Release Date: November 07, 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 a 5% increase in revenue for the third quarter, reaching $3.4 million.
- Total operating expenses decreased by 16%, reflecting effective cost management.
- The company achieved a positive adjusted EBITDA of approximately $42,000, marking a 121% increase from the previous year.
- The OneFirm strategy has successfully unified geographically dispersed insurance agencies, enhancing cross-selling and collaboration.
- The anticipated acquisition of Spetner Associates is expected to double consolidated revenues and accelerate growth.
Negative Points
- Despite improvements, Reliance Global Group Inc (RELI) reported a net loss of approximately $837,000 for the quarter.
- Commission expenses rose by 13% due to higher first-year commissions, impacting overall financial results.
- The company faced a $3.2 million intangible asset impairment charge, affecting year-to-date operating costs.
- The integration of Spetner Associates, while promising, presents potential challenges in merging operations and realizing synergies.
- Market perception issues related to previous warrant overhang may have impacted the company's share price.
Q & A Highlights
Q: Congrats on achieving positive adjusted EBITDA. Can you provide more details on the synergies and cost savings from the Spetner acquisition?
A: Ezra Beyman, CEO: The potential for cross-selling is phenomenal, with over 85,000 employees needing various types of insurance. Our testing showed substantial savings, which could attract many customers. Spetner's advanced technology will help streamline expenses and back-office support. Joel Markovits, CFO: Spetner has strong revenue, around $14-$15 million annually, with a healthy EBITDA margin of 40%. This will significantly benefit us as we merge.
Q: Following the acquisition, what are your plans for the excess cash flow? Would you consider buying back stock?
A: Ezra Beyman, CEO: Buying back stock is a possibility, as we believe it's a bargain. I've previously bought significant blocks of stock. We aim to deploy capital smartly, whether through stock buybacks, growing the company, advancing technology, or acquisitions.
Q: Can you elaborate on the financial improvements this quarter?
A: Joel Markovits, CFO: Revenues increased by 5% to $3.4 million, and operating expenses decreased by 16%. This led to a 64% improvement in loss from operations. Adjusted EBITDA showed a $43,000 gain, a 121% improvement from last year. These results reflect our OneFirm strategy's success in cross-utilizing talent and consolidating vendor contracts.
Q: How does the AI-powered commercial quote and buying solution impact your business?
A: Ezra Beyman, CEO: The AI solution accelerates the quoting process, offering faster, more competitive quotes and seamless policy binding. This enhances client satisfaction and empowers agents to unlock new revenue streams, benefiting RELI Exchange through its commission-sharing model.
Q: What are your expectations for the Spetner acquisition's impact on revenue and market position?
A: Ezra Beyman, CEO: We expect the acquisition to nearly double our consolidated revenues and enhance our market position. Spetner's voluntary benefits program and market reach will create substantial synergies, accelerating our growth trajectory and expanding our personal insurance offerings through the RELI Exchange platform.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
