Anywhere Real Estate Q4 2024 Earnings Report

Anywhere Real Estate EPS Results

• Actual EPS: -$0.45
• Consensus EPS: -$0.36
• Beat/Miss: Missed by -$0.09
• One Year Ago EPS: N/A

Anywhere Real Estate Revenue Results

• Actual Revenue: $1.36 billion
• Expected Revenue: $1.28 billion
• Beat/Miss: Beat by +$79.09 million
• YoY Revenue Growth: N/A

Anywhere Real Estate Announcement Details

• Quarter: Q4 2024
• Date: 2/13/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 13, 2025
• Conference Call Time: 8:30AM ET

Anywhere Real Estate (NYSE:HOUS), through its subsidiaries, provides residential real estate services in the United States and internationally. The company operates through three segments: Anywhere Brands, Anywhere Advisors, and Anywhere Integrated Services. The Anywhere Brands segment franchises the Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, Coldwell Banker Commercial, Corcoran, ERA, and Sotheby's International Realty brand names. This segment also includes global relocation services under Cartus brand name; and lead generation activities. The Anywhere Advisors segment operates a full-service residential real estate brokerage business under the Coldwell Banker, Corcoran, and Sotheby's International Realty brand names to assist home buyers and sellers in the listing, marketing, selling, and finding homes. This segment also operates real estate auction joint venture. The Anywhere Integrated Services segment provides full-service title, escrow, and settlement services to consumers, real estate companies, corporations, and financial institutions primarily in support of residential real estate transactions. This segment also originates and markets its mortgage lending services to other real estate brokerage companies. The company was formerly known as Realogy Holdings Corp. and changed its name to Anywhere Real Estate Inc. in June 2022. Anywhere Real Estate Inc. was incorporated in 2006 and is headquartered in Madison, New Jersey.

Anywhere Real Estate Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning and welcome to the Anywhere Real Estate Year End twenty twenty four 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, Senior VP of Investor Relations & Treasury at Anywhere Real Estate]

Thank you, Sarah. Good morning and welcome to the year end twenty twenty four earnings conference call for Anywhere Real Estate. On the call with me today are Anywhere's CEO and President, Ryan Schneider and Chief Financial Officer, Charlotte Simonelli. As shown on Slide three of the presentation, the company will be making statements about this future results and other forward looking statements during this call. These statements are based on the current expectation and the current economic environment.

[Alicia Swift, Senior VP of Investor Relations & Treasury at Anywhere Real Estate]

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, as well as uncertainty related to the California wildfires. Actual results may differ materially from those expressed or implied in the forward looking statements. Effective 12/31/2024, the company updated its definition of operating EBITDA to include adjustments for non cash stock based compensation and certain legal matters. These revisions enhance comparability with industry peers and all the figures discussed in this call and in our reported materials are adjusted to reflect this change. The inclusion of these adjustments does not materially affect segment level trends or conclusions previously disclosed.

[Alicia Swift, Senior VP of Investor Relations & Treasury at Anywhere Real Estate]

Reconciliations of operating EBITDA to the most directly comparable GAAP measure are provided for all periods reported. The references made to January in these remarks are preliminary results for the month. January 2025 has the same number of business days as January 2024. We have three large expected one time free cash flow headwinds in 2025, which total approximately $115,000,000 The first headwind is our approved $83,500,000 litigation settlement. We have made $30,000,000 in payments.

[Alicia Swift, Senior VP of Investor Relations & Treasury at Anywhere Real Estate]

The remaining $53,500,000 will be due when the appeals are resolved. The timing of the appeals is uncertain, depending on the developments in the proceedings, and we currently expect the payment to occur no earlier than mid-twenty twenty five. Second, the 1999 Cinda's legacy tax matter of approximately $40,000,000 is due shortly after the notice is received and is anticipated in 2025. Third, in January 2025, the company entered into a settlement of the Bumpus or TCPA litigation for $20,000,000 We anticipate making this payment in Q3 twenty twenty five, which is subject to preliminary and final court approval. For further discussion of these matters, see our SEC periodic reports.

[Alicia Swift, Senior VP of Investor Relations & Treasury at Anywhere Real Estate]

The reference to core franchise in these remarks is the franchise segment excluding relocation and leads. 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 our annual and quarterly SEC filings. For those who listen to the rebroadcast of this presentation,

[Alicia Swift, Senior VP of Investor Relations & Treasury at Anywhere Real Estate]

we remind you that the remarks

[Alicia Swift, Senior VP of Investor Relations & Treasury at Anywhere Real Estate]

made herein are as of today, February 13, and have not been updated subsequent to the initial earnings call. Now I will turn the call over to our CEO and President, Ryan Schneider.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Thank you, Alicia. Good morning, everyone. I was recently reminded of a famous Da Vinci quote that states people of accomplishment rarely sit back and let things happen to them. They go out and happen to things. And this is exactly what anywhere real estate did in 2024 and is going to do in 2025.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

In 2024, we delivered industry leading EBITDA. We helped our agents and franchisees navigate both the tough housing market and the industry practice changes with competitive edge. And we continue to invest in and accelerate our strategy, enhancing our market position to fuel growth and deliver long term value for our stakeholders. As we take on 2025, we're prepared to lead with the same proactive energy to power our future success. Now reflecting on our 2024 performance, we generated $290,000,000 of operating EBITDA, up $35,000,000 from the prior year and delivered $50,000,000 of free cash flow, $70,000,000 excluding our $20,000,000 litigation settlement payment.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

We closed the year with strong momentum, earning $52,000,000 of operating EBITDA in the fourth quarter, up $24,000,000 year over year with 13% closed transaction volume growth. We exceeded our cost saving target by 25%, achieving nearly $125,000,000 in savings by simplifying, automating and streamlining our operations. Now looking ahead, we're focused on new technologies and automation to unlock new cost saving opportunities that really didn't exist before. And we have targeted another $100,000,000 for 2025, reinforcing our commitment to permanently lowering our cost base and enhancing our earnings power. And we accelerated our aggressive AI agenda, deploying generative AI at scale across many parts of our business to drive better experiences faster and at lower cost.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Our efforts include both customer facing examples and internal solutions that are transforming how we operate. For example, our Listing Concierge product with its new AI integration drove significant adoption and was named best use of AI by a brokerage in 2024. New AI integration in our leads business is better identifying and targeting consumers most likely to become buyers. We are now able to better match these higher quality leads with our best performing agents faster than before and these leads are seeing a 40 plus percent improvement in conversion rate. And Generative AI continues to improve our operations.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

We currently process about 15,000 documents a day to support our brokerage transactions. With Generative AI, we have the ability to process these with fewer than half the team in a fraction of the time with a significant reduction in error rates. And in our most recent pilot, we've seen error rates fall to as low as one in 5,000 documents processed. Now turning to growth. We meaningfully expanded our luxury leadership across Sotheby's International Realty, Corcoran and Coldwell Banker Global Luxury.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Our luxury volume was up nearly 10% for the year and approximately 20% in the fourth quarter as we gained meaningful market share here. The most exciting thing about our luxury outperformance is the powerful unit growth, which grew 4% year over year for the full year and by 12 year over year in Q4, both substantially exceeding the market's unit results. We continue to lead the industry selling the most luxury homes at all luxury price points. So for example, we sold over $10.10 dollars plus million homes in 2024 and have over ten ten million dollars plus listings in our current portfolio. Our Sotheby's concierge auction business, where we are paid both a buyer premium and a seller commission, continues to grow and had a $5,000,000,000 plus average sales price in 2024.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And this luxury success is driven by our distinctive value propositions and the talented agents who continue to flock to and stay with our great luxury brands. We grew our high margin franchise network, adding 67 new franchisees in 2024 with 28 new franchisees in Q4. And in Q4, we were especially proud of the addition of a 400 agent, long time independent family owned brokerage in the D. C. Area to our growing Corcoran brand.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

We broadened our upward title joint venture from three to six states in 2024 with now over 20 franchise partners in place and three more states in the pipeline. We love the upward title momentum in the business because it opens new earnings opportunities for us and our franchisees, enhances our value proposition and deepens our relationship with participating franchisees. We successfully implemented complex industry practice changes, providing our network with clear guidance and innovative solutions, giving them a significant competitive edge. For instance, our Keysight product enables agents to effortlessly create and collect digitally signed buyer agreements by simply scanning a client's license with their mobile device. And finally, in late twenty twenty four, we launched Reimagine '25 to transform how we operate as a company going forward, seizing new opportunities to unlock by generative AI and other emerging technologies to deliver better experiences for our customers faster and at lower cost.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Reimagine 25 enables us as early adopters to jump start a more innovative future and will serve as the foundation of our continued efforts to lower our cost base. Now turning to 2025, January started off much like the end of twenty twenty four. The housing market remains challenged, especially with a lack of supply and real pressure on the number of unit transactions. However, we had a robust January with 12% closed volume growth year over year driven by price gains. And our open volume in January, while softer, was still positive at plus 4%, also driven by price gains.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Now even more important for 2025, there's two industry topics I want to be clear on. The first is NAR's Clear Cooperation Policy, which requires all listings to be put on the MLS within twenty four hours of publicly marking a property. Our position is that the rule should be relaxed to provide more flexibility to sellers. However, we oppose a blanket repeal as we believe transparency and access to all available inventory are in the best interest of both sellers and buyers. Those advocating for full repeal are primarily advancing their own interests as there's clearly an opportunity for players with listing scale to create private off market listing networks that only select agents can access, which clearly could enhance near term economics.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

But we believe this is bad for consumers and we think it's best to do what's in the long term interest of the consumer. However, let me be clear. We actually have the most listings in the industry across our brands. If the market evolves to favor private off market listing networks, we are ready to capitalize and we will ensure our agents and franchisees are never disadvantaged. The scale of Anywhere offers significant benefits and we're prepared to leverage all of our advantages to make sure our agents and franchisees have everything they need to succeed in a private listings world.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

The second topic is industry consolidation. We're seeing more firms looking to sell across brokerage, adjacent services and PropTech. We're well positioned to explore these opportunities, not only because of our liquidity, but also due to the competitive edge that we offer. We believe our assets enable us to provide unique solutions with the most synergies, the easiest integration and ready to use technology. We would be excited to augment our growth through M and A opportunities at attractive economics.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And to be clear, we will maintain a disciplined approach to profitability with deals that enhance the bottom line, not just the top line. With that, let me now turn it over to Charlotte for more details on 2024.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Good morning, everyone. We ended 2024 with numerous successes. We generated meaningful operating EBITDA. We over delivered on cost savings. We successfully navigated through unprecedented industry uncertainty and helped our franchisees and agents implement practice changes with minimal impact to our financials.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

We reduced and lengthened our capital structure with the repayment of our term Loan A and some debt repurchases. We saw agent commission split trends continue to moderate for yet another year. We prudently managed our cash and we made significant progress on our strategy and exited the year with solid momentum. I will now highlight our Q4 and full year 2024 financial results. As Alicia mentioned in our opening, we have revised how we report operating EBITDA to enhance comparability to industry peers and all the figures discussed in this call and in our reported materials reflect this change.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Q4 revenue was $1,400,000,000 up 9% versus prior year and operating EBITDA was 52,000,000 an increase of 86% versus prior year primarily due to higher transaction volume and cost savings, partially offset by foreign currency impacts and relocation and some costs related to the acquisition of DOMA in our underwriter JV. Full year revenue was $5,700,000,000 up 1% versus prior year and operating EBITDA was $290,000,000 an increase of 14% versus prior year primarily driven by higher operating margins as we continue to improve our cost structure. We realized nearly $125,000,000 of cost savings, which was about 25% higher than our initial targets and achieved efficiencies across the enterprise, with the majority coming from our own brokerage and title businesses as we further integrate and simplify the real estate transaction. Total operating, marketing and G and A expenses for the year totaled 1,710,000,000 down $72,000,000 versus prior year. About 40% of our realized cost savings were offset by growth related costs and other inflationary items.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Full year free cash flow was $70,000,000 before the $20,000,000 litigation payment made in the second quarter. Our full year free cash flow delivery was about $30,000,000 below our target due to the timing of a tax refund, which was initially expected in Q4, but now anticipated in the first half of this year. Consistent with our capital allocation priorities, we used our free cash flow to invest in our future and to pay down debt. We continued to make selective investments to drive growth, including attracting new agents and franchisees at better margins, expanding our technology platform with new products and services and streamlining our operations to deliver better experiences faster at lower costs. We also strengthened our balance sheet by pushing out maturities with no incremental interest expense and reducing overall debt by about $30,000,000 We will continue to opportunistically evaluate ways to improve our capital structure and I am confident in our current position with no maturities due before March 2026 and ample liquidity remaining on our revolver.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

It's important to highlight that this year's achievements are a continuation of our long term strategy to enhance our operating results and capital structure. Since 2019, including two of the worst years in housing in three decades, we have delivered almost $700,000,000 of realized cost savings and reduced overall debt by $930,000,000 We have a proven track record of delivering on our commitments and achieving our goals, exceeding the cost saving goals we put forth in our twenty twenty two Investor Day. On top of these accomplishments, we continue to push ahead with transformation through Reimagine '25, which Ryan mentioned. This ambitious multi year transformation effort aims to set us up for greater growth and success in the future. It will contribute to our savings program for 2025 and beyond, leveraging technology to reduce manual processes and importantly, enhance our value proposition and unlock growth opportunities.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

One example is innovating around agent support delivery using cutting edge technology to reduce in person interactions and physical resources and instead focus on enhanced ready now support throughout the transaction. Now let me go into more detail on our full year business segment performance. Our Anywhere Brands business, which includes leads and relocation generated $521,000,000 in operating EBITDA. Operating EBITDA was down $6,000,000 primarily due to foreign currency impacts in our relocation business. We remain confident in our core franchise business, which further expanded in the quarter and its robust margins.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Our Anywhere Advisors operating EBITDA was negative $93,000,000 an increase of $42,000,000 versus prior year driven by higher revenue and lower operating and marketing costs. This business generated $226,000,000 in operating EBITDA before the transfer of intercompany royalties and marketing fees paid to our franchise business. Agent commission splits were 80.3% in 2024, up 14 basis points versus the prior year, representing one of the best year over year results we've seen in a while. And our Q4 agent commission split rate was also 80.3%, down seven basis points year over year and down 10 basis points sequentially from the prior year. This marks 11 consecutive quarters with our agent commission split rate about 80% and this is all despite adding over 2,500 producing agents in 2024, underscoring our strong agent value proposition.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Anywhere Integrated Services operating EBITDA was negative $13,000,000 an improvement of $3,000,000 versus prior year. Operating EBITDA benefited year over year due to increases in both purchase and refi units, partially offset by increased labor costs and our continued investment to roll out upward title. Equity and earnings was impacted by a $5,000,000 decrease in our underwriter JV, primarily related to the Doma acquisition in Q4. Before discussing specific guidance, I want to address the California wildfires. We are actively monitoring the devastating impact in the Greater Los Angeles area with our primary focus on the safety of our people.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Our hearts go out to our employees, affiliated agents and franchisees who have been affected and forced to leave their homes. As of today, about 1,000 agents and a few of our own brokerage and title offices in that area have been impacted. We are proud of our team's resilience and our ability to seamlessly service our clients due in part to our virtual service delivery model. And while the financial impact on this region is uncertain, we do know that the effects of this broad based devastation will be felt in Q1 and beyond. Now turning to 2025.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Given what we know today, we expect operating EBITDA for the full year to be about $350,000,000 with the biggest swing factor being the housing market itself, which is inherently volatile. We expect to deliver about $100,000,000 in cost savings this year, which will be offset in part by inflationary pressures and investments as we look to make significant progress transforming our business. We have proven our free cash flow delivery remains strong in both good and bad markets, and we anticipate our 2025 free cash flow, excluding one time items, to be similar to 2024. Free cash flow, like EBITDA, is driven by the overall housing market and may be impacted by additional investments we make to drive growth and enhance our technology strategy. Our fourth quarter and full year results highlight Anywhere's financial discipline.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

We start 2025 with determination and confidence reinforced by industry leading profitability and solid cash flow generation. I am proud of what we have accomplished and even more excited for the future as we truly transform our business, accelerate growth and lead the industry forward. Let me now turn the call back to Ryan for some closing remarks.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Thank you, Charlotte. Anywhere Real Estate has proven our ability to deliver results regardless of market conditions. In 2024, we navigated the housing market with resilience and determination, generating meaningful operating EBITDA and free cash flow, investing in future growth, over delivering on cost savings and adapting to unprecedented industry changes. In 2025, Anywhere Real Estate will focus on executing our strategic agenda, reimagining how we operate and leveraging our competitive advantages to drive growth, outperform the market and deliver value for our agents, franchisees and shareholders. The future is full of opportunities and anywhere real estate is ready to lead the industry to what's next.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

With that, we will take your questions.

[Operator]

Thank you. Your first question comes from the line of Matthew Bouley with Barclays. Your line is open.

[Matthew Bouley, Senior Equity Research Analyst at Barclays]

Good morning, everyone. Thank you for taking the questions. I guess, first, wanted to touch on the operating EBITDA outlook for 2025, the $350,000,000 I guess a simple question, just sort of what are some of the underlying assumptions you're making within that around, I guess transaction volumes, commission splits, commission rates, Obviously, we got the cost reductions in there, but just kind of any other pieces you can help us bridge

[Matthew Bouley, Senior Equity Research Analyst at Barclays]

to that EBITDA? Thank you.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Yes. So, as I mentioned, the single biggest swing factor is going to be the housing market, and there's some pretty wide ranges in industry forecasts right now. So we've had to take a bit of a call on that. We're going to watch it together. We'll update quarterly as if anything changes in our assumptions on the housing market.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

But because the industry forecasts are so kind of wide as they normally are at this point in the year, I don't think it's smart to peg to any specific number. But obviously we are giving guidance for the first time in a while. And so we feel good about where we sit today. We gave the numbers on cost savings. I think you can see over the last few years about the net impact of the cost savings.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

So hopefully, you can use some of the last year's analogs and some of the remarks I've made about what the add backs are and investments and inflation to impact that. We feel good about the splits. We've had a lot of 11 consecutive quarters around 80, 80% for the commission splits. Those will obviously vary with volume as well. But again, 11 consecutive quarters is part of the reason, you know, the consistency in that that is, enabling us to put a pin on some guidance for this year.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

As far as ABCR, you know, we're the only ones who do report that. And the numbers that we've reported have been relatively consistent, since the changes in the process. If things change, you know, we'll update things. But what we're seeing is relatively consistent on ABCR. So obviously, a lot of volatility in housing in general, but I think the piece parts that we've laid out, there's a lot of there that has been pretty consistent, our cost savings and commission split specifically.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

And so we'll continue to update you as the quarters go on. But, feeling good about where we ended the year and feeling good about our momentum as we start the year.

[Matthew Bouley, Senior Equity Research Analyst at Barclays]

Okay. Got it. I guess what I'm hearing is a lot of consistency and I guess correct me if I'm wrong. But second question, the comments you made around clear cooperation, kind of just when you talked about a relaxed clear cooperation, I guess my question is kind of what is that middle ground that you'd be looking for, kind of what exactly are you advocating for, and sort of how would you how are you going to approach this in the coming weeks and months? Thank you.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Yes. So our brokerage leader, Sue Janeko, and she runs our own, our franchise brokerage in a lot of ways. She has the biggest job in real estate. She just did an editorial taking your question on exactly trying to lay out, look, you know, the the most frustrating thing about the debate going on in our industry is it's it's like an extreme debate. Either it must stay the same or it must be totally repealed.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And so what Sue put out was some thoughts about, hey, there are places where you may want to relax it a little bit for sellers. It doesn't have to be twenty four hours, etcetera. But you do need to preserve the fact that over time, you want all sellers and buyers to be able to see all the inventory. It's to both of their benefit. And so, we actually think the two extremes are both bad outcomes.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And so Sue put that out earlier this week. We'll continue to advocate for that. We're one of the only companies that has a dedicated government relations team in D. C. And obviously, our trade group has some issues and we've got to take more leadership.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

But that's kind of where we're going. And I thought Sue's editorial was well done, Matt. And at the end of the day, you know, the two extremes are are both have some real issues with them. The current extreme and the mandatory nature is a problem. We don't like mandatory things.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

We've been telling people to relax mandatory rules for a number of years. And, since people didn't listen to us on the participation rule, we all paid dearly for that. But on the flip side, again, just a kind of total repeal and moving the world to private listings network, I don't think it's good for the consumer. So, we're in the relax not repeal world. We've laid our position out in a couple of different forums now and we'll continue to advocate for that.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

But let's be very clear, like we are ready. If somebody want if the world goes to private listings, we will not let our agents be disadvantaged and we have more listings to make into private listings than anybody does. I think that's a short sighted way for our industry to go. But we've got the technology ready. We have the people ready.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

We've thought through all the issues of it. And we're ready, but it's not our recommendation.

[Matthew Bouley, Senior Equity Research Analyst at Barclays]

Got it. Well, thank you, Ryan and Charlotte. Good luck, guys.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Thank you, Matt.

[Operator]

The next question comes from Ryan McKeveny with Zelman. Your line is open.

[Ryan Mckeveny, Managing Director at Zelman & Associates]

Hey, thank you guys. Good morning. Wanted to ask on the franchise side. So it looks like the press release mentions you added 28 franchisees in 4Q and 67 in 2024. I guess maybe if you could talk to pipeline or interest for the franchisees heading into 2025.

[Ryan Mckeveny, Managing Director at Zelman & Associates]

And I guess I'm curious, is the pipeline or even those who have joined the network skewed towards established independent brokerages just converting to your brands? Or are these kind of new players becoming franchisees? Thank you.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Yes. Look, we like the pipeline. It feels good, kind of consistent with kind of the success we've had. I think the combination, Ryan, of the litigation in 'twenty three and these practice changes in 'twenty four have helped us on this dimension, right? The value proposition we offer to franchisees has a lot of good things in it, including the lead side, the brand side, some of the back office stuff, etcetera.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

But there are a lot of people who really realize the power of kind of being part of someone who can both take care of you better in litigation, but also help navigate industry practice changes. So we had a number of existing franchisees obviously join us, and that happens today. We just added some new ones in multiple states in the last two weeks that have all been public. And so that's been helpful. And then others have seen things.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

We've had people join us because they've liked this upward title thing that we've done. Right? As they're looking for new opportunities, they can get into that if they're part of our ecosystem. And so, while we always have a few people who kind of start out from nothing as franchisees, when we talk about the 67 or the 28, we're talking about established companies of different sizes, including the 400 agent Corcoran franchisee down in D. C.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Now who have joined our company.

[Ryan Mckeveny, Managing Director at Zelman & Associates]

That's very helpful. And Charlotte, just I think a clarification, I kind of missed this and I'll check the transcript later, but maybe you can remind us. I think you made a comment about a tax refund that was expected last year that's now going to come this year and potentially that is a benefit to EBITDA. I might have totally misheard that, but maybe you can revisit what that comment was. Yes.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

It's just the benefits of free cash flow. It doesn't impact the EBITDA. So it's an explanation of like we had given guidance that we expected our free cash flow in 2024, excluding one time items and other things to be about $100,000,000 And the tax refund was anticipated last year and that's the reason why we now delivered free cash flow to $70,000,000 and it's just a timing thing. And we've even already gotten notice from the IRS that we should expect part of that already in the first quarter. So it's just a free cash flow timing thing, nothing to do with EBITDA.

[Ryan Mckeveny, Managing Director at Zelman & Associates]

Okay. And on the guide for free cash flow, the 70 you referenced is kind of ballpark the target we should be thinking about for 2025?

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

So I did say similar to prior year, so yes.

[Ryan Mckeveny, Managing Director at Zelman & Associates]

Okay. Thank you very much.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

And it's excluding those one time items that Alicia referenced in her opening remarks.

[Ryan Mckeveny, Managing Director at Zelman & Associates]

Right. Okay. Got it. Thank you very much.

[Alicia Swift, Senior VP of Investor Relations & Treasury at Anywhere Real Estate]

Sure.

[Operator]

The next question comes from John Campbell with Stephens. Your line is open.

[John Campbell, Managing Director at Stephens Inc.]

Hey, guys. Good morning. Congrats on a great close to the year.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Thanks, John.

[John Campbell, Managing Director at Stephens Inc.]

Sure. Ryan, I appreciate your clarity and the clear message on CCP. Just assuming that for some reason consumers end up being okay with the private networks and there's greater fragmentation, obviously, you called out your industry leading number of listings. So that's obviously a great start. You also mentioned just a second ago that you have the technology ready.

[John Campbell, Managing Director at Stephens Inc.]

Obviously, your largest competitor out there has pushed a new consumer app and seems to be lining up their site as more of a portal. I appreciate from a competitive standpoint, you might not want to show all your cards here, but maybe just talk to high level how you'd look to leverage your leading position?

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Well, look, I mean, you're right, we're not going to show our cards on this call. We'll show it to our agents, franchisees first and then in the market. But the world's not that complicated, right? If you want to do a private listing network, it's just not that complicated. So you could map out exactly what we would provide and have and kind of corral across our owned and franchise brokerage network and then how agents and consumers would interact with us.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

So, it's not that complicated. And again, my thesis and my real public message is both we think that's a bad way for the industry to go, but if it goes there, we're going to be not only are we ready, but we think we do frankly pretty well relative to anybody. So that's a place that we're just very focused on. But again, over time, if buyers can't easily get access to all the inventory, I just think that's bad for sellers in terms of getting the best price on your house. I also think there's some fair housing issues on that.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And if you're a seller and you can't get access to how other homes sold at what price, it hurts your ability to price your home. So again, I just don't think it's a great place for the industry to go, but we obviously have to be prepared. And my message is not only are we prepared, but we've got assets that would be advantageous on all of our competitors, we believe, just starting with the number of listings.

[John Campbell, Managing Director at Stephens Inc.]

Yes, that's great color. I appreciate all that. And then Charlotte, back to the $350,000,000 EBITDA guidance. You mentioned the wide dispersion in the industry forecast. We're certainly seeing that as well.

[John Campbell, Managing Director at Stephens Inc.]

But just given how tied the P and L is to housing, I'm thinking you probably do have an internal forecast you're going with. I'm hoping you can maybe shed some light on that or maybe just talk to a rule of thumb sensitivity for, I don't know, every 100 bps or so of volume swings?

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Yes. We're not really coming off of what we've said in the past around sort of like the $15,000,000 mark for the percentage of change in growth. It does depend on the unit volume and the lower the units sort of the lower the impact is because of title. But if you think about, I think you can actually probably, if you look through the other assumptions I've given you, you could probably even come up to what our own internal forecast is within a couple of percentage points.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And John, just to comment on your math question here because we believe in you guys. Just know that. We believe in you. And this is the first time Charlotte and I have ever in the month of February given you a full year number, right? In the past, we've always kind of gone with the philosophy of, hey, we're going to give you as many of the piece parts as we can.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

You put your volume forecast in, do the math and you come up with a number, right? This year, we thought, we've heard your feedback, others, and we thought let's try something a little bit different, which is we're giving you our view. And as Charlotte said, we'll update it every quarter. Boy, this housing market is the thing if you look back in time that kind of really changes the world between February and the full year results often. But we hope this is interesting and helpful.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And again, the nice thing is we have three more bites at the apple to update you as kind of the year evolved. But it is a different approach and it'll be very interesting to see your feedback on does it work better than what we had been doing on this dimension. But we're excited to try it. But we also recognize it might leave you a teen bit frustrated that, you know, we're not giving you every single piece to add up to it. But like that's a little more of turning it around in the old way.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

So anyway, we're excited and we believe you guys will do great with it.

[John Campbell, Managing Director at Stephens Inc.]

Appreciate that guys.

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

Thanks John.

[Operator]

Your next question comes from Tommy Bjorn with KBW. Your line is open.

[Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)]

Hey, good morning guys. Thanks for taking the questions. Good morning. Yes. So Ryan, last quarter you gave some interesting commentary around homebuyers given the choice of signing different agent engagement agreements, be it to look at one single house or part of a longer home buying journey.

[Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)]

Do you have an update on any of that or any data points around that and kind of what those compensation agreements look like?

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Like? Yes, sure. Happy to do it. And partly because this is a chance to say, I was a little bit wrong. We rolled out these kind of five different buyer agreements, Tommy.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And you talked to some of them, right? Single house, multiple house, just go on a home tour and then kind of the classic six months, we're an exclusive relationship agreement, right? And part of the reason we rolled out the five is we weren't sure how consumers would react and we didn't want people to just have a yesno choice on one agreement. We wanted them some options. And the data not just into November when we last talked or excuse me, October when we last talked, but the data through January is it's almost all people signing the six month exclusive agreement.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

North of 80% of our buyers are signing that agreement and that just blows me away and it's awesome. And so frankly, we're probably going to end up discontinuing some of the other ones that just don't get much usage or much traction because consumers aren't really interested in them and let's reduce the complexity and all that kind of stuff. And it's a testament to the power of the value that agents provide. And I don't think that stat, by the way, is unique to anywhere. I don't have anyone else's data, but when I talk to agents at other firms and I talk to people in our industry, I think other people are getting using those same things more than 50% of the time.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And it comes back to I do think that the agents are doing a very good job articulating their value to buyers and going on that journey to kind of make these people's lives better together. And so the data has only gotten stronger on the use of the six month exclusive since I talked to you in October. And we looked at it through mid January or so is the last time I looked at it, late January data kind of thing. And so really excited by that. Still glad we were thoughtful about trying the different things to be prepared.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

You never know where the world's going to go. But it's gone in a way that's really consistent with agents adding a lot of value and communicating their value well, and consumers have voted with their feet. Very excited.

[Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)]

Got it. And just on the same point, I'm sure it's a bit tough to track, but do you have any sense around if consumers are shopping around a bit more, maybe perhaps taking the six month exclusive agreement from an Anywhere agent comparing it to competitors when they're beginning this process or any data around that?

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

I think the shopping is no different than it used to be, but I think the shopping happens before you get to the point you're talking about, right? I don't think anybody's take I don't think a lot of people are taking two physical agreements and comparing them and then picking, right? I think consumers do a lot of their agent networking and interviewing and everything before they get to that conversation, Right? And then the people who already have relationships with agents, from my talking to agents, they haven't seen a difference in their existing relationships looking at other people in terms of like the percent of people they do repeat business with kind of thing. So I think the shopping happens, but I think the shopping happens more upstream than at the kind of let's negotiate and sign the buyer agreement point Matt or Tommy, excuse me.

[Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)]

Got it. Okay. And then just quickly switching over, you sound a little more constructive on the acquisition opportunity in the year ahead. Did you envision that getting funded with equity or debt? Or is there enough cash flow generation not going toward some of those one off items and eventual debt reductions to fund those opportunities?

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Look, I mentioned our liquidity. I don't think we're going to be an equity buyer. I think we're a cash buyer if we're going to buy stuff typically. We got tons of liquidity, as Charlotte kind of talked about. We have positive free cash flow.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

The other thing is, remember, and I referenced this when you look at our ability to combine with others, especially in the brokerage area, we have the most synergies and those synergies have two interesting things. One is you can get a bunch of them in year one in these deals, right? The other thing from a covenant standpoint, our covenants give us very good benefits to synergies of deals even if they're unrealized. So they got to be good deals, of course, and we've seen some deals in the market that we wouldn't do. But boy, yes, we think we could do some good stuff, especially as kind of the market feels like it's changing.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

After going into a third tough year, you can see a little more no mas happening in not just brokerage, but in some adjacent services and you can definitely see it in PropTech. I get that call every week basically. Every two weeks.

[Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)]

Thanks, Ryan. Yes.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

Multiple times a month.

[Operator]

The final question comes from Nahum Tasvazgi with JPMorgan. Your line is open.

[Nahom Tesfazghi, Equity Research Analyst at J.P. Morgan]

Hey, guys. Thanks for taking the question. Just one on my end, and I guess going back to the guidance, how much does the adjustment for noncash compensation and legal matters impact the 2025 guidance of $350,000,000 Or I guess, another way to say that or I guess better put is, how much does that help the guide compared to the old definition?

[Charlotte Simonelli, Executive VP, CFO & Treasurer at Anywhere Real Estate]

So I think what you'll see in the press release is the prior two years, it's a relatively small number. In 2023, that number was 12, I believe, on the full year and 17 in 2024. So it's not a material impact in the past two years.

[Ryan Schneider, CEO, President & Director at Anywhere Real Estate]

And the way I think about it, just looking at that information in the press release is, '24 is a pretty tough housing market. But even with all those adjustments that you mentioned, we were able to grow our EBITDA by $35,000,000 and then in twenty twenty five million dollars it's $60,000,000 of EBITDA growth with all those adjustments apples to apples now. So it's a kind of $60,000,000 growth apples to apples on that stuff. So there's no headwind or tailwind in the $60,000,000 growth.

[Nahom Tesfazghi, Equity Research Analyst at J.P. Morgan]

Got it. That makes sense. Thank you.

[Alicia Swift, Senior VP of Investor Relations & Treasury at Anywhere Real Estate]

This concludes the question and answer session and will conclude today's conference call. Thank you for joining. You may now disconnect.

Participants

Executives

• Alicia Swift, Senior VP of Investor Relations & Treasury
• Ryan Schneider, CEO, President & Director
• Charlotte Simonelli, Executive VP, CFO & Treasurer

Analysts

• Matthew Bouley, Senior Equity Research Analyst at Barclays
• Ryan Mckeveny, Managing Director at Zelman & Associates
• John Campbell, Managing Director at Stephens Inc.
• Tommy McJoynt-Griffith, Director at Keefe, Bruyette & Woods (KBW)
• Nahom Tesfazghi, Equity Research Analyst at J.P. Morgan