Earnings call transcript: Reliance Global Q1 2024 shows revenue rise

Reliance Global Group reported a modest increase in revenue for the first quarter of 2024, alongside a reduction in net loss. The company’s stock, however, saw a decline in aftermarket trading, continuing its challenging trajectory that has seen an 80% decline over the past year according to InvestingPro data. Reliance Global continues to focus on innovation and operational improvements, with plans for strategic acquisitions and platform enhancements. Analysis from InvestingPro suggests the stock is currently trading below its Fair Value, presenting a potential opportunity for value investors.

Key Takeaways

• Revenue increased by 2% from the previous year.
• Net loss improved significantly, decreasing by 24%.
• The company launched an AI-powered platform, Reliaxchange.
• Aftermarket stock price dropped by 3.42%.
• Strategic acquisition of Spentner Associates is underway.

Company Performance

Reliance Global Group demonstrated a steady performance in Q1 2024, with a 2% increase in revenue, reaching $14.1 million compared to $13.7 million in 2023. The company’s focus on cost efficiency and strategic investments has led to a notable reduction in net loss, shrinking from $12.1 million to $9.1 million. This improvement aligns with the company’s strategy to enhance profitability and operational excellence, though InvestingPro data reveals challenges with a weak gross profit margin of 16.5% and negative EBITDA of -$2.23 million in the last twelve months. For deeper insights into RELI’s financial health and additional ProTips, subscribers can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Financial Highlights

• Total Revenue: $14.1 million, up 2% from $13.7 million in 2023.
• Commission Expense: Increased by $500,000, reflecting a 12% growth.
• Salaries and Wages: Decreased by $200,000, a 4% reduction.
• Net Loss: Reduced to $9.1 million from $12.1 million, a 24% improvement.
• Adjusted EBITDA: Improved from -$500,000 to -$300,000, marking a 39% improvement.

Outlook & Guidance

Reliance Global is optimistic about its future, with plans to acquire Spentner Associates and enhance its Reliaxchange platform. The company aims to become a multibillion-dollar enterprise through innovation and operational excellence, despite InvestingPro indicating rapid cash burn and a concerning Altman Z-Score of -12.97. Forward-looking EPS forecasts for FY2024 and FY2025 are set at $1.29 and $5.44, respectively, with revenue projections of $22.8 million for FY2024 and $30.78 million for FY2025. InvestingPro subscribers have access to detailed financial health scores and additional metrics that provide crucial context for these ambitious targets.

Executive Commentary

CEO Ezra Beynon emphasized the company’s commitment to innovation and operational excellence, stating, "The momentum we have built in 2024 is just the beginning." CFO Joel Markovich highlighted the focus on building a profitable business, saying, "We remain laser-focused on continuing to build a highly profitable business enterprise."

Risks and Challenges

• Market Volatility: Continued fluctuations could impact stock performance.
• Integration Risks: Challenges may arise from the Spentner acquisition.
• Competitive Pressure: The InsurTech sector is highly competitive, requiring constant innovation.
• Economic Conditions: Macro-economic factors could affect growth prospects.
• Technological Advancements: Keeping pace with rapid technological changes is crucial for maintaining a competitive edge.

Reliance Global’s strategic initiatives and financial improvements position it well for future growth, although market conditions and competitive pressures remain key challenges.

Full transcript - Reliance Global Group Inc (RELI) Q4 2024:

Conference Operator: Good day, and welcome to the Reliance Global Group’s Fourth Quarter and twenty twenty four Year End Business Update Call. At this time, all participants are in a listen only mode and a question and answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Ted Avas of Crescendo Communications.

Sir, you may begin.

Ted Avas, Crescendo Communications Representative, Crescendo Communications: Thank you. Good afternoon, and thank you for joining Reliance Global Group’s twenty twenty four year end financial results and business update conference call. On the call with us today are Ezra Beynon, Chairman and Chief Executive Officer of Reliance Global Group and Joel Markovich, Chief Financial Officer of Reliance. Earlier today, the company announced its operating results for the year ended 12/31/2024, and the price release is posted on the company’s website, www.relianceglobalgroup.com. In addition, the company will be filing its annual report on Form 10 ks with the U.

S. Securities and Exchange Commission today, which can also be accessed on the company’s website as well as the SEC’s website at www.sec.gov. If you have any questions after the call or would like any additional information about the company, please contact Rescendo Communications at (212) 671-1020. Before Mr. Bayman reviews the company’s operating results for the year ended 12/31/2024, we would like to remind everyone that this conference call may contain forward looking statements.

All statements under the statements of historical facts contained in this conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations are forward looking statements. The words anticipate, estimate, expect, project, plan, seek, intend, believe, may, might, will, should, could, likely, continue design and the negative of such terms and other words and terms of similar expressions are intended to identify forward looking statements. These forward looking statements are based largely on the company’s current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short term and long term business operations and objectives and financial needs. These forward looking statements are subject to several risks, uncertainties and assumptions as described in the company’s Form 10 K filed with the U. S.

Securities and Exchange Commission on 03/06/2025. Because of these risks, uncertainties and assumptions, the forward looking events and circumstances discussed in this conference call may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward looking statements. You should not rely upon forward looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward looking statements are reasonable, it cannot guarantee future results, level of activity, performance or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward looking statements.

The company disclaims any duty to update any of these forward looking statements. All forward looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made on this conference call. You should evaluate all forward looking statements made by the company in the context of these risks and uncertainties. Having said that, I would now like to turn the call over to Ezra Beiman, Chairman and Chief Executive Officer of Reliance Global Group. Ezra?

Ezra Beynon, Chairman and Chief Executive Officer, Reliance Global Group: Thanks, Ted. Good afternoon and thank you for everyone for joining us today. We are excited to share that 2024 has been a year of continued revenue growth and solid operational performance for Reliance. This transformative year was fueled by our disciplined fiscal management, strategic investments in technology and well targeted acquisitions. One firm’s strategy played a crucial role by seamlessly integrating our agency operations into a unified tech driven platform.

This approach not only boosted efficiency and cut costs, but also strengthened our net operating results. These efforts have greatly improved our profitability and we believe positioned us for long term scalable growth in the ever evolving InsurTech landscape. In addition, we believe that the planned acquisition of Spentner Associates, which I am pleased to report is now in the final stages and expected to close in the near future and the ongoing expansion of Reliaxchange AI powered quote and bind platform are set to create substantial value for both the company and its shareholders. Our quote and bind platform has transformed the insurance purchasing experience by enabling agents to generate competitive quotes and buying policies instantly. By harnessing the power of AI, automation and advanced data analytics, we are boosting efficiency, enhancing underwriting accuracy and providing exceptional service to our agents and their clients.

We have made substantial enhancements to the Reliaxchange quote and buy in platform, reinforcing our position as a leader in the insurtech space. Since its initial beta launch in September, the platform has rapidly expanded to feature a greater number of carriers and a wider selection of insurance products with even more upgrades on the horizon. Designed to simplify workflows for agents, it enables them to generate quotes and buying policies instantly, significantly boosting efficiency and speeding up the policy issuance process. Leveraging AI driven automation, the platform enhances underwriting accuracy while providing access to top tier carriers, which helps ensure competitive pricing and a diverse range of coverage options. At Reliance, we are committed and transforming the insurance industry through the strategic use of technology and automation.

By continuously expanding our quote and buy platform, we are equipping agents with advanced tools to improve efficiency, close deals more quickly and drive profitability. This initiative is a key part of our strategy to establish RelianceChange as the most competitive and insurance friendly InsurTech solution in the market. Looking ahead, we cannot be more excited about the future of Reliance Global Group. With our disciplined expansion strategy, cutting edge technology and well planned acquisitions, we are in a strong position to seize new opportunities in the rapidly evolving InsurTech space. The expected completion of the Sprechner acquisition and the ongoing enhancements to our quote unbind platform are just the start of what we believe will be a period of unprecedented growth.

We are committed to innovation, operational excellence and delivering exceptional service to our agents and customers. By staying true to our vision, we are confident that we can build Realiance into a multibillion dollar company, highly profitable that creates sustainable long term value for our shareholders. The momentum we have built in 2024 is just the beginning. We are truly excited about what’s in store for 2025 and beyond. I would now like to turn the call over to Joel Markowitz, our Chief Financial Officer of Realign Global to review the financial results for the year ended 12/31/2024.

Joel?

Joel Markovich, Chief Financial Officer, Reliance Global Group: Thank you, Ezra, and good afternoon. It’s my pleasure to share some key financial highlights for the year ended 12/31/2024. All figures presented are approximates. As Ezra mentioned, 2024 has been another year of sustained revenue growth and solid operational performance. Year over year, for the years ended 12/31/2024 and 2023, revenues increased by 300,000 or 2% to $14,100,000 compared to $13,700,000 This upward trend is attributed to sustained organic growth of our current in place operations.

Commission expense increased by $500,000 or 12%, primarily driven by swings in the company’s commission income revenue mix and organic revenue growth. Salaries and wages decreased by 4% or $200,000 demonstrating the company’s ability to effectively and efficiently utilize its human capital and still continue to organically grow revenues and operations. General and administrative expense increased nominally by $100,000 or 3% driven in part by general inflation and acquisition related costs, however, offset by one time cost efficiency enhancements. Total operating expenses decreased by 21% or $5,900,000 This resulted in positive movement in our loss from operations, which improved at 45% or $6,200,000 Net loss decreased by $2,900,000 or 24% to $9,100,000 versus $12,100,000 This positive swing results from amongst other things lower intangible asset impairment charges and more importantly, the company is successfully simplifying its balance sheet, decreasing or eliminating previous encumbrances resulting from certain fair value contingent and warrant liabilities, where those positions were liquidated or substantially reduced during 2024, thus minimizing adverse impacts from fair value swings affecting the company’s profitability. Turning to APIDA, our adjusted EBITDA metric, a non GAAP measure, but key company performance indicator.

APIDA improved significantly during 2024 by 39% or $200,000 from a loss from $500,000 to a loss of $300,000 brought about through the implementation of our One Fund strategy, which drives disciplined fiscal management and exciting organic operational growth. The 39% EBITDA improvements demonstrate the company’s continued trend towards sustained EBITDA profitability. Hopefully, these financial highlights were helpful. And to close out our formal remarks, I want to reiterate Ezra’s comments that we’re excited to be nearing a closing on the Spepner M and A deal. And we remain laser focused on continuing to build a highly profitable business enterprise through expansion and innovation, strengthening our market share and providing substantial returns and long lasting value to our shareholders.

Let me now turn the call back over to the operator to open the lines for questions, comments or feedback. Operator?

Conference Operator: Thank We have a question from Nicole Kaufman with Blackridge Capital. Your line is live.

Nicole Kaufman, Analyst, Blackridge Capital: Hi, good afternoon guys. Thank you for taking my question. So the Suttner acquisition seems to be on track, but can you provide any additional color or elaborate further on status?

Ezra Beynon, Chairman and Chief Executive Officer, Reliance Global Group: So we technically can’t tell you that much about it. Could tell you, we’re very excited. We’re getting close. Some of the finishing touches are being done, whatever had to be done. And we’re excited as ever because we’re going to have great communication with Jonathan Spettner.

The numbers that we’re seeing it and our auditors are seeing it, phenomenal. The growth has been beautiful and we’re so excited about not only its business, how it meshes, with our business, the core selling abilities, the recognition it gives us, the exposure to as we said in our announcements over 85,000 employees. We couldn’t be more excited. It’s really and it’s really heading in the right direction. We look forward to suing soon making that beautiful announcement.

Nicole Kaufman, Analyst, Blackridge Capital: Well, thank you for answering the question and I’m looking forward to the announcement as well. I’ll hop back in the queue if I have an additional question. Thank you again.

Joel Markovich, Chief Financial Officer, Reliance Global Group: Thank you. Thank you, Nicole.

Ted Avas, Crescendo Communications Representative, Crescendo Communications: Thank

Conference Operator: you. As we have no further questions on the lines at this time, I would like to hand it back over to management for any closing remarks they may have.

Joel Markovich, Chief Financial Officer, Reliance Global Group: Thank you. On behalf of Ezra and the entire Reliance team, thank you all for your participation in this business update. We are excited and energized by the company’s future and are incredibly happy to be sharing this onward journey with you, our valued shareholders and other interested parties. Until next time, we wish you all the very best.

Conference Operator: Thank you. This does conclude today’s conference. You may disconnect your lines at this time and we thank you for your participation.

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