Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Reliance Global Group Inc (RELI, Financial) reported consistent and sustained revenue growth for the first half of 2024, with revenues of $3.2 million for Q2 and $7.3 million for the first six months, representing 1% and 3% growth respectively from the prior year.
- The company achieved a 13% reduction in operating expenses in Q2 2024 compared to the same period in 2023, demonstrating improved efficiency.
- Net loss from continuing operations improved by 62% in Q2 2024 compared to the same period last year.
- The acquisition of Specifar is expected to double annual revenues to approximately $28 million and significantly boost EBITDA, marking a transformational period for the company.
- The launch of a new real estate division, led by experienced executive Ed Miller, aims to diversify the company's portfolio and leverage non-dilutive financing sources.
Negative Points
- Despite revenue growth, the company still reported a net loss from continuing operations, indicating ongoing financial challenges.
- Adjusted EBITDA showed a nominal loss of $178,000 in Q2 2024, reflecting that profitability improvements are still needed.
- The company faces risks and uncertainties related to the successful integration of acquisitions and the realization of projected synergies.
- Inflationary pressures and increased employee compensation costs have impacted the company's operating expenses.
- The company's reliance on forward-looking statements introduces potential variability in future performance, which may not align with current projections.
Q & A Highlights
Reliance Global Group Inc (RELI) Q2 2024 Earnings Call Highlights
Q: Can you provide more details on the new real estate division that you're launching?
A: We are excited about this new initiative. The real estate market, particularly multifamily properties, presents a significant opportunity. We believe this sector is the safest and most stable, given the constant demand for housing. Ed Miller, a seasoned real estate investor, will lead this division. We aim to leverage our extensive experience to capitalize on current market conditions. However, our immediate focus remains on completing the Specifar acquisition.
Q: Could you provide an update on the Specifar acquisition and any related developments?
A: The Specifar acquisition is progressing well. We have completed most of the due diligence and contractual requirements. The business itself is growing rapidly, now covering 85,000 employees, up from 45,000 when we started the transaction. This growth is very promising, and we are excited about the potential synergies and market expansion this acquisition will bring.
Q: What are the key drivers behind the 13% reduction in operating expenses for the second quarter of 2024?
A: The reduction in operating expenses is primarily due to a 12% decrease in general and administrative costs and a 30% decrease in marketing costs. Additionally, we have resolved or paid off certain agreements, resulting in no license value adjustments affecting our operating results. These efficiencies have significantly improved our financial performance.
Q: How do you anticipate the Specifar acquisition will impact Reliance Global Group's financial performance?
A: We expect the Specifar acquisition to be transformational, potentially doubling our annual revenues to approximately $28 million and significantly boosting our EBITDA. The integration of Specifar's expertise and client base will enhance our market position and service offerings, driving substantial growth and profitability.
Q: Can you elaborate on the strategic goals and expected outcomes of the new real estate division?
A: The new real estate division aligns with our strategy of accretive and cash flow-positive acquisitions. By diversifying into multifamily and commercial real estate, we aim to leverage non-dilutive financing sources and enhance our asset value. This initiative will broaden our portfolio and provide substantial investment returns, contributing to our overall growth and profitability.
Q: What are the anticipated benefits of the one firm strategy for Reliance Global Group?
A: The one firm strategy integrates our nine owned and upgraded agencies into a cohesive business unit, granting us access to higher commission tiers and extensive cross-selling opportunities. This approach maximizes talent utilization, enhances data access and sharing, and consolidates vendor relationships, reducing overall operating expenses and driving significant revenue growth.
Q: How has the company's capital structure been simplified, and what impact do you expect this to have?
A: We have significantly simplified our capital structure by exercising all outstanding Series C and D warrants and removing the Series B derivative instruments from our balance sheet. This eliminates the perceived warrant overhang, which may have adversely impacted our share price. We believe this enhanced capital structure will resonate well with current and future investors.
Q: What are the key financial highlights for the second quarter of 2024?
A: For the second quarter of 2024, we reported revenues of $3.2 million, a 1% increase from the same period last year. Operating expenses decreased by 13%, resulting in a 62% improvement in net loss from continuing operations. Our adjusted EBITDA showed a nominal loss of $178,000, just under 6% of revenues. We expect continued improvement in EBITDA as we progress through the fiscal year.
Q: What is the company's long-term vision and strategic focus?
A: Our mission is to build a multibillion-dollar, highly profitable enterprise that delivers substantial and sustainable returns to shareholders. We are committed to establishing Reliance as a powerful, technology-driven enterprise prioritizing sustainable profitability and increased shareholder value. The Specifar acquisition and new real estate division are key components of this strategy.
Q: How does the company plan to leverage its new real estate division for future growth?
A: The new real estate division will focus on acquiring multifamily and commercial properties, leveraging our extensive experience and strategic vision. This initiative will diversify our business lines and asset categories, providing substantial investment returns and accelerating our progress toward achieving our objectives. The division will operate on a success-based compensation model, ensuring alignment with our growth goals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
