Ohmyhome Ltd Q3 FY2024 Earnings Call

Hi, good evening everyone and good morning for our investors dialing in from the U.S. welcome to Ohmyhome Q3 2024 growth updates. Before we start, we would like to quickly go through the important notice and disclaimers. This presentation contains forward-looking statements that reflect our current expectations and view of future events, all of which are subject to risks and uncertainties. If used, the words believe, may, will, estimate, continue, anticipate, intent, expectations and similar expressions are intended to identify forward-looking statements. Forward-looking statements give our current expectations or forecast of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements are likely to address our growth strategy, financial results and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions or a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statements can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in forward-looking statements include, but aren't limited to, assumptions about future financial and operating results, including revenue, income, expenditure, cash balances and other financial items. Our ability to execute our growth strategies, including our ability to meet our goals, current and future economic political conditions, our capital requirements and our ability to raise additional capital which we may require. Our ability to attract customers and further enhance our brand recognition, our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business trends and competition in the brokerage and related industry and other assumptions described in this presentation underlying or relating to any forward-looking statements. We describe certain material risks, uncertainties and assumptions that could affect our business, including our financial conditions, results of operations, financial filings that we base our forward-looking statements on our management belief and assumptions based on our information available to our management at the time the statements are made. We caution you that actual outcomes are likely to differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date on which statements are made or to reflect the occurrence of unanticipated events. You should read our public filings and the documents that we refer to in this presentation with understanding that our future results may be materially different from what we expect.

Hi everyone. Good day to you. I'm Rhonda Wong, CEO and co-founder of Ohmyhome. Thank you very much for joining us today. We founded Ohmyhome in 2016, and that's Race Wong and myself in the image. We're sisters, born in Malaysia, raised in Singapore. We started Ohmyhome with a background in property transactions and trading. We realized that there is a huge market gap where many people who are selling and buying infrequently do not quite have the right knowledge or information when it comes to real estate transactions. We rely on real estate agents to provide information. So we have since become Singapore's largest integrated property transactions and services platform. Many people call us the One-stop Shop, which means that aside from buying, selling and renting with Ohmyhome, you can also secure mortgage, legal services as well as renovation and property management. Our vision is to be the most trusted and comprehensive property solution for everyone. By everyone, we mean those who can't afford services or agencies, as well as the rest of the market from investors to your everyday folks buying and selling for the first time. In order to achieve scalability and to serve more consumers across the world, we then use technology to bring speed, ease, and reliability to property-related services. We are very happy to share and present our results today, and today's presentation will be led by our Director of Finance, Leo Li.

All right, thank you Rhonda. So first off, just a quick overview of our latest cap table. Our ticker symbol is OMH, traded under the NASDAQ Exchange. Our IPO was last year on March 21, and our current shares outstanding are at 23 million shares as of yesterday. Now share price as of yesterday was $0.44 USD and our last 90 days average trading volume is 135,000 shares per day. Analyst ratings by Maxim and Zacks are sitting at $1.5 and $3 respectively. On September 6, 2024, the founders, namely Race and Rhonda Wong, exchanged half of their monthly salaries from January to August 2024 into ordinary shares, and those shares were issued on October 4, 2024. This green section here represents the additional shares being acquired by the two founders. This shows that the founders believe in the business and are committed to it. We will later share the reason why, primarily because of the growth of the business that we are seeing. So we are a property one-stop shop, and this diagram encapsulates all the businesses that we do, so our customers can come in from every part of their lifecycle with Ohmyhome. For potential buyers or sellers, usually they will start with the research section where they look at free blogs, valuation of homes, and guides. Some who may be considering doing it by themselves with the time and energy to do so will do so via our DIY platform with verified listings by homeowners. The majority of our customers prefer to have an agent to help them transact their property, and all of our agents are in-house and also top 1% in Singapore in terms of the number of transactions across the entire island. We usually charge around 1% of the property's value as a commission revenue for our brokerage business. To support our brokerage business and also to help our customers close faster, we also work with banks to provide mortgages and trusted law firms to provide legal conveyancing services. During the process, it is common for homeowners who have just purchased their home to look for renovation. We also operate as the main contractor in the renovation business with in-house interior designers and project managers to help design and build their dream homes for our clients. For this segment, we typically service high-end condominium homeowners, landed homeowners, and office renovation projects. Lastly, we have a prominent property management business where we act as managing agents for multiple condominium projects. We help them manage all common areas and allow residents to book facilities like tennis courts and saunas, collecting property management revenue from them. A quick recap of our first half of 2023 results in case some investors missed it. We have seen stellar growth of 106% in terms of revenue. Our revenue grew from SGD 2.17 million to SGD 4.47 million, and our gross profit has almost doubled and this is mainly due to margin improvement across all our businesses. Our brokerage gross margin increased from 46% to 49%. Our renovation business margin improved from 23% to 28%. Our property management gross margin also increased from 31% to 33%. Although we are still incurring a loss, the loss is narrowing as we continually invest in technology, and we have seen a net decrease of 220,000 compared to the same period last year. Operating expenses remained high in the short term mainly due to a recent acquisition of the property management business, and we need time to optimize costs. There's also an increase in amortization expenses of 440,000 in the first half of 2024 versus only 180,000 from the same period last year. Operating expenses are expected to reduce significantly from the third quarter onwards, mainly due to a series of cost optimization plans initiated in second quarter 2024. We expect this number to narrow significantly going forward. In terms of our balance sheet, we have seen improvement with increased assets, decreased liabilities leading to a net increase in equity. Cash and cash equivalents have rebounded to a healthy SGD 2.4 million due to a placement undertaken in the first quarter of the year to execute our strategy for further growth and breakeven.

Now come to the important part. We would like to summarize our presentation with three key points. First is that we are a high-growth prop-tech company. Secondly, we have a business model that is highly profitable at scale, and we are currently trading at a low valuation multiple compared to what's happening in the industry. Regarding the first point, I will detail the numbers here. For the third quarter of 2024, we are seeing a gross transaction value of homes brokered amounting to $212 million for the first nine months of 2024, representing a 51% increase compared to last year. We have also seen a significant increase in renovation contracts signed, totaling SGD 2.43 million for the same period, which is close to 300% of last year. In terms of units managed by our property management business, we have increased from 6,700 units at the end of the year to 9,283, marking a 30% year-on-year increase. The total property transaction GDP stands at SGD 334 million, similar to last year, but out of that, 63% went through our agents compared to just 42% last year. Lastly, maintaining cash balance is always a focus. As of September 30, 2024, our cash balance is at 22.1 million, significantly up from the last reported figure of 1.8 million in June. For brokerage services, we have seen a steady increase, indicated by the number of transactions and the gross transaction value in USD millions showing healthy growth. For the first nine months of 2024, we noted a 51% increase in total GTV, and a 32% increase in transactions. Our gross margins have improved due to enhanced brand awareness and the successful launch of HomerAI in the second half of 2023. To recap, HomerAI is a unique homeowner-focused platform that streamlines the home selling process, available as an application and mobile service for our Singapore customers. Users can see live valuation data supported by extensive guides, enabling us to build a sales pipeline for mid-to-high intent sellers, thereby enhancing user acquisition strategies over time.

In the third quarter of 2024, we have connected close to 10,000 homeowners on the platform, collecting valuable user data for targeting and optimizing our services. This number continues to grow steadily, indicating increasing transaction volumes via homeowner users that have also risen comfortably over the years. Currently, the total homes connected amount to around 33,000, representing over $20 billion in gross merchandise value that is waiting to be transacted. The transaction originating from HomerAI users has grown from 0% at inception to nearly 20% of the total brokerage operations. We continue to develop new features for users, enabling them to manage their listings seamlessly while ensuring they have the latest home valuations and pre-drafted messages to simplify communication. Our technology allows us to respond instantly to inquiries while providing data-driven insights, setting us apart from traditional agents who may lack accuracy. Our agents can now focus more on closing deals rather than answering routine queries, driving higher transaction volumes at a faster pace than market averages, while ensuring customer satisfaction.

We are proud of our consistent performance in providing excellent service quality alongside leveraging technology. We are able to process transactions faster with 65% of our deals completed within seven days on average, and 73% of our properties achieved sales above market average prices. Our efficient technology implementation results in a stellar client satisfaction rating of 4.9 stars across all platforms. To put this in context, each of our agents can close 60 to 70 deals per year, while traditional brokerage models only manage three to five deals. Additionally, as we expand into the high-end renovation segment, DreamR has recorded $1.5 million worth of renovation contracts in the third quarter of 2024, translating to a massive 400% growth compared to last year. We have achieved 286% growth for the first nine months combined, focusing on higher-end commercial and residential projects, capitalizing on our technological advancements that have enhanced user experiences by generating personalized ideas and mood boards that cater to their renovation visions through AI.

Our property management segment is also growing, currently managing over 30 condominium projects with more than 9,000 units, representing impressive growth for just three years of operation. By managing these properties, we create recurring revenue streams and engage higher-end customer bases, benefiting our brokerage and renovation services. The recurring fee model per managed unit significantly strengthens our financial position. During this growth phase, we are also capturing additional market share and nurturing recurring customers by creating seamless mobile-based property management services with full task management integration.

Our three key drivers for growth include seamlessly integrating our condo and property management services, actively growing our customer pipeline with new partnerships, and employing AI tools such as HomerAI for improved client engagement. To summarize, we currently maintain a whopping 13 times more customer lifetime value compared to traditional brokerages, allowing us higher profitability margins at scale. This is attributed to our underlying structure where we can retain 50% gross margins instead of the standard 5% found in typical freelance models. Our renovation deals yield significantly higher profits while providing added value through improved service offerings, underscoring why our business is positioned for sustainable growth.

Lastly, we are trading at a considerably lower valuation multiple at 1.3 times revenue, starkly lower compared to peers such as Property Guru, recently acquired at a valuation of 9 times their projected revenue. This disparity highlights the market's undervaluation of our potential as we continue to build our reputation and market presence. We hope that as awareness grows, more investors will recognize our unique value proposition. In closing, we have demonstrated consistent growth and opportunities for future expansion. Our commitment to developing our services alongside responding to market needs will ensure we remain as a competitive market player in Southeast Asia, and we thank everyone for their attention today.

We appreciate everyone's attention today. As we continue to build our reputation and market presence, we believe the market is currently undervaluing our potential. We are optimistic that as awareness increases, more investors will see our unique value proposition. We have shown consistent growth and have opportunities for future expansion. Our dedication to developing our services in line with market demands will keep us competitive in Southeast Asia.

Hi Alan. So together with us, we have one of our analysts on the call, Mr. Allen Klee from Maxim.

Hi, can you hear me?

Yes.

Yes, yes, we can hear.

Oh, hello. A couple of things stood out. One, I heard you say that you increased your cash levels. How? I was curious how you were able to do that.

Well, as we mentioned in the presentation earlier, we are very focused on our operating efficiency. Essentially, we have closed many more deals and secured additional renovation contracts that helped us build our cash flow recently. Additionally, our losses have significantly reduced due to initiatives taken in the second half of the year.

So that...

Sorry, Allen.

Yes, no, go ahead.

I also saw Derek asking about elaboration on the cost generation. This is not rocket science. We have evaluated all of our internal headcount and resources; we have optimized them to ensure every dollar spent achieves the expected ROI. We also redirected some resources into marketing, focusing on revenue generation and growth. This is the result of both increased sales and revenue seen in the third quarter along with reduced expenditure.

Our acquisition into property management has assisted us as well. With thousands of units under management, we can better offer services without incurring excessive customer acquisition costs. Moreover, we've increased our partnerships, collaborating with various partners from SMB coffee shops to finance and insurance companies, boosting our lead generation. Previously, we relied heavily on paid marketing. As we enter our eighth year, we’re exploring ways to generate more organic reach for customer acquisition. We are now the highest-rated brokerage prop-tech company in the entire region with over 8,000 five-star reviews. As highlighted earlier, compared to other brokerages in Singapore, there are numerous complaints against agents in terms of dishonesty, opaque information, and costly services. Thus, we initiated Ohmyhome to better serve customers. We have made substantial progress and recognize the areas for continued growth.

I was just wondering if you could give us some commentary on the Singapore housing market overall and the economy.

The Singapore housing market is generally vibrant, largely due to government regulations that control pricing and prevent overheating. Over the past decade, the government's efforts have ensured that most real estate owners are cash-rich, allowing them to withstand higher interest rates and economic fluctuations without having to sell at steep discounts. In an environment of higher interest rates globally, Singapore’s interest rates remain lower. For example, our high is about 3% to 4% and our low is around 1% to 2%. As these interest rates decrease, we expect more activity in the market. Overall, the Singapore transaction dynamics are such that we remain unfazed whether the market rises or falls, as long as transactions occur. Annually, Singapore has about 40,000 sales transactions and approximately 100,000 rental transactions. While this is small compared to countries like the U.S. or India, each transaction is substantial given Singapore's property prices—an average government housing unit costing around $350,000 and private properties ranging from $1 million to $5 million. Therefore, we anticipate more activity as interest rates decline, although transaction volumes have been healthy over the past few years. We entered the market in 2016, a time of high taxation, intending to fill the market gap precisely. In doing so, within four months, we rose to become the top player. Derek asked if the higher agency fees result from lower transactions, which is indeed due to more condo transactions. The acquisition of the property management business has drawn more condo customers. Moreover, our marketing efforts aim to increase deal values per transaction, which has also led to larger renovation contracts. We have shifted focus to renovation deals exceeding $200,000, finding success in that segment as we expand our operations and remain hands-on in understanding market dynamics.

Allen, do you have any further questions or comments?

I think you mentioned this, but if you could highlight how the combination of using the property management business and your AI tool have been able to grow business and the opportunities for continuing this growth.

Thank you, Allen. It's a good question regarding HomerAI. The beauty of HomerAI isn't just that it's an AI tool; it’s about its practical application in our business. I recently had discussions with some prop tech colleagues in the U.S., and what we’ve developed here with HomerAI is unique and not widely implemented in the U.S. market. The costs associated with developing this technology are high, and during its initial launch period, we prided ourselves on ensuring it was built to scale for maximum output. It's beneficial for us whether we have 10 users or 1 million as the fundamental tech cost remains constant. As our user base grows, so do our conversion rates become more affordable and accessible. Through HomerAI, we proactively engage homeowners who might not be considering transactions currently but are provided with valuable market information and valuations continuously. Should they decide to transact, our brand remains top-of-mind due to their earlier engagement with our platform. Our successful user engagement signifies that effective technology leads to reduction in queries needing agent intervention, while enhancing agents' capability to focus on closing deals, thereby increasing overall rates of successful transactions.

In addition to AI, our existing property management app serves as an additional means of integrating users. The app supports managing over 9,000 units while providing various services and proactive engagements that hook homeowners into our ecosystem of services, thus allowing for price discovery through HomerAI. While we're still in our integration phase, the seamless transition from property management to direct service engagement options will enhance user interactions. To address Linda's question on attracting new investors, we acknowledge our efforts haven't yielded the anticipated results, but our core focus remains on delivering business results that provide lasting value to shareholders over flashy marketing campaigns. We intend to enhance exposure gradually with an emphasis on business efficacy while actively maintaining our investor communication through various social platforms. As time is running short, thank you, Rhonda, thank you everyone for attending. Thank you, Allen, for your questions.

Thank you everyone, and do check out our latest videos from our tour in the United States. We’re thrilled with the work we’re doing, and we’re excited to see you at our next update.

Thank you everyone. For any questions or further information, feel free to visit our website at www.ohmyhome.com and our Investor Relations site, ir.ohmyhome.com. If any questions arise, please feel free to email [email protected]. Thank you, and have a great day.