Reliance Global Group, Inc. (RELI) Bundle
Understanding Reliance Global Group, Inc. (RELI) Revenue Streams
Understanding Reliance Global Group, Inc.’s Revenue Streams
As of September 30, 2024, the total revenue for Reliance Global Group, Inc. was $10,757,238, a slight increase from $10,410,591 reported during the same period in 2023, representing a year-over-year growth of 3%.
Breakdown of Primary Revenue Sources
The primary revenue source for the company is commission income, which is categorized into different segments:
| Revenue Source | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Medical | $2,422,523 | $2,557,939 | $8,095,631 | $8,376,964 |
| Life | $46,808 | $30,254 | $141,811 | $135,857 |
| Property and Casualty | $972,127 | $687,390 | $2,519,145 | $1,897,770 |
| Total Revenue | $3,441,458 | $3,275,583 | $10,757,238 | $10,410,591 |
Year-over-Year Revenue Growth Rate
The revenue growth from Q3 2023 to Q3 2024 reflects a 5% increase in commission income from $3,275,583 to $3,441,458.
In the nine-month comparison, the increase in commission income from $10,410,591 in 2023 to $10,757,238 in 2024 also illustrates a year-over-year growth of 3%.
Contribution of Different Business Segments to Overall Revenue
The contribution of each segment to the overall revenue for the nine months ended September 30, 2024, is as follows:
- Medical: 75.4% of total revenue
- Life: 1.3% of total revenue
- Property and Casualty: 23.3% of total revenue
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Medical revenue decreased from $8,376,964 in 2023 to $8,095,631 in 2024, a drop of 3.4%.
- Life insurance revenue increased by 54.5%, from $30,254 to $46,808.
- Property and Casualty revenue saw a significant increase of 32.5%, from $687,390 to $972,127.
Overall, while the Medical segment showed a decline, both Life and Property & Casualty segments exhibited growth, contributing to the overall revenue increase.
A Deep Dive into Reliance Global Group, Inc. (RELI) Profitability
A Deep Dive into Reliance Global Group, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was approximately 71.5%, compared to 73.5% for the same period in 2023. The gross profit for the nine months ended September 30, 2024, was $7,692,086 on total revenue of $10,757,238.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was -62.1%, reflecting an operating loss of $6,690,278 against total revenue of $10,757,238. This is a decrease from -41.0% for the same period in 2023.
Net Profit Margin: The net profit margin was -71.4% for the nine months ended September 30, 2024, with a net loss of $7,673,373 compared to total revenue. In the previous year, the net profit margin was -28.5%.
Trends in Profitability Over Time
The following table illustrates the trends in profitability metrics over the past two years:
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 71.5% | 73.5% | -2.0% |
| Operating Profit Margin | -62.1% | -41.0% | -21.1% |
| Net Profit Margin | -71.4% | -28.5% | -42.9% |
Comparison of Profitability Ratios with Industry Averages
As of 2024, the industry average gross profit margin in the insurance brokerage sector is around 75%, while the average operating profit margin is approximately 10%. The net profit margin averages about 5%. In comparison, the company's margins indicate significant underperformance relative to industry benchmarks.
Analysis of Operational Efficiency
The operational efficiency metrics reveal several insights:
- Commission Expense: For the nine months ended September 30, 2024, commission expenses totaled $3,065,152, an increase of 13% from $2,708,746 in 2023.
- Salaries and Wages: Total salaries and wages for the same period were $5,494,551, reflecting a 3% increase from $5,330,813 in 2023.
- General and Administrative Expenses: These expenses amounted to $3,188,033, which is a 5% increase compared to $3,031,596 in 2023.
- Depreciation and Amortization: Depreciation and amortization costs decreased by 27% to $1,425,700 from $1,962,066 in the previous year.
This trend in increasing operating costs, while revenues are not growing at the same pace, indicates challenges in cost management and operational efficiency.
Debt vs. Equity: How Reliance Global Group, Inc. (RELI) Finances Its Growth
Debt vs. Equity: How Reliance Global Group, Inc. Finances Its Growth
As of September 30, 2024, Reliance Global Group, Inc. reported total liabilities of $14,599,167 compared to $15,867,680 as of December 31, 2023. This reflects a decrease in debt levels over the period.
The company's long-term debt as of September 30, 2024, was $9,887,894, down from $11,026,971 at the end of 2023. The breakdown of long-term debt includes:
| Debt Type | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Term Loan for ABC | $2,615,859 | $2,899,409 |
| Term Loan for Barra | $5,755,819 | $6,089,580 |
| Other Loans | $1,516,216 | $1,661,982 |
| Total Long-Term Debt | $9,887,894 | $11,026,971 |
The short-term debt as of September 30, 2024, was recorded at $106,715, compared to $56,197 at December 31, 2023, indicating a significant increase in short-term liabilities.
The debt-to-equity ratio as of September 30, 2024, is calculated to be approximately 5.17, based on total stockholders' equity of $2,820,600. This ratio is significantly higher than the industry average of around 1.00, indicating a heavier reliance on debt financing compared to equity.
Recent debt issuances include the refinancing of existing term loans with variable interest rates ranging from prime rate plus 2.0% to 2.5%. The company has also engaged in an At Market Issuance Sales Agreement, allowing it to issue shares of common stock to manage its capital structure effectively.
As of the end of September 2024, the company’s cash balance stood at approximately $2,354,000 with working capital of approximately $431,000. This reflects a decrease from a cash balance of $2,739,000 and working capital of $1,189,000 at the end of 2023, indicating tightening liquidity.
In balancing its financing strategy, the company has issued a total of 658,088 shares under the ATM Agreement, raising approximately $2,824,227 net of fees during the nine months ended September 30, 2024. This move aims to strengthen its equity base amid high debt levels.
Assessing Reliance Global Group, Inc. (RELI) Liquidity
Assessing Reliance Global Group, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is approximately 0.69, calculated from current assets of $2,785,000 (including cash of $2,354,000) and current liabilities of $3,403,569.
Quick Ratio: The quick ratio is approximately 0.69 as well, considering that the current assets include cash and cash equivalents, while excluding inventory and other non-liquid assets.
Working Capital Trends
Working Capital: As of September 30, 2024, working capital stands at approximately $431,000, a decrease from $1,189,000 on December 31, 2023.
Cash Flow Statements Overview
Cash Flow from Operating Activities: For the nine months ended September 30, 2024, net cash used in continuing operating activities was $(1,647,881), compared to $(3,833,545) for the same period in 2023.
Cash Flow from Investing Activities: Cash used in investing activities totaled $(58,787) for the nine months ended September 30, 2024, compared to cash provided of $718,583 in 2023.
Cash Flow from Financing Activities: Cash provided by financing activities was $1,321,449 for the nine months ended September 30, 2024, versus $593,912 in 2023.
Potential Liquidity Concerns or Strengths
Despite a cash balance of approximately $2,354,000 as of September 30, 2024, the decline in working capital and the current ratio below 1 indicate potential liquidity concerns. The company's reliance on financing activities, generating $1.3 million in cash, reflects ongoing capital needs to support operations.
| Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Assets | $2,785,000 | $3,928,000 |
| Current Liabilities | $3,403,569 | $2,739,000 |
| Working Capital | $431,000 | $1,189,000 |
| Cash Balance | $2,354,000 | $2,739,000 |
| Net Cash Used in Operating Activities | $(1,647,881) | $(3,833,545) |
| Net Cash Used in Investing Activities | $(58,787) | $718,583 |
| Net Cash Provided by Financing Activities | $1,321,449 | $593,912 |
Is Reliance Global Group, Inc. (RELI) Overvalued or Undervalued?
Valuation Analysis
To determine if Reliance Global Group, Inc. (RELI) is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company reported a basic loss per share of ($10.56) and a diluted loss per share of ($10.56). Given that the current P/E ratio cannot be calculated due to the company reporting a loss, it indicates that traditional valuation metrics may not be applicable.
Price-to-Book (P/B) Ratio
The book value per share is calculated as follows:
- Total stockholders’ equity: $2,820,600
- Shares outstanding: 1,452,249
- Book value per share: $1.94 (calculated as $2,820,600 / 1,452,249)
As of the latest available stock price of $4.56 from the At Market Issuance Sales Agreement, the P/B ratio is approximately 2.35 (calculated as $4.56 / $1.94).
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the company reported an AEBITDA of $42,508. The enterprise value can be estimated as follows:
- Market capitalization (current stock price shares outstanding): $6,622,877.84 (calculated as $4.56 1,452,249)
- Total debt: $10,431,297 (total liabilities as of September 30, 2024)
- Cash and cash equivalents: $2,354,000
- Enterprise value: $14,704,177.84 (calculated as market cap + total debt - cash)
Thus, the EV/EBITDA ratio is approximately 346.68 (calculated as $14,704,177.84 / $42,508).
Stock Price Trends
Over the last 12 months, the stock price has fluctuated, with a recent peak of $4.56 and a low around $1.80. The stock has shown volatility, reflective of market sentiment and operational performance.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, and therefore, the dividend yield is 0%. There is no payout ratio applicable due to the absence of dividends.
Analyst Consensus
As of the latest reports, analysts hold a consensus rating of Hold for Reliance Global Group, Inc. This suggests that while the stock is not currently seen as a strong buy, there are no immediate concerns prompting a sell rating.
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Loss reported) |
| P/B Ratio | 2.35 |
| EV/EBITDA Ratio | 346.68 |
| Stock Price (Current) | $4.56 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Reliance Global Group, Inc. (RELI)
Key Risks Facing Reliance Global Group, Inc.
Internal and External Risks
- Industry Competition: The company faces intense competition in the insurance brokerage market, impacting pricing and market share.
- Regulatory Changes: Changes in regulations could significantly affect operational capabilities and compliance costs.
- Market Conditions: Economic downturns can lead to decreased demand for insurance products and services.
Operational Risks
- Financial Performance: For the nine months ended September 30, 2024, the company reported a net loss of $7,673,373, compared to a loss of $2,982,827 for the same period in 2023.
- Loss from Operations: The loss from operations for the same period was $6,690,278, up from $4,278,308 in 2023.
Financial Risks
- Debt Levels: Total liabilities as of September 30, 2024, were approximately $14,599,167, a decrease from $15,867,680 at the end of 2023.
- Cash Flow: The company had a cash balance of approximately $2,354,000 as of September 30, 2024, down from $2,739,000 at December 31, 2023.
Strategic Risks
- Market Position: The company’s ability to maintain its market position is challenged by new entrants and changing consumer preferences.
- Acquisition Strategies: The effectiveness of the company’s acquisition strategy can impact overall growth and integration costs.
Mitigation Strategies
- Cost Management: The company has been actively reducing operating expenses, achieving a decrease from $4,710,637 in Q3 2023 to $3,953,435 in Q3 2024.
- Capital Raising: The company has entered into an At Market Issuance Sales Agreement to raise additional capital, with a remaining capacity of approximately $902,000.
| Risk Factor | Description | Current Impact |
|---|---|---|
| Net Loss | Increased losses affecting financial stability | $7,673,373 (2024) |
| Loss from Operations | Higher operational losses | $6,690,278 (2024) |
| Total Liabilities | Debt levels impacting financial flexibility | $14,599,167 (2024) |
| Cash Balance | Reduction in liquid assets | $2,354,000 (2024) |
| Operating Expenses | Efforts to reduce costs | $3,953,435 (2024) |
Legal and Compliance Risks
- Litigation: The company is subject to various legal proceedings, which may have financial implications, though no material adverse effects are anticipated.
Future Growth Prospects for Reliance Global Group, Inc. (RELI)
Future Growth Prospects for Reliance Global Group, Inc. (RELI)
Analysis of Key Growth Drivers
The company is focusing on several growth drivers, including:
- Product innovations in insurance products and services.
- Expansion into new markets, particularly through strategic acquisitions.
- Enhancement of digital capabilities to improve customer engagement.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the total revenue was $10,757,238, compared to $10,410,591 for the same period in 2023, marking a growth of 3%. The projected revenue growth for 2024 is estimated at approximately 3.3% year-over-year based on current trends.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has engaged in an At Market Issuance Sales Agreement with EF Hutton LLC, which allows the issuance of common stock with a net remaining ATM capacity of $902,000 as of the latest report . This capital can be utilized for further acquisitions and operational enhancements.
Competitive Advantages that Position the Company for Growth
The company benefits from established relationships with significant insurance carriers, with Priority Health accounting for 33% of total revenue in the nine months ended September 30, 2024 . This dependency on major customers provides stability and opportunities for cross-selling additional services.
| Growth Metric | 2023 | 2024 (Projected) | Growth Rate (%) |
|---|---|---|---|
| Total Revenue | $10,410,591 | $10,757,238 | 3% |
| Commission Income | $10,410,591 | $10,757,238 | 3% |
| Average Price per Share (ATM) | N/A | $4.56 | N/A |
| ATM Capacity Remaining | N/A | $902,000 | N/A |
Conclusion of Growth Opportunities
Overall, Reliance Global Group, Inc. is poised for growth through strategic initiatives, product innovations, and market expansions, supported by strong relationships with key insurance carriers and effective capital utilization strategies.
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Updated on 16 Nov 2024
Resources:
- Reliance Global Group, Inc. (RELI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Reliance Global Group, Inc. (RELI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Reliance Global Group, Inc. (RELI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.