If we're thinking about it from the vantage point of investors like how to think about that coming back to either benefit or work against you investors in the stock.
Speaker Change: Yeah, So look.
Speaker Change: I hear loud and clear not only from our own agents and franchisees, but I hear from other companies agents that you know that.
Speaker Change: The consensus is as you want as many people to see a listing as possible to get the best price you want your buyers have access to that inventory.
Speaker Change: And.
Speaker Change: It's the way people want to do business they want to do what's best for the customer.
Speaker Change: EBITDA.
Speaker Change: You could make a different decision and push for something that might be better for the brokerage. So I hear that out there in the market and then I see you know Zillow and Red Bend choice is theirs to make that if they don't want a display of listings that were private and that's their choice and I think having your listings on public portals is a helpful thing in selling.
Speaker Change: So in your house, so we're leaning in pretty hard too.
Speaker Change: I'm not clear cooperation itself, but more just the fact that the broad distribution of listings is best for the customer whether buyers or sellers now look there is a role for private listings out there and we sell private listings today.
Speaker Change: Our owned brokerage brands Coldwell banker Corker and Sotheby's International Realty, all have private listing capabilities that are active today than we sell.
Speaker Change: Divot listings, where it's right for the customer, but it's a pretty small share of those things. We are going to go ahead like I told you last quarter, Tony and finish building the private listing capabilities for our franchise brands, partly because there is a subset of listings or should be private or people want private and we want them to have that choice.
Speaker Change: And so we want that but we also want to build it so that we're never at a competitive disadvantage.
Speaker Change: Private listings really does become more prevalent out there in the industry. So we're definitely going to have that and so I think the way it comes back to two.
Speaker Change: To investors as well.
Speaker Change: Where you're likely to see the success with the end customer not just in the near term on the current listing but over time right. I think you can you can you can probably talk to a customer and they're doing something against their interests once but over time, those kind of things arent tend not to be really sustainable business approaches.
Speaker Change: So we wanted to do what's right for the customer no matter. What are we think for almost everybody. It starts with that broad distribution of listings and we have a belief that will pay off not just in our selling and helping people buy homes, but in how we're able to actually recruit more agents and more franchisees and we saw that in our recruiting results in the <unk>.
Speaker Change: First quarter, we had some <unk>.
Speaker Change: Actual you know very successful agents coming to join US in Q1, we had some amazing results against our competition and some of the feedback on that was you know they like the way we were dealing with listings and customers.
Speaker Change: Okay. That's really helpful. Thank you and then just my second question is with regards to.
Speaker Change: Commission rates.
Speaker Change: They were down a little bit.
Speaker Change: Year over year, but can you maybe comment on what.
Speaker Change: <unk> of that was maybe from pressure on buy side commissions and just maybe where we are in terms of finding out where that ultimately settles out here.
Speaker Change: Yeah.
Speaker Change: We're the one company that does that shares this this data publicly.
Speaker Change: And they were down.
Speaker Change: A few basis points.
Speaker Change: Two basis points in one of our businesses and six basis points in the other a little bit of the drop was buy side and a little bit of the drop was on the lift side and so we've now had like three quarters in a row here.
Speaker Change: Sure.
Speaker Change: Where where the.
Speaker Change: Sure.
Speaker Change: There really hasnt been that much movement frankly less than we had predicted when we did our budget for this year to be honest.
Speaker Change: One dynamic you should probably know is there's a little more drop in luxury.
Speaker Change: So.
Speaker Change: Where you actually see it showing up more as a little bit more in the luxury side, Tony and when I say, a little bit more we're talking you know single.
Speaker Change: Single digit basis points here or not not anything bigger than that but I do think there is something about the savvy buyer and seller, maybe being a little more sophisticated than maybe negotiating a bit harder, but on the flip side when you.
Speaker Change: Doing 10, 50 million dollar deals or whatever there's always been a lot of commission negotiation happening there.
Speaker Change: In history, so I'm, probably not that surprised by it but to that point, though Tony because we had twice as many 10 million and above listings that has a natural pressure on <unk> CR because those price points tend to have licensed many sales that diagnostic sorry sales, yes, yes that tends to put pressure on the ABC or just the mix of the business.
Speaker Change: Got it I appreciate it thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of John Campbell with Stephens incorporated.
John Campbell: Hey, guys good morning, John.
Speaker Change: So Ryan I.
Speaker Change: I think you probably anticipated a few of these CCP questions I'm, hoping we can revisit that maybe zoom out a little bit on where you stand.
Speaker Change: Obviously, you got just frame it up you've got Zillow ESP redfin on one side with pretty firm stance and you've got accomplished on the other side.
Speaker Change: In your prepared remarks, you called out advocating for both consumer transparency and choice does seem to be kind of the battle cry is on each side of the debate, but you don't want to put words in your mouth, but if I could after this correctly you believe that listing should be syndicated to the portals, but you'd disagree with the zillow move where it basically banning all private listings I don't follow your standard so suddenly.
Speaker Change: Mike.
Speaker Change: Willing to that's not right John Okay.
Speaker Change: Okay go ahead I am for the Zillow move.
Speaker Change: Now it benefits Zillow and it may come back to be a problem for everybody else, but in general we fall down.
Speaker Change: <unk> fine and like I said, we sell some private listings today kind of thing.
Speaker Change: <unk>.
Speaker Change: But you know.
Speaker Change: Think the best thing for customers for almost everybody is broad distribution of your listings because thats, how you get the best price.
Speaker Change: And again you know.
Speaker Change: I can tell my agent's, Hey, do this and we'll make a little more money on this deal, but we will do it probably at the customer's expense as my personal feelings John.
Speaker Change: And so we come down stronger on the broad distribution.
Speaker Change: We come down stronger on being totally fine if private listings aren't on the public portals.
Speaker Change: And we think there's still a place for private listings and again, we probably have as many as anybody given our luxury business, but that's okay.
Speaker Change: So we're leaning pretty heavily into that the one side of the debate now we have all the private listing capabilities. We havent been three brands already we're gonna have been our franchise brands here in the second quarter.
Speaker Change: But I would position that more as you know for the niche people who need them.
Speaker Change: And as kind of a defensive move that if the world becomes much more focused on that than we have the ability to make sure. Our agents are never disadvantage.
Speaker Change: And our franchisees, but we're more on the.
Speaker Change: We're more on the broad distribution side, because we think it's best for the customer it really comes down to just best for the customer.
Speaker Change: And our belief okay. Okay that makes sense I. Appreciate you clarifying that and then maybe if you could share any kind of insights Corcoran launch the private listening network.
Speaker Change: Kind of what's your what's your sense is for trends there if you're seeing anything different than the rest of the business.
Speaker Change: I mean, we've got probably we've had a private listing network and corker and before it was just kind of I don't know if.
Speaker Change: Relaunched with a different brand name is the right way to think about it we have one in Sotheby's, we have won and coldwell banker.
Speaker Change: We sell some listings all privately today.
Speaker Change: I know the number I'm not going to disclose it but it's.
Speaker Change: It's really is more of a niche thing, especially skewing in the luxury area and we haven't seen any change in that trend because our agents.
Speaker Change: Usually they are doing what is best for the customer and what the customers want and you know in the vast majority of situations is the best thing to do is to get as many people looking at a lifting as you can to get the best price and then also have you know our buyers be able to see as many listeners as possible. So.
Speaker Change: It's great to have the capabilities. So it's great to usage in those niche cases that we've done for years and decades frankly.
Speaker Change: It's great to have the capability just from a defensive standpoint, but.
Speaker Change: But there is not any sort of flood of customers.
Speaker Change: That approach because again I think most people realize the best way to get the best price on your house is to have a lot of people looking at it.
Speaker Change: Yeah. It makes a lot of sense and then Ron I apologize if I missed the details here, but did you provide the exact year over year change in April open versus closed volumes, yes. It was basically flat open.
Speaker Change: <unk> opened and closed volumes basically flat so far and that's through April 25th for something I'd through Friday, what's really flat the macro market and macro volatility and I don't mean housing market I mean the broader.
Speaker Change: Economy.
Speaker Change: It's clearly been a lot of volatility in April that's the biggest thing I am hearing from agents is what's affecting April versus Q1. So it's.
Speaker Change: Flat so far through the month.
Speaker Change: There may be a little headwind with where Easter fell this year versus last year.
Speaker Change: Uh huh.
Speaker Change: And the April numbers, but.
Speaker Change: Mostly the overall market and macro volatility is what our agents are saying is hasnt more flat and our data at least.
Speaker Change: Yes, it makes sense and I mean, we've heard that's better than what we've heard from maybe some other market proxy. So that's.
Speaker Change: Good on your end.
Speaker Change: I don't know if you have the granularity of this and it might not matter too much but you mentioned volatility we heard that a lot as well obviously rates have moved a lot and throughout April.
Speaker Change: Any sense for how the transaction trends move kind of week to week, maybe what that exit rate was last week.
Speaker Change: Not really I mean, it moves around but some of that is just bluntly kind of like.
Speaker Change: How are reporting kind of works as we grabbed out or for franchisees.
Speaker Change: Some people report in one day some people it takes a few extra days, sometimes so not really anything week to week that we've seen I think kind of flat is a good number for the month and it wasn't like March was flat March was.
Speaker Change: Pretty consistent with the quarter, but definitely there was a lot of macro change here in our economy in April and I think you can see it kind of.
Speaker Change: Getting us to kind of the flat year over year in opened and closed in the month so far.
John Campbell: Excellent. Thanks, Ryan Thank you John.
Speaker Change: Your next question comes from the line of Tommy Moll join with K B W.
Speaker Change: Hey, good morning, guys good morning low.
Speaker Change: Yeah, a question on the.
Speaker Change: Integrated services or title segment. So the bottom line trends there underperformed the improvement seen in the in the brands in the advisor segment and I think you called out some investments in that segment can you maybe quantify what that investment drag is and then when we will potentially see that conclude.
Speaker Change: Yeah, so on the investment side.
Speaker Change: A couple of different things, so we're making investments in the agents.
Speaker Change: Cruise agents and you saw our results there right. So.
Speaker Change: 600 about 650, producing agents recruited but I think Ryan also mentioned that the GCI attributed to those with like 30% up so they're very solidly producing agents and so theres a little bit of a an influx. There I think some of the other increases are around our technology investments them because we are.
Speaker Change: We're investing in the short term to deliver some of the efficiencies from our recent re imagined twenty-five program and so the savings are actually more heavily weighted to the back half of the year.
Speaker Change: And so youll see that come through the other thing is upwards. So.
Speaker Change: You know it has a drag in entitled because until we have critical mass in that business. It's still in the build phase and a lot of these businesses take a year or two years whatever to get to full critical math. So that's another piece of some of the investments, but I think what youre going to see in the back half of the year across our businesses.
Speaker Change: Is that the savings are going to step up in a material way.
Speaker Change:
Speaker Change: And then the longer some of these upward titled.
Speaker Change: The ventures are on the books theyre starting to become much more productive so.
Speaker Change: This was always going to be the case you know these things are pretty much on or ahead of our plans. So I feel good about it and I feel good that we also have 85% of our savings identified.
Speaker Change: Got it and can you just remind us sort of what success looks like in that that upward title title investments.
Speaker Change: Whether it comes through in something quantifiable like attach rates on title or anything else you guys can pinpoint two for metric wise.
Speaker Change: Well I mean look each of them has their own company and remember it is us.
Speaker Change: And a group of franchisees so you know.
Speaker Change: The core metric of success is just the you know.
The bottom line results that come out of it but it's got the strategic Halo of.
Speaker Change: Being helpful to franchisees open up a new profit pool that they never had access to before because they weren't big enough to have their own title company.
Speaker Change: And then it's got that also halo of.
Speaker Change: Recruiting.
Speaker Change: New franchisees without as part of the value proposition.
Speaker Change: And then again hopefully tightening the relationship with the franchisee that will hopefully help us at renewal so it's a pure.
Speaker Change: Let's grow our bottom line kind of approach.
Speaker Change: But with those kind of strategic franchise halos.
Speaker Change: That complements a pretty pretty attractive franchise business already and some of these individual.
Speaker Change: Individual units are already profitable individually, it's just that as we launch more startup costs et cetera.
Speaker Change: Okay.
Speaker Change: All makes sense. Thank you.
Speaker Change: Yeah.
Speaker Change: Again, if you would like to ask a question press Star one on your telephone Keypad. Your next question comes from the line of Matthew Bouley with Barclays.
Matthew Bouley: Good morning, everyone. Thanks for taking the questions.
Speaker Change: So maybe sticking on the listings exclusivity topic.
Matthew Bouley: Just getting back to that.
Speaker Change: My question is on kind of the specific drawbacks.
Speaker Change: That you guys see to two or more I guess robust exclusive platform.
Speaker Change: So you implied that the exclusive listings I guess in a vacuum would would benefit the big scaled brokerage financially.
Speaker Change: But I guess do you have any math around kind of the benefit of broad public distribution or is it more kind of really taking your own agent in home buyer seller feedback.
Speaker Change: And I guess, if you could extend that how does that your position on this impact recruiting of agents today. Thank you. So two things. So first look I mean, you can look at you know.
Speaker Change: There are what I would consider some incredible third party studies bright MLS is done I believe two now.
Speaker Change: That just.
Speaker Change: Show that you know broad distributional listings means home sell for more than homes that are are marketed privately.
Speaker Change: We've done our own analysis on that everybody has done other people have done analysis on it almost everybody comes to the same conclusion, which is broad distributional listing means a higher price for the home. So that's the that's the reason right there right and what's best for the customer kind of thing.
Speaker Change: So we really start with that and then.
Speaker Change: And then you know the.
Speaker Change: The feedback from our agents of course is important but.
Speaker Change: I said some of our recent recruiting success, which is frankly it was a lot better than it was a year ago as I gave you the stats on especially versus some of our bigger competitors.
Speaker Change: You know is partly because agents like kind of the approach we're taking to listings.
Speaker Change: You know.
Speaker Change: And so.
Speaker Change: Again, there while there is a role for exclusive and in select cases, when we sell a bunch of that stuff just because of our luxury presence you know I don't I don't think this is that heart of.
Speaker Change: The thing to think through right I mean, you know.
Speaker Change: The more listings I can do exclusively my brokerage makes more money, but you know that may not be the best thing for the customer and I think if you don't do the best thing for the customer and the long term businesses get into real trouble that way is do industry. So that's why we believe what we believe in the way we're going to push it and we think it will pay off in <unk>.
Speaker Change: Not just again selling homes for higher prices for customers, but.
Speaker Change: <unk> recruiting agents, who wanted to do business that way, yes, let's be clear. We do believe this is a better financial decision to it is for the customer, but like to Ryan's point, the long term for the agent recruiting and the stickiness of our agent base and selling homes at higher prices. We do believe that's a better financial outcome for us as well.
Got it okay. Yeah. Thank you both for that and and.
Speaker Change: Obviously, there was going to be a lot of discussion on this topic today. So thank you for that so yes. The second one I'll shift to a different gear the balance sheet I guess just first.
Speaker Change: Any thoughts here as we said in April on how Youre thinking about addressing the 2026 maturity.
Speaker Change: And then just any further kind of step back and broader color around the M&A environment. As you guys spoke about last quarter, maybe looking cross brokerages and real estate prop tech and all of that thank you.
Speaker Change: Yeah sure. So you know.
Speaker Change: We've spoken at credit conferences, we've spoken externally lots of different ways, we do plan to refinance the 2000 and the convertible notes.
Speaker Change: You can always assume that were ready to go at any time and it's really a market thing obviously the market volatility is not helping anybody in any industry right. Now we are encourage that.
Speaker Change: A lot of activity starting back up again in the investment grade side. So we're watching it very closely but trying to refinance at the most volatile period is probably not the best course of action. So we're seeing glimmers of hope as things start to crack open a little bit we will be ready to go we will re.
Speaker Change: Finance them at some point.
Speaker Change: And we have options, we have options, whether it's and the syndicated deal or on the private side.
Speaker Change: And as always we'll be opportunistic to try to strike at the right time, but you cannot you can assume that we're going to be ready whenever that time.
Speaker Change: It presents itself.
Speaker Change: On the M&A front.
Speaker Change: And the M&A front look.
Speaker Change: First off we're open for business there.
Speaker Change: We're always looking at some things there and I do still think that industry consolidations inevitable frankly, this whole industry could use more streamlining with all of the margin pressure scale helps et cetera, but it's been really funny. If you think about it if you would go to the start of this year. We're four months into the year. There has been very very <unk>.
Speaker Change: Little actual activity.
Speaker Change: And the biggest deals have all come out of the mortgage sector.
Speaker Change: And it's and I find it interesting that the biggest deals have been around building that end to end capabilities something we've been working on for a while and always think it's critical it's really hard.
Speaker Change: Whether your us or some of the people, who just invested to try to do more of that but it's a real opportunity and we find it interesting to see that's where the M&A as you know the other thing we saw in the quarter was we saw private capital actually invest in one of our franchise competitors, which I think is at least a positive signal.
Speaker Change: About.
Speaker Change: The opportunities in that kind of pretty high margin pretty interesting business, albeit one thats been.
Speaker Change: Subject to all the changes our industry has had going on but we like that especially given how are.
Speaker Change: Our franchise network economics benchmark against other public franchise economic players and then finally, you know look we're still seeing more firms looking to sell across brokerage.
Speaker Change: Title mortgage and prop tech, but theres still a pretty big gap between the bid and the ask and that's partly why I think there's just been fewer deals so far this year we.
We have helped our franchisees closed some M&A deals in the first quarter.
Speaker Change: But.
Speaker Change: But there is some real opportunity we're looking at spending more time on that as a leadership team.
Speaker Change: Bridging the bid ask is a bit of a challenge and.
Speaker Change: But it's a great place to put our effort and we think there should be some opportunities there down the road.
Speaker Change: Well great. Thanks, guys I appreciate the thoughts alright. Thank you.
Speaker Change: Your next question comes from the line of Nick Mcandrew with Zelman.
Nick McAndrew: Hey, guys. Thanks for taking my question just one for you Ryan I'm curious, obviously pretty strong ESP gains year over year, and maybe just high level given all the macro volatility with the market sell off throughout April and maybe potential recession fears just anything to call out that you're noticing so far in April specifically in luxury.
Nick McAndrew: The price point in terms of either home sitting longer in terms of days on market or maybe the behavior of that high price point seller, if youre starting to see any more price reductions from a seller standpoint, just kind of thoughts overall, just given that that's how I would think.
Speaker Change: Great question look you know April like I said, it's got a lot of kind of U.
Speaker Change: U S markets and macro volatility kind of thing.
Speaker Change: And it's kind of led to you know in our book kind of flat opens in close but let me just rattle off some stuff.
Speaker Change: We haven't seen days on market change.
Speaker Change: In our own portfolio.
Speaker Change: It's basically flat, we havent seen cancellations change in April that's something that's got a little bit of press write ups about.
Speaker Change: No of deals being canceled, but our cancellation rate is is that hasn't really changed in April compared to Q1 or previous years, we're not seeing much there and then.
Speaker Change: We are.
Speaker Change: We're still seeing price growth in April across all segments, including the ones that you asked about.
Speaker Change: But this trend of just not having enough homes and units being down and price being up you know has continued in April both on our open to and our closed volume so.
Speaker Change: The underlying trends around price versus units around days on market or I can't believe havent really change, but there has been an overall just kind of a drop in the level here.
Speaker Change: Down to kind of flat year over year.
Speaker Change: As what we've seen in April April so far, but it is pretty volatile out there.
So we're you know we're.
Speaker Change: Uh huh.
Speaker Change: Watching it closely and not extrapolating too far from these things, but that is what we're what we're seeing in luxury continues to do well I mean like I said are our luxury listings in Q1 were up 12% year over year, that's much better than the rest of our portfolio.
Speaker Change: Probably some more share gain in that in the in the future we're hoping.
Speaker Change: And.
Speaker Change: And luxury outperformed in April I mean luxury is not flat in April luxury is up in April and volume. So far. So that's that's what we're seeing in terms of some of those more nuance trends there Nick.
Speaker Change: Awesome, Yeah that all makes sense. Thank you guys.
Speaker Change: Thank you Nick.
Speaker Change: Ladies and gentlemen at this time there are no further questions.
Speaker Change: Thank you have a good rest of your day.
Speaker Change: That concludes today's call. Thank you all for joining you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
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