by Annette DeCicco | Aug 6, 2024 | Industry, News Feed
Pending $25 million settlement of January cyberattack adds to $66 million second-quarter net loss, but executives say they’re in a better position to grow after selling $29 billion in mortgage servicing rights.
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LoanDepot executives say they’re in a better position to grow after restructuring debt and boosting second-quarter revenue to the highest level since the start of the 2022 market downturn.
But $27 million in expenses tied to the pending settlement of a January cybersecurity attack affecting nearly 17 million clients weighed on second-quarter earnings, with the Irvine, California-based lender posting a $65.8 million net loss Tuesday.
That’s down 8 percent from the $71.5 million net loss loanDepot racked up in Q1, with net revenue growing 19 percent to $265.4 million. Excluding a $12.6 million write-down in the fair value of loanDepot’s mortgage servicing rights portfolio, adjusted total revenue rose to $278 million — the highest mark in two years.
“During the second quarter, by most measures, we delivered our strongest operational results since the beginning of the market downturn that began in the first quarter of 2022,” loanDepot President and CEO Frank Martell said in a statement. “As we near the completion of our Vision 2025 strategic plan, which was launched in July 2022, we have dramatically improved our operational results while positioning the company for long-term success.”
Shares in loanDepot, which in the last year have traded for as little as $1.14 and as much as $3.47, were up 4 percent to $2.15 in after-hours trading following Tuesday’s earnings release.
LoanDepot mortgage originations by purpose
At $6.09 billion, loanDepot’s Q2 mortgage originations were essentially unchanged from a year ago. But purchase lending picked up 33 percent from Q1, to $4.38 billion, and refinancing grew 35 percent to $1.71 billion.
“This quarter, the company continued to build our in-market retail franchise, which contributed to our expanded margins and market share growth,” Martell said. “In addition, we believe the company is increasingly well positioned to capitalize on the record levels of home equity available to homeowners for debt consolidation and home improvement, as well as the inevitable increase in rate and term refinance volume as mortgage interest rates are expected to decrease.”
LoanDepot reduced its debt load by $137 million and extended its maturity to 2027 through a tender and exchange of $500 million of corporate notes that were due in the fourth quarter of 2025.
It accomplished that feat in part by selling $29 billion in mortgage servicing rights (MSRs), leaving loanDepot with a $114.3 billion MSR portfolio as of June 30, a 20 percent drop from March 31. The nation’s largest mortgage lender, United Wholesale Mortgage, is pursuing a similar strategy on an even larger scale, trimming its MSR portfolio by $110 billion this year.
LoanDepot nevertheless continues to collect monthly mortgage payments on 403,302 loans on behalf of investors, earning $125 million in Q2 servicing fee income.
Trimming its MSR portfolio and restructuring its debt left loanDepot with a stronger balance sheet, including $533 million in cash.
The $26.94 million in expenses related to the January cyberattack recognized by loanDepot in Q2 bring the total cost of the attack to $41.6 million after factoring out expected insurance recoveries. Those expenses include the cost to investigate and remediate the incident, costs of customer notifications and identity protection, professional fees including legal expenses, litigation settlement costs and commission guarantees.
During the second quarter, the company set aside $25 million in connection with an expected settlement of a class action lawsuit related to the cyberattack.
David Hayes
LoanDepot reached “a settlement in principle” and is currently negotiating the terms of a settlement agreement that’s expected to be submitted for court approval later in the third quarter, Chief Financial Officer David Hayes said.
“We believe the settlement will remove significant uncertainty for our stakeholders going forward,” Hayes said in a statement.
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by Amy Corr | Aug 6, 2024 | Industry, News Feed
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Shares in United Wholesale Mortgage are trading at a three-year high after the nation’s largest mortgage lender posted a healthy second-quarter profit, paid down debt and said it’s in prime position to capitalize and grow as mortgage rates continue to drop.
After a $115 million write-down in the fair value of its mortgage servicing rights, UWM reported $76.3 million in second-quarter net earnings.
Mortgage originations were up 6 percent from a year ago, to $33.6 billion — the highest level since Q1 2022. At 1.06 percent, gain margins were also an improvement from 0.88 percent a year ago.
UWM said it expects Q3 originations of $31 billion to $38 billion, with gain margins of 0.85 percent to 1.10 percent, in line with recent quarters.
While the outlook for lending is improving, UWM has also boosted its bottom line by more than $2 billion this year by selling off a big chunk of its loan servicing business. UWM’s mortgage servicing rights (MSR) portfolio shrank by 23 percent in Q1 and by another 17 percent in Q2, to $189.5 billion.
That helped UWM finish up the quarter with about $2.7 billion in available liquidity, including $680.2 million in cash.
Mat Ishbia
“We had a strategy coming in this year,” CEO Mat Ishbia said on a call with investment analysts. “The strategy was to de-risk, sell MSRs in the first three to six months of the year and prepare for scale, technology, and operationally … it’s playing out how we expected.”
Since hitting a 52-week low of $4.49 on Oct. 4 when mortgage rates were approaching post-pandemic peaks, UWM’s share price has been on the rise as investors grow increasingly bullish about the prospects for mortgage lending to pick up as rates come back down to Earth.
Shares in UWM hit a new 52-week high of $8.85 on Monday after two surprisingly weak jobs reports last week put mortgage rates in a tailspin. It was the highest valuation shares in the Pontiac, Michigan-based wholesale lender have reached in more than three years.
“We’re raising our price target to $10 from $8 following the earnings call and good Q2 results, as the stock remains our favorite way to position for lower interest rates,” BTIG analyst Eric Hagen said in a note to clients.
At 6.4 percent Monday, rates on 30-year fixed-rate conforming mortgages are down 87 basis points from a 2024 high of 7.27 percent registered April 25, and haven’t been lower since May 2023, according to rate lock data tracked by Optimal Blue. A basis point is one-hundredth of a percentage point.
Shares in UWM initially dropped 8 percent to $8.07 when markets opened after the release of earnings Tuesday morning but surged back to $8.66 in afternoon trading before closing the day at $8.50.
Shares in UWM rival Rocket Mortgage — formerly the nation’s largest mortgage lender, before ceding the title to UWM in 2022 — also hit a new 52-week high of $18.66 Tuesday, a 160 percent gain from $7.17 on Oct. 25.
Rocket last week reported that Q2 net income was up 28 percent from a year ago to $178 million, with mortgage originations growing by 10 percent over that time, to $24.7 billion. Rocket says artificial intelligence tools it’s developing will help it rapidly scale its business even more when mortgage lending rebounds.
Ishbia said UWM has also been investing in technology that will help the mortgage brokers the company works with make the most of any boom.
“In the second quarter, we announced the number of products and technology that add speed and capacity to the broker channel that really just didn’t exist in 2020 and 2021,” Ishbia said. “We’re really excited to see these things come into action.”
UWM’s consumer-facing Mortgage Matchup website — a searchable database that helps consumers find a local mortgage broker — is the official mortgage partner of the NBA and WNBA, and Ishbia said, “We’re seeing more and more people going to this website every single day.”
UWM’s newly updated TRAC+ program offers pricing incentives to mortgage brokers who agree to let UWM handle not only title review but closing and disbursement for clients who are refinancing existing loans.
Ishbia called TRAC+ “a huge game changer” because mortgage brokers “no longer have to go outside and work with a third-party title company or anyone outside, and it saves the consumer thousands of dollars.”
UWM also continues to “invest heavily” in its automated document recognition and processing system, BOLT, which Ishbia said allows mortgage brokers to get initial approvals in as little as 15 minutes and enables UWM’s underwriters to do “more business every single day, with technology pulling the weight on a lot of the underwriting processes.”
UWM Q2 refinancing up 69% from a year ago
At $27.2 billion, purchase loans represented 81 percent of UWM’s Q2 2024 mortgage originations. That’s more than double the 40 percent share of business that purchase lending provided in Q2 2021.
While purchase originations were down 3 percent from the same time a year ago, refinancing grew by 69 percent, to $6.5 billion.
UWM originates more purchase mortgages than any of its rivals, but Ishbia said refinancing will be the biggest immediate opportunity if mortgage rates continue to fall as the economy cools.
“I always said the mini refi boom, or full refi boom … is when you make all the money,” Ishbia said. “If the market turns back, we’re still going to dominate in the purchase market as we have been for the last couple of years.”
UWM’s servicing portfolio shrinks by 40%
While lenders typically sell the mortgages they originate to investors, many like to keep the rights to “service” those loans, collecting monthly payments from borrowers on behalf of investors.
Loan servicing not only generates fee revenue that can level out ups and downs in originations but can give lenders a leg up on competitors when borrowers are ready to refinance or buy their next home.
To boost its bottom line, UWM has trimmed its loan servicing portfolio by 41 percent since the end of 2021, when it was collecting payments on more than 1 million mortgages with outstanding balances of $319.8 billion.
As a result, Q2 income from loan servicing dropped 30 percent to $143.9 million compared to Q4 2023, when that line of business generated $206.5 million in revenue.
Andrew Hubacker
UWM has generated close to $2.4 billion in net proceeds through the end of the second quarter by selling mortgage servicing rights, Chief Financial Officer Andrew Hubacker said.
Proceeds from those sales have been used to pay down debt, increase production and invest in UWM’s business — while “also maintaining a consistent dividend for our shareholders,” he said.
(Ishbia and his family — including brother Justin and father Jeff, who both sit on the UWM’s board of directors — collect $150 million in dividend payments every quarter, The Wall Street Journal noted in November.)
Asked if UWM will continue to sell servicing rights, Ishbia wouldn’t rule that out — if the price is right.
“I’m not saying we won’t sell anymore MSRs, because people call us all the time to try to buy them,” Ishbia said. “However, it’s not a focus of mine right now. My focus is on origination, on scale and dominance in this industry. That’s what we’re focused on right now.”
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by Christy Murdock | Aug 6, 2024 | Industry, News Feed
Innovation is in our DNA at Inman — that’s why we’re excited about August’s Technology and Innovation Month. We’ll kick it off by celebrating the companies and individuals pushing the industry forward with an expanded slate of Inman Innovator Awards at Inman Connect Las Vegas. Then, we’ll continue to celebrate the brightest minds in real estate all month long.
Pulse is a recurring column where we ask for readers’ takes on varying topics in a weekly survey and report back with our findings.
From industry titans to reality TV mainstays, last week’s Inman Connect Las Vegas offered the opportunity to fine-tune every aspect of a real estate pro’s business, from marketing to operations to that all-important Aug. 17 implementation response.
Whether you were there in person, virtually or following along through Inman’s coverage of the event, you’re sure to have come away with some fresh takes on the industry at large — and on your business in particular.
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We always want to know what informed and inspired you, so tell us about your biggest Inman Connect Las Vegas takeaways. Did you learn what 168 means? Did you find out more about AI and how to plug it into your business planning? Were you wowed by a keynote speaker or partial to the panel discussions? Did you end up with a new vision for your brand or reassurance about what you’re already doing? Let us know below:
We’ll compile a list of the top responses and post them on Inman next Tuesday.
by Sean Frank | Aug 6, 2024 | Industry, News Feed
Total revenue grew to $42.2 million during the second quarter of 2024, up from $39.6 million the previous year, as the company worked to increase its market share.
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Spatial data company Matterport saw total revenue grow to $42.2 million during the second quarter of 2024, up from $39.6 million the previous year, as the company worked to increase its market share.
An earnings report released on Tuesday showed that subscription revenue accounted for $24.2 million of that total revenue, which was up 16 percent year over year.
Services made up about $10.9 million of total revenue and product made up about $7.2 million of total revenue.
Meanwhile, the company’s net loss was $0.45 per share with Non-GAAP net loss of $0.02 per share, a 71 percent improvement from the previous year.
Matterport’s gross profits hit about $19.4 million, up from $15.9 million the year before.
“I’m pleased to announced our second-quarter 2024 results, which underscore our ongoing success in driving efficient growth,” Matterport Chairman and CEO RJ Pittman said in a statement.
“Subscription revenue increased by 16 percent year over year, reaching a record $24.2 million, and now accounts for over 57 percent of our total revenue. This growth highlights our strategic focus on expanding the recurring subscription revenue within our business.
“Q2 was marked by bold product innovation as we continue to develop new products and deliver exceptional value to our customers. Our latest AI initiative, Project Genesis, along with our spatial data-driven efforts like Property Intelligence from our Q1 Winter Release, have been well received by customers and partners. We are actively developing the future of the digital twin and look forward to unveiling more breakthroughs in our Fall Release later this year.”
The company’s total subscribers grew by 28 percent year over year to 1.06 million. Square feet under management rose 33 percent year over year to 33 billion, and spaces under management increased 24 percent on an annual basis to 13 million.
During the first half of 2024, the company’s cash for operating activities improved by 64 percent year over year to $11.8 million.
“Our second quarter results represent continued revenue growth and improvements in Non-GAAP net loss per share year over year,” said Chief Financial Officer JD Fay. “Steady subscription revenue growth, gross margin expansion, and continued operating expense discipline drove our non-GAAP loss per share to $0.02, which is a 71 percent year-on-year improvement. These results underscore our steadfast commitment to profitability and highlight the significant progress we are making in transforming the industry. As we continue to drive the adoption of Matterport digital twins, we are not just experiencing growth; we are shaping a future where digital transformation empowers our customers and redefines the built world.”
Unlike many publicly traded companies, Matterport did not hold a call with investors, which typically serves to provide context to reported earnings and gives investors an opportunity to ask executives questions.
Last quarter, the spacial data company had trimmed net losses by 36 percent year over year.
During the first quarter of 2024, CoStar announced that it was acquiring Matterport for $1.6 billion. The acquisition is set to add a wealth of residential and commercial data to CoStar’s reservoirs.
CoStar will acquire all outstanding shares of Matterport in a cash and stock transaction valued at $5.50 per share, representing an equity value of about $2.1 billion and an enterprise value of about $1.6 billion, based on CoStar’s common stock closing price on April 19, 2024.
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by Rachael Hite | Aug 6, 2024 | Industry, News Feed
The company’s earnings report saw revenue climb 7 percent to $295.2 million between April and June, but it also lost $27.9 million — just a hair above its Q2 2023 loss.
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Redfin spent the second quarter of 2024 mostly treading water, with a new report showing that the company’s revenue rose even as losses and web traffic remained nearly flat.
In total, the portal and brokerage company earned $295.2 million in revenue between April and June of this year, according to a Q2 earnings report. That’s a 7 percent increase compared to the same period in 2023. At the same time, Redfin suffered a net loss of $27.9 million, just a hair more than the $27.4 million it lost one year earlier.
The report also shows that Redfin’s apps and website attracted “nearly 52 million average monthly users.” In Q2 of 2023, the company also had 52 million average monthly users.
Glenn Kelman
In the report, Redfin CEO Glenn Kelman celebrated the results, saying that “in a still-declining market, Redfin grew revenues, profits and market share.”
The report shows that gross profit — a figure that calculates profits after production costs, but before other expenses such as interest or taxes — grew 9 percent year over year to $109.6 million. Redfin’s market share grew to 0.77 percent of U.S. existing home sales by units, the report adds, up from 0.75 percent a year earlier.
Heading into Tuesday’s earnings, Redfin shares were trading in the low $7 range. That was down slightly for the day and week, and down compared to a year ago when shares were trading in the low $10 range.
Shares fluctuated in after-hours trading following the publication of Tuesday’s earnings report but ultimately trended down.
Credit: Google
As of Tuesday afternoon, Redfin had a market cap of about $848 million.
Redfin last reported earnings in May. At the time, the company revealed that revenue jumped 5 percent year over year in the first quarter of the year to $225.5 million. The company also lost $66.8 million in the quarter, an increase compared to $60.8 million in the first quarter of 2023.
During a call with investors Tuesday afternoon, Kelman touted the growth of Redfin Next, a program that launched earlier this year and which shifts agents from a salary model to a commission model. Redfin initially rolled out the program in four California markets but has since expanded it to dozens of others.
Kelman said during the call that in 2025 the program will be rolled out in all of the company’s markets and that it has helped with recruiting. The report adds that “to date, Redfin has signed more than 200 top-producing agents to join the brokerage under Redfin Next.”
While fielding calls from Wall Street analysts during the call, Kelman added that “the next dimension for us is teams.” He explained that Redfin hopes to build teams around its top-producing agents, which will, in turn, allow the company to “develop new-to-the-industry agents” under those top producers.
“We think that’ll let us scale up hiring,” he added.
Teams have been a major real estate trend in recent years and have played a role in the rise of both established firms such as Coldwell Banker as well as upstarts such as eXp Realty. However, Redfin — perhaps thanks to its now-disappearing salaried agent model — has been largely absent from that conversation. Kelman’s comments, however, suggest the company now wants to hop more overtly onto the teams bandwagon.
Kelman also speculated during the call that Redfin may have a recruiting advantage thanks to the coming industry rules changes that resulted from antitrust litigation. The changes “may help with recruiting by encouraging more agents to consider a brokerage built to compete on price,” Kelman argued.
Later during the call, Kelman discussed the market, saying that it is “significantly shifting in buyers’ favor.” That’s thanks to growing inventory and falling rates, though he added that so far those lower rates haven’t spurred significantly higher rates of homebuying.
“It has been the first time in years that a major interest rate drop had no impact on homebuying demand,” Kelman said, adding later that “I can’t remember a time where rates came down this far this fast and the market has been so muted in its response.”
Kelman speculated that the “muted” response could be due to anxiety about the coming presidential election or about the economy. Or, he continued, it may be that recent rate drops simply came “too late” in the year when many people are on vacation or no longer paying attention to the housing market. However, he said it’s “inconceivable to me that there won’t be a reaction” and that if “rates keep falling, U.S. home sales should increase.”
“I believe the housing market is about to get better,” Kelman said, “and that Redfin is about to take share.”
Update: This story was updated after publication with additional information from Redfin’s earnings report, as well as with commentary from the company’s investor call.
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by Amy Stockberger | Aug 6, 2024 | Industry, News Feed
The leading short-term rental platform told investors that its share of revenue grew by 11 percent to $2.75 billion in the second quarter of this year. Travelers made 125.1 million total bookings in three months.
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Airbnb continued its domination of the short-term rental market in the second quarter, when it saw its total earnings grow by 11 percent to $2.75 billion on ongoing strong travel demand and international expansion, according to its second-quarter earnings report.
The company reported a net income of $555 million during the quarter that ended June 30. That was actually a 15 percent decline compared to a year earlier, driven by an income tax increase, the company told investors during a call on Tuesday.
The company generated a total of $21.2 billion for itself and the hosts that supply its platform with places to stay, an 11 percent increase from a year earlier. In total, travelers booked 125.1 million nights and activities on the platform.
“We’re looking forward to another record summer travel season,” CEO Brian Chesky told investors during the call.
The company shared some warning signs that may have to do with the recent jitters in the national economy. It said travelers are waiting longer to book their trips than in recent years, a possible sign of a lack of confidence in the national economy.
“It’s not that consumers are not necessarily going to book that trip for Thanksgiving or Christmas; it’s just that they haven’t booked yet,” Chief Financial Officer Ellie Mertz said.
Airbnb executives said they expected to see a “moderation” of nights booked in the third quarter compared to the second.
That outlook spooked investors, and Airbnb stock fell over 13 percent during after-market trading on Tuesday.
Chesky tried to calm investors’ nerves during a call after markets closed. He said the company had become highly profitable while primarily offering one product and penetrating five countries well. He compared the company’s performance to Apple and Amazon when those companies focused on single products (computers and books). Just like those modern behemoths, Chesky said, Airbnb is primed to diversify its offerings in the long term.
Chesky called Airbnb “one of the most profitable organizations in tech.”
Some of that growth came from the company’s ongoing focus on expansion both within the U.S. and abroad. It was also buoyed by a 4 percent increase in average daily rates (ADRs), or the price of a booking on Airbnb, for North America. Average daily rates are now $170.
There aren’t signs that travelers are looking to book cheaper listings, executives said.
With restrictions from the pandemic in the rearview mirror, Airbnb has sought to expand its staff and its platform offerings in underserved markets internationally.
Bookings increased by 17 percent in Latin America during the quarter and 19 percent in Asia.
Chesky said that while Airbnb has a presence in 220 countries, it had only penetrated five countries — the U.S., the United Kingdom, France, Canada and Australia — and that it was focused on expanding into more markets.
The company said it benefitted from major sports events overseas, as well. Over 400,000 guests are staying in Airbnbs in the Paris region during the Olympics, for example, though the full scope of those numbers won’t be seen until next quarter’s results are released.
The company is pushing for more users to download and use its app, and it reported a 25 percent increase in app downloads globally in the quarter. Over half of all nights booked in the quarter were made on the app.
That was driven in part by the company’s release of its Icons category in May, a new group of venues that include things like a replica of the house from the animated Pixar film Up. Users were required to download the app to apply for a free stay in one of the company’s new Icon listings.
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