Residential real estate services company Anywhere Real Estate (NYSE:HOUS) fell short of analysts' expectations in Q4 FY2023, with revenue down 5.5% year on year to $1.25 billion. It made a GAAP loss of $0.97 per share, improving from its loss of $4.13 per share in the same quarter last year.
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Anywhere Real Estate (HOUS) Q4 FY2023 Highlights:
- Revenue: $1.25 billion vs analyst estimates of $1.28 billion (2.1% miss)
- EPS: -$0.97 vs analyst estimates of -$0.39 (-$0.58 miss)
- Free Cash Flow was -$13 million, down from $95 million in the previous quarter
- Gross Margin (GAAP): 35%, in line with the same quarter last year
- Market Capitalization: $844.1 million
"Anywhere demonstrated our leadership strength in 2023, driving meaningful results in a tough real estate market," said Ryan Schneider, Anywhere president and CEO.
Formerly known as Realogy Holdings, Anywhere Real Estate (NYSE:HOUS) is a residential real estate company with a network of brokerages, franchises, and settlement services.
Real Estate Services
Technology has therefore been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.
Sales Growth
A company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. Anywhere Real Estate's revenue declined over the last five years, dropping 1.3% annually. 
Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Anywhere Real Estate's recent history shows its demand has decreased even further, as its revenue has shown annualized declines of 16% over the last two years.
This quarter, Anywhere Real Estate missed Wall Street's estimates and reported a rather uninspiring 5.5% year-on-year revenue decline, generating $1.25 billion of revenue. Looking ahead, Wall Street expects sales to grow 6.1% over the next 12 months, an acceleration from this quarter.
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Cash Is King
If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, Anywhere Real Estate broke even from a free cash flow perspective, subpar for a consumer discretionary business.
Anywhere Real Estate burned through $13 million of cash in Q4, equivalent to a negative 1% margin, increasing its cash burn by 75.5% year on year.
Key Takeaways from Anywhere Real Estate's Q4 Results
We struggled to find many strong positives in these results. The company missed analysts' estimates on all major operating metrics (revenue, EBITDA, EPS, free cash flow). Furthermore, it noted that Q1 2024 is seeing historically low unit volume and, as a result, expects to produce negative EBITDA. For the rest of 2024, it expects more normal seasonal volumes. Overall, this was a mixed quarter for Anywhere Real Estate. The company is down 1% on the results and currently trades at $7.57 per share.
Anywhere Real Estate may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.