Revenue of $94.5 million is what RealPage reported as the markets closed and this report shows it modestly surpassed the midpoint of guidance with an adjusted EBITDA toward the low end and adjusted EPS at the high end. The gross margin was slightly lower than the general estimate considering RealPage’s implementation investments in LeaseStar. These second quarter results, and of note, on demand organic growth of 20% is a modest positive for the stock considering anxiety heading into the quarter of another deceleration in growth.
RealPage’s third quarter guidance was in line with the predictions as revenue, adjusted EBITDA and adjusted EPS ranges all bracketed consensus estimates. The company did modestly increase the bottom end of their full year revenue range by $1 million to $385 million with the top end stable at $390 million and maintaining an adjusted EBITDA guidance of 490 million to $93 million to $93 million and adjusted EPS between $0.57 and $0.60. RealPage expects to generate between 21% and 22% in on demand reported revenue growth for the third quarter and for the year in full. This should alert investors that execution is improving somewhat. LeasStar growth has remained constant with last quarter evidence that the strength from some products are being offset by customer adoption trends.
Shares of RealPage are considered constructive due to fairly low expectations for on demand organic revenue growth. As the near term investors await success from the new products being introduced and new sales organization initiatives, which theoretically should collectively benefit from an end market that will pursue technology to enhance productivity around and front office tasks. Of note is an expectation of a second quarter trends will be constant for the next few quarters until multifamily churn increases somewhat which should drive more screening and fee related revenues for the company. It should also push association managers and building owners to look more closely at the yield management as well as marketing and customer acquisition products that RealPage offers.