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Cloud Stocks: RealPage Brings AI and SaaS to Real Estate

Posted on Monday, Mar 9th 2020

Technology is increasingly changing the landscape of the real estate vertical. There are now more than a dozen real estate tech companies valued at an aggregate ~$75 billion. RealPage (NASDAQ:RP) is a leading SaaS company in the real estate vertical that looks interesting.

RealPage’s Financials

RealPage provides a technology platform that enables real estate owners and managers to change how people experience and use rental space. Clients use the platform to gain transparency in asset performance, leverage data insights and monetize space to create incremental yields. Founded in 1998 and headquartered in Richardson, Texas, RealPage currently serves over 18 million units worldwide from offices in North America, Europe and Asia.

Fourth quarter revenue grew 12% to $254.8 million, ahead of analyst estimates of $251.55 million. Net income grew 222% to $20.2 million or $0.21 per share. Non-GAAP net income per share was $0.48, beating analyst estimates of $0.47.

For the full year 2019, revenue grew 14% to $988.1 million. Net income was up 68% to $58.2 million, or $0.60 per share. Non-GAAP net income per share was $1.76.

For the first quarter, RealPage expects to achieve revenue in the range of $276 million to $280 million and non-GAAP net income per share in the range of $0.41 to $0.43. For 2020, it expects revenue in the range of $1,163 million to $1,183 million and non-GAAP net income per share in the range of $1.95 to $2.

RealPage’s Acquisitions and Offerings

Acquisitions are central to RealPage’s growth stories. It has so far acquired 39 companies. It started off 2020 with the acquisition of resident engagement platform Modern Message for an undisclosed amount. Modern Message provides loyalty and reward programs for residents and proactively helps properties improve their online reputation assessment score called ORA. Modern Message was founded in 2012 and had raised $2.5 million in funding.

Modern Message is being tightly integrated into RealPage’s ActiveBuilding solution. Resident Services is one of RealPage’s largest and fastest-growing product categories. In December, it deployed ActiveBuilding e-commerce, a solution that is purpose-built to enhance the resident experience and drive incremental yield from amenities like spaces, services and events.

A major acquisition in 2019 was the $580 million acquisition of Buildium, a real estate property management solution provider. RealPage will be using the acquisition to target smaller multifamily, single-family, associations (HOA and condo) and commercial real estate market segments. Buildium had over 17,000 customers in more than 50 countries and serves 2 million residential units while RealPage serves 16.8 million units worldwide. Buildium’s revenue in 2019 was expected to be up 30% to $60 million.

Last year, RealPage introduced RealPage® AI Screening, the first AI-based screening algorithm built specifically for the multifamily apartment rental industry. It leverages data science and machine learning techniques to evaluate renter performance over the course of a lease. AI Screening also incorporates granular third-party consumer financial data to better predict applicant risk. RealPage also plans to combine AI Screening with the Buildium platform.

Last month, RealPage announced the launch of AI Revenue Management, a multi-dimensional revenue optimization solution that executes across price, demand, credit and workforce to increase revenues. It is now testing a new AI contact center scheduled for release in Q2 that activates an AI bot called Simon that will be available for chat, text, email and phone calls.

Other players using technology in the real estate vertical are Zillow, Redfin, Airbnb, Procore, and Lemonade. RealPage stands out for several reasons. It is a public SaaS company in the real estate sector that is profitable, focuses on AI, and believes in making strategic acquisitions to fuel its growth.

RealPage’s stock is currently trading at $63.75 with a market cap of $6 billion. It hit a 52-week high of $65.92 in April last year and a 52-week low of $51.65 in November last year.

This segment is a part in the series : Cloud Stocks


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