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1. The world's leading provider of property management software
1.1. SaaS business leads the world, and the solution is constantly improving.
RealPage (RP.US)Founded in 1998, it is the world's leading application software company in the housing rental industry.The company specializes in serving the housing rental industry for more than 20 years, through direct sales agencies, to provide property management software and software support services for the housing rental and vacation rental industries, to integrate and simplify the management of housing rental and property operation.
The company directly attacks the pain points of the traditional housing rental industry, such as low software efficiency, poor flexibility and scattered organization, and puts forward a SaaS solution. By establishing a real-time database and integrating market intelligence, the company simplifies the complex processes in the housing rental system and the interaction between participants, and helps owners and property managers to obtain information efficiently and visually manage the related business of housing rental, such as marketing, pricing, tenant screening, etc. Provide operational performance at the same time Provide comprehensive and comprehensive information for potential customers and lessees; help investors to invest and harvest capital cautiously; help the property department to provide resident services more efficiently.
In order to continue to expand and improve the company's solutions, the company pays attention to the extension mergers and acquisitions of advanced and complementary businesses, products and technologies.At the beginning of its establishment, RealPage acquired Rent Roll, which mainly provides the traditional rental management system, and released the first SaaS management system OneSite in June 2001. Since then, the company has continued to expand the platform and optimize functions, and since July 2002, it has completed more than 45 acquisitions of complementary technologies, improving the functions of the solution and expanding the service scope of the solution. In 2019, the company acquired most of the assets of LeaseTerm Solutions, 100% of the outstanding shares of Hipercept, all the assets of Simple Bills, and 100% ownership of Investor Management Services, and signed a merger and share purchase agreement with Buildium.
1.2. Professional SaaS solution for housing rental
The company's business structure is simple and consists only of SaaS solution revenue, professional services and other income.. Among them, the SaaS solution is sold through a subscription license agreement, and its related revenue includes the license and subscription fees for the solution, the transaction fees related to the company's software value-added services, and the commission the company receives from insurance services. Usually, the company's subscription license agreement is irrevocable, with an initial term of one year or more, and payment in advance on a monthly, quarterly, or annual basis. Professional services include fees for the consulting and implementation of solutions provided by the company to customers, which are charged according to the time and volume of services or the fixed price of related services; other income mainly includes the sales of sub-instrument equipment, including its installation services. A small portion of revenue comes from in-house software solutions provided by the company.
Organize various types of sales teams to provide SaaS software solutions.Through direct sales organizations, RealPage organizes different sales teams according to factors such as region, potential customer size and property type, to provide a higher level of service for the unique needs of customers. The company aims to provide a single system for all components of the housing rental system, different users access different applications, and provide customers with a full-cycle technical platform for renting. Its platform includes four broad categories of solutions: property management, rental and marketing, tenant services and asset optimization, with multiple product services in each category.
1.3. The proportion of shares held by the chairman of the board is gradually declining.
The company has four major shareholders with a shareholding ratio of more than 5%, of which the largest shareholder is the chairman of the company.The shareholder with the highest shareholding proportion is Stephen T. Winn, who holds 12.6405 million shares, or 13.35%. He also serves as the chief executive, chairman and board member of the company. In addition, the major shareholders with a shareholding ratio of more than 5% are T. ROWE PRICE ASSOCIATES, INC.,The Vanguard Group.BlackRock, IncIt holds 10.15%, 7.72% and 5.31% of the shares, respectively. Although Stephen T. Winn still holds the largest number of shares, its stake has fallen from 32.75% in 2014 to 13.35% in 2020, according to the annual report.
1.4. The ability to generate income is stable, and the ability to control expenses is strengthened.
RealPage mainly provides SaaS solutions, and total revenue continues to grow.The vast majority of the company's revenue comes from SaaS solutions, accounting for more than 95% of the company's total revenue. The rapid growth of this kind of revenue is mainly due to the organic growth of the company's four types of SaaS solutions through the expansion of functions and the acquisition of new technology platforms. In the fiscal year 2015-2019, the company's total revenue growth rate was more than double digits, with revenue of 469 million, 568 million, 671 million, 870 million and 988 million respectively, and the year-on-year growth rate of total revenue in 2016-2019 was 21.26%, 18.10%, 29.59% and 13.65%, respectively.
Tenant services account for the largest share of revenue from RealPage's four types of SaaS solutions.In fiscal year 2019, property management, rental and marketing, tenant services, and asset optimization accounted for 22%, 19%, 44% and 15% of total SaaS solution revenue, respectively. Among them, the tenant service solution has the largest revenue, reaching US $421 million, making it the company's main source of revenue.
The number of properties using RealPage's SaaS solution is increasing year by year.The number of properties managed by the SaaS solution in fiscal year 2015-2019 was 10568, 10989, 13003, 16219 and 18475, respectively. Since fiscal year 2016, the number of properties managed by customers using RealPage's SaaS solution has maintained a high growth rate since fiscal year 2016, with a year-on-year growth of 24.73% in 2018. This high growth shows that the company's strategy to increase its platform penetration through SaaS solutions is successful and effective. At the same time, the average income per property of the SaaS solution at the end of the accounting period has been maintained at about $55000 in the past three years, and the increase in the company's revenue mainly comes from the increase in the number of properties using the solution.
Gross margin continued to grow and gross profit margin remained at a high level.In the fiscal year 2015-2019, the company's gross profit was $270 million, $326 million, $398 million, $505 million and $562 million, respectively. The sales gross profit margin is 57.61%, 57.35%, 59.25%, 58.12% and 56.87% respectively, maintaining a high gross profit margin of more than 56%. The main reason is that the company has good bargaining power to downstream enterprises, technical advantages and moat.
The net profit rate of sales and ROE fluctuate greatly.The net profit rate of the company in the fiscal year 2015-2019 was-1.97%, 2.93%, 0.06%, 3.99% and 5.89%, respectively. After the net interest rate declined in 2017, the company rebounded year by year. Return on equity (ROE) is-2.81%, 4.68%, 0.09%, 4.44% and 5.21% respectively, which is the same as the growth trend of net interest rate on sales. The main reason is that the company has relatively high expenses in 2017.
The volatility of R & D investment has increased.In the 2015-2019 fiscal year, the company's R & D expenses were US $68.8 million, US $73.61 million, US $89.45 million, US $118.53 million and US $112.22 million respectively, which decreased only in 2019, and the rest of the financial year increased steadily. And the company's R & D expenses account for more than 10% of revenue, and the company pays attention to product research and development and application expansion. And the reduction of the company's product development expenses in 2019 is due to the company's internal initiative, improve its scientific research ability, and fully mobilize the enthusiasm of the company's R & D personnel.
The rate of sales expenses continues to decline.In the fiscal year 2015-2019, the company's sales expenses were $1.2311, $1.3521, $1.6508, $1.6661 and $193.96 million, respectively, and the sales expenses increased year by year. This is due to the company's expanded recruitment of sales staff, increased employee salary expenses, and the company's combination of different solutions to increase customer demand, resulting in an increase in employee travel compared with the same period last year. The company maintained a sales expense rate of more than 20% until 2018, and dropped to less than 20% in 2018 and 2019. After the decline of the company's net sales interest rate and ROE level caused by the increase in sales expense rate in 2017, the company controls the sales expense rate and improves the efficiency of expense expenditure.
The strong profitability benefits from the characteristics of high operating cash flow and low capital expenditure.RealPage's cash flow from operating activities has grown rapidly, from $96 million in 2015 to $317 million in 2019, more than triple that in 2015. The company has a strong ability to earn free cash flow, while capital expenditure has been maintained at a level of about $50 million, and the company has steadily controlled expenditure on capital investments.
two。 The potential of the industry is huge and the advantage of RealPage is obvious.
2.1. The scale of the housing rental market is large, and the shortcomings of the traditional rental system are obvious.
The housing rental market is large in scale and distinctive in characteristics.There are 44.6 million rental homes in the United States in 2017, according to a report by the Housing investigation Bureau under the U.S. Census Bureau. Based on the data and the company's own estimates, RealPage puts the overall size of the U. S. rental market at more than $580 billion. But at the same time, the housing rental market is limited by regionality, seasonality, diversity of participants, tenant mobility and diversification of housing rental uses, and there has been a lack of efficient and wide-ranging systematic tools to manage it in history.
The management of housing rental covers the entire rental cycle of tenants and the operation process of the property, and the rental system consists of many components. Decentralized real estate managers need to be responsible for managing decentralized rental housing, which makes the mode of operation complex and diverse, so the management of housing rental is faced with challenges. And affected by health events in 2020, the rental activity in the United States is active, and the renewal rate of tenants is at an all-time high, and the market is expected to expand in the future.
The solution of traditional house rental has obvious shortcomings.Since the mid-1990s, when the housing rental market began to integrate from decentralization, the demand of the housing rental industry has gone beyond the basic accounting and recording functions, and various new value-added services have been added, such as Internet marketing, rental pricing, tenant screening and owner income optimization. In order to meet the complex and growing needs of the market, the housing rental industry has implemented a large number of point solutions in the past, such as the use ofMicrosoftExcel and some internally developed solutions to manage its properties.
These solutions are costly to implement and maintain, often lack integrated capabilities to help rental property owners, properties, and investors maximize operating income, and do not have relevant research reports and analysis tools. to support investors to optimize their return on investment or to help them make decisions about the allocation of their capital. In addition, at that time, many professionals in the housing rental industry still relied on paper or spreadsheets for recording and calculation, which was prone to human error or company losses caused by disclosure of information due to poor internal management.
2.2. The industry is subdivided and highly competitive.
The subdivision degree of the industry is high, and the competition under the tuyere is fierce.Because the real estate application software industry covers a wide range of areas, including accounting, marketing, operation and maintenance, property services, asset management, tenant management and other sub-areas, so more companies occupy a certain market share in its sub-areas. For example, CoStar studies and provides commercial rental industry data, Truss provides office and joint office rental services for small and medium-sized enterprises, and ClientLook, acquired by LightBox this year, provides commercial rental CRM solutions. Driven by 5G, big data and Internet of things technology, the real estate technology industry has ushered in considerable development. In order to timely update leading technologies and increase market share, various leading companies have frequent M & An activities, such as CoStar's acquisition of hotel data provider STR in 2019, LightBox's acquisition of CRE sales solution provider Real Capital Markets, leasing and asset management platform VTS acquires retail marketing platform Property Capsule, etc.
2.3.RealPageHave a competitive advantage
The competitive advantages of RealPage solutions are as follows:
① SaaS platform based on real-time rental transaction database:The platform provides a single access point over the Internet and provides a public database of rental transaction data, allowing solutions to transmit offline data or access data in real time.
② 's large and growing housing rental system:As of December 31, 2019, RealPage has a customer base of more than 29800, and its integrated data analytics and SaaS solutions help manage approximately 18.5 million U.S. rental operations.
③ provides a comprehensive platform for data analysis and SaaS solution services for the rental industry:The company's solutions and service platform provide in-depth analysis for managing the entire rental cycle of tenants and the core operation process of property management, and provide corresponding services according to the needs of users. This integrated SaaS platform enables customers to optimize operating income and return on investment.
④ in-depth analysis and price optimization tools based on rental transaction data:The company has a huge rental transaction data pool, professional knowledge in rental marketing, professional and scientific team and its strong forecasting ability. Based on statistical modeling and its own solutions, the company provides customers with more detailed market intelligence, which helps to improve customers' operational return and return on investment.
⑤ 's open cloud computing architecture:The company's cloud computing architecture enables its solutions to interface with customers' existing systems and allows customers to outsource the management of third-party business applications, which shortens the sales cycle and improves the adoption of the company's solutions in the target market.
⑥ 's experienced management team, strong integration and operational recordRealPage has an experienced and efficient management team with extensive expertise in the rental industry. The team continues to develop and improve data analysis and SaaS solutions.
3. Strategically stable and will remain in a leading position in the future
3.1. Continuous acquisition of new products and solutions
Continue to acquire complementary businesses, products and technologies.The company selectively evaluates its capital allocation strategy so that the enterprises and technologies it acquires can help the company achieve its strategic goals. On January 22, 2020, RealPage bought Modern Message Inc for a consideration of $65.2 million. The company is a solution provider for the multi-family rental industry. According to statistics, the company's platform can increase the online reputation assessment (ORA) score of 53% for owners and property owners in leases, and the return on investment of its overall solution is as high as 22 times that of other company solutions. At the same time, it can save property managers 50% of management costs.
3.2. It is expected to maintain a leading position in the industry and increase its market share
The company plans to maintain its position as a leading solution provider in the housing rental industry.In the future, the company expects to continue to use its solution platform and industry influence to achieve the goal of maintaining industry leadership and increasing market share. The strategic elements to achieve this goal are as follows:
① expands new customers:The company plans to actively establish new customer relationships with property management professionals and investors who do not currently use RealPage solutions. In addition to promoting the company's property management solutions, the company will also use the cloud open architecture to promote the integration of its solutions with the existing systems of new customers, and sell value-added services supported by software to customers of other third-party property management systems.
② increases adoption of the RealPage platform:The company believes that so far, the penetration of SaaS solutions in the rental market is not high, and these solutions have great potential to sell to customers and generate high SaaS business revenue. By increasing the adoption of RealPage solution platforms and value-added services among existing customers, the company plans to actively sell and cross-sell its solutions to customers.
③ adds new features and functions to the RealPage rental platform:The company plans to continue to develop and introduce new solutions to sell to new and existing customers. These solutions may include solutions deployed internally by the customer and can support the customer to develop their international business. The company plans to build new relationships with third-party application providers who can use the company's open architecture to provide customers with additional product and service capabilities through the platform.
(editor: Li Guojian)