RE/MAX Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 2, 2025

There are 9 speakers on the call.

Operator

Good morning, and welcome to the REMAX Holdings First Quarter twenty twenty five Earnings Conference and Webcast. My name is Ellie, and I will be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Andy Schulz, Senior Vice President of Investor Relations. Mr. Scholes?

Speaker 1

Thank you, operator. Good morning, everyone, and welcome to REMAX Holdings first quarter twenty twenty five earnings conference call. Please visit the Investor Relations section of www.remaxholdings.com for all earnings related materials, including our standard earnings presentation and to access the live webcast and the replay of the call today. Our prepared remarks and answers to your questions on today's call may contain forward looking statements. Forward looking statements include those related to agent count, franchise sales and open offices, financial measures and outlook, brand expansion, competition, technology, housing and mortgage market conditions, capital allocation, credit facility dividends, share repurchases, litigation settlement, strategic and operational plans and business models.

Speaker 1

Forward looking statements represent management's current estimates. REMAX Holdings assumes no obligation to update any forward looking statements in the future. Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those projected in forward looking statements. These are discussed in our first quarter twenty twenty five financial results press release and other SEC filings. Also, we will refer to certain non GAAP measures on today's call.

Speaker 1

Please see the definitions and reconciliations of non GAAP measures contained in our most recent quarterly financial results press release, which is available on our website. Joining me on our call today are Eric Carlson, our Chief Executive Officer and Carey Callahan, our Chief Financial Officer. Ward Morrison will join us for Q and A. With that, I'd like to turn the call over to REMAX Holdings' CEO,

Speaker 2

Eric Carlson. Eric? Thank you, Andy, and thanks to everyone for joining us this morning. We started the year on a positive note from a financial perspective as our first quarter results feature higher than expected revenue, margins and profits. Our team's focus on operational excellence continues to help margins, enhance overall profitability and strengthen our foundation.

Speaker 2

Cary will provide more details in a few moments. Broadly, the macroeconomic situation and the real estate market are clouded with uncertainty. There are many puts and takes including tariffs, rising inventory, what could happen with interest rates, even recent debate and change in industry policies. Let me spend a moment on that. The National Association of Realtors recently modified its clear cooperation policy which aims to provide more flexibility for home sellers and their agents while maintaining the transparency and fairness of the MLS system.

Speaker 2

REMAX continues to support transparency and fairness as cornerstones in real estate. The recent introduction of the updated policy provides a balanced approach addressing diverse seller preferences while preserving the intent of the clear cooperation policy. It's imperative that agents ensure transparency with their clients clearly outlining the implications of delaying the marketing of listings and helping them adjust expectations accordingly. Ultimately, promoting listings to a broader audience remains in the best interest for most buyers and sellers, a position that REMAX has consistently held and still supports. We are proactively helping our network navigate this change and we remain focused on those things within our control.

Speaker 2

Having the number one brand in real estate and the most trusted, most productive professionals in the business gives us great confidence in our network's ability to adapt and succeed as they have for over fifty years. As we mentioned on our last call, 2025 is an important year for REMAX Holdings and its brands. It's a year of transition, continued building, innovation, evolution and execution. Since I arrived, we've been working on improving the strength of our foundation, people, process, products and platforms. These efforts are positioning us for long term success.

Speaker 2

We are focused on elevating our value proposition to help affiliates win more listings, save time and profitably build their business. Since our last earnings call, we've unveiled bold new resources to help us achieve these objectives. They all support our strategy of expanding and modernizing our products and services and enhancing our competitive advantage. We've made several notable announcements this year involving refreshed dynamic branding, expanded access to productivity boosting agent education, a user friendly social influencer platform, advanced new marketing resources, a comprehensive global referral system, and importantly, an innovative onboarding program called Aspire that will help us attract and develop the next generation of top producing REMAX agents. At this year's R4 convention in February, we unveiled a refresh of our REMAX logotype and balloon logo designed to continue efforts to modernize the branding online and on social media.

Speaker 2

The dynamic visual identity will help REMAX affiliates present themselves in a contemporary way across all digital platforms. We're excited to continue rolling out the refreshed brand throughout 2025 and beyond. We also introduced Max Engage, an easy to use social influencer platform that provides trending content and shareable posts and features rewards, loyalty, and gamification components. It helps the brand get loud, get loud across social channels and throughout the REMAX network, encouraging agents to embrace the size and scale of the REMAX brand, including our tools, education, and unique culture of highly productive and professional agents. We know it's critical for agents to present themselves online in a professional manner.

Speaker 2

The vast majority of customers start their home buying or selling journey online, And three quarters of consumers rate a company on how they show up across digital channels. We're committed to providing tools to modernize how the number one brand in real estate and the most trusted agents in the industry present themselves across digital platforms. These first two programs are Refresh Branding and Max Engage help create a more consistent and professional REMAX image across the board. Exciting new marketing tools are also being deployed, including the launch of a global marketing platform that can be customized at the local franchise and agent level, the successful MaxTech lead concierge program and AI powered website enhancements. We also recently launched the HomeView app, which enables agents to easily communicate with and maintain post sale engagement with clients.

Speaker 2

Coming soon, a new full service global referral system called MaxRefer will be available with AI layered in to easily enable a REMAX agent to find the right referral partner and track everything, including the referral fee being paid, Our worldwide footprint and network of 145,000 agents is unmatched and growing as evidenced by the fact our global agent count grew by over 10% in Q1. Max Referral will help elevate the customer experience and help us further enhance our global competitive advantage, which brings us to our innovative new onboarding program designed to help shape the next generation of top producing REMAX agents, Aspire. This strategic program combines world class education, the advanced technology solutions in Max Tech and financial incentives to support agents who are driven to greatness. We're very excited about Aspire for a host of reasons. It combines many of the foundational pieces we put in place last year, including improved technology and expansive customer feedback loop, enhanced analytics and leveraging the power of the network scale.

Speaker 2

Aspire has been specifically designed to attract promising recruits, increase agent productivity and through both recruiting and retention have a positive impact on agent count. Enhanced recruiting represents one of the greatest opportunities to grow agent count. The fact is REMAX broker owners have not recruited as many agents in recent years as they did in the past. Many have told us their recruiting efforts would be more effective if REMAX could provide more assistance in onboarding and share more of the economic risk in recruiting new agents to the brand. These recruits could need a little more time to build their skills and increase their productivity to REMAX levels or transition their book of business.

Speaker 2

We know we can help those agents who want to be more productive achieve their goals. As a result, the educational component of the Aspire program, which is integrated into Max Tech, is critically important and valuable. According to Buffini and Company, agents who complete its one hundred days to greatness course average seven closed transaction sides, 75,000 in gross commission income, and a handful of referrals during their first year. Retention is much higher when agents reach that level of earnings. Later in the second part of the year, agents in the Inspire program will also benefit from the certified full service professional course, which will help them to become trusted professionals in virtually every aspect of the business.

Speaker 2

The technology piece is very impactful because agents who use Max Tech are nearly twice as productive as those who don't. Plus agents in the Aspire program will be learning the Max Tech platform as they build their sales skills, multiplying the retention factor. Early responses and reactions by the network have been quite positive and we look forward to sharing more on our next earnings call. We've intentionally picked up the pace of change at REMAX as we see many opportunities. Opportunities to improve the customer experience, to expand and elevate our value proposition and diversify and generate more revenue.

Speaker 2

With recent exciting additions to our leadership team in both Canada and The U. S, the continued maturation of our lead concierge, REMAX Media Network and conversions, mergers and acquisition programs alongside the slew of recently announced initiatives, look, it's a new day here at REMAX and we are open for business. Now I'll turn it over to Carrie.

Speaker 3

Thank you, Eric. Good morning, everyone. Our first quarter results were a continuation of a trend we have consistently seen over the past year, driving better than expected expense management to deliver positive margin and profit performance. Our top line performance was also solid this quarter, thanks to healthy broker fee revenue. Moreover, strong operational focus and execution helped produce lower than anticipated expenses despite the macro conditions.

Speaker 3

Some of our notable quarterly financial highlights included total revenue of $74,500,000 adjusted EBITDA of $19,300,000 up 1.5% over Q1 of last year adjusted EBITDA margin of 25.9%, an increase of 164 basis points over the first quarter of twenty twenty four, and adjusted diluted EPS of $0.24 Looking closer at revenue, excluding the marketing funds, revenue was $55,600,000 a decrease of 4.3% compared to the same period last year, driven by negative organic growth of 3.2% and adverse foreign currency movements of 1.1%. The decline in organic growth was principally due to lower U. S. Agent count, mortgage segment revenue and revenue from previous acquisitions, partially offset by higher broker fees. The challenging mortgage market continues to impact our mortgage segment, and it may take a few more quarters to return to consistent revenue growth.

Speaker 3

However, there are some positive signs. In FY 2024, network wide transactions and volume increased compared to 2023. Recently, we also experienced a flurry of franchise renewals with long term Motto owners recommitting for another seven years. Lastly, our annual broker and loan originator conference saw its highest attendance since 02/2019. These developments are encouraging indicators of the mortgage sector's resiliency and highlight the enduring value and opportunity of being a Motto affiliate.

Speaker 3

For the fourth consecutive quarter, margin performance improved, thanks to our focus on ongoing operational efficiencies. First quarter selling, operating and administrative expenses decreased $2,700,000 or 5.9% to $43,000,000 There were many modest puts and takes, but the cost reductions were primarily driven by a decrease in professional fees and certain personnel and events related expenses, partially offset by higher equity based compensation and other technology investments. We continue to generate positive operating cash flow. However, our first quarter cash generation tends to be a little lower given the seasonality of our industry and our annual investment in ARBOR. Consequently, our total leverage ratio was 3.61 to one as of March 31, almost the same as it was at year end.

Speaker 3

We expect our TLR to decrease as we get into the back half of the year as we benefit from stronger seasonal business trends, which should produce higher amounts of free cash flow. We continue to believe our patience from a capital allocation perspective has been prudent. Our priorities remain unchanged, and we are strategically reinvesting in the business and building our cash reserves as we work to lower our PLR below 3.5 times. Now on to our guidance. Given the uncertainty in the current macro environment, coupled with the challenging real estate market, we have a tougher than usual task when it comes to forecasting future results.

Speaker 3

However, we are excited about all of our ongoing initiatives and the momentum we are building. Our second quarter and full year 2025 outlook assumes no further currency movements, acquisitions or divestitures. For the second quarter of twenty twenty five, we expect agent count to increase 1.5% to 2.5 over second quarter twenty twenty four, revenue in a range of $70 to $75,000,000 including revenue from the marketing funds in a range of $17,000,000 to $19,000,000 and adjusted EBITDA in a range of 22,500,000.0 to $25,500,000 dollars For the full year 2025, we still expect agent count in a range from negative 1% to positive 1% over full year 2024, revenue in a range of $290,000,000 to $310,000,000 including revenue from the marketing funds in a range of 71,000,000 to $75,000,000 and adjusted EBITDA in a range of 90,000,000 to 100,000,000 With that, I'll turn it back to Eric for closing comments.

Speaker 2

Thanks, Carrie. I just wanted to note that this is Ward Morrison's last earnings call. After an impressive twenty year run at REMAX, Motto and Weemlo, Ward is retiring from REMAX Holdings next month, getting married and heading off to start the new chapter of life. We thank him for his many contributions and wish him nothing but the best of luck. Thank you, Ward.

Speaker 2

With that, operator, let's open it up for questions.

Operator

Thank you. We are now opening the floor for question and answer session. Your first question comes from the line of Anthony Paolone of JPMorgan. Your line is now open.

Speaker 4

Thanks. Good morning. I mean, first question is on the franchise sales line. I know it's a smaller revenue line, but down a decent amount year over year. I was wondering how much of that is maybe just the conference versus whether that line item is going to be pressured from some of these other initiatives to combine franchises and help grow teams and other things that might take away from the actual franchise sales?

Speaker 3

Yes. Good morning, Tony. Thanks for the question. So, you know, I think a couple things. As it relates to, to the annual conference, it was actually a fantastic conference this year.

Speaker 3

Although attendance was down a little bit, I think engagement was significantly up. So from a revenue perspective, we were a couple hundred thousand dollars down. The other thing that's pressuring that line is actually the wind down of some of our prior technology acquisitions, so our Gadbury acquisition in particular. That's pressuring that line item by a little north of $500,000 We're going to see that continue into Q2. But think the thing that's really exciting about just the q one performance is we've seen the margin performance continue to increase.

Speaker 3

We've obviously been focused on the cost side. 2025 is really about the additional revenue opportunity. So we did have, you know, some of that offset for Gadbury was modestly offset by some of our newer initiatives, our lead concierge program, our REMAX Media Network program. And so I think for us, it's really thinking about how do we continue to, you know, grow the existing base, the existing business, but also look at those ancillary ancillary revenue opportunities that we think, you know, ultimately, especially REMAX Media Network, you know, could be a seven digit revenue, opportunity over the long term. It's just to depend it just really kinda depends right now given the macro how long it's gonna take for that opportunity to ramp up.

Speaker 2

And, Tony, this this is, Eric. Specifically, kind of as it relates to maybe units, and just the, the market a bit. I mean, I do think that they're, you know, it's been it's been well kind of documented that there'll be some consolidation, you know, in the, in the industry. You're seeing a little bit of that now. I mean, I think it's been focused maybe a little bit more on the mortgage side than the real estate side today.

Speaker 2

I do think that, you know, the, you know, if you wanna talk about, you know, valuations, I do think that there's a little bit of, you know, spread too too large of a spread between the bid and the ask, and I think that folks are still riding a little bit high kind of on maybe some of those, the spikiness of the COVID years. With all that said, you know, look at it's for us, it starts with kind of people, process, products, and platform, and like we talked about in the opening remarks. And, you know, one is, you know, we're retooling the team. Two is we, we definitely are seeing a lot of inbound activity. Folks wanting to make something happen with the REMAX brand.

Speaker 2

That can be through the broker channel. That could be through us specifically. And I think that in the back half of the year, I think that the the CMNA and the MNA activity will probably pick up. I think right now also just with the overhang with uncertainty in the market, I think people are just kind of in a little bit of a wait and see attitude on that front. And I think that, you know, they're also trying to hang on.

Speaker 2

So those those opportunities that would come to you from, you know, being on the edge of maybe bankruptcy, aren't quite, there, yet. But I think that, you know, those operators that are struggling, that aren't reinvesting in the business, you know, that'll probably come to fruition late q two, earlier q three. Hopefully, that helps.

Speaker 4

Yeah. No. That's that's that's great color. And then just my other question is just more on the OpEx side. You all have done a good job of containing that even in the even with the backdrop of inflation.

Speaker 4

So just wondering like how much you think is left potentially to go there before you've just kind of squeezed everything out that you can?

Speaker 3

Hey, Toni. So I think the OpEx side, I think we have really put in good discipline around everything that we're doing, and we're really trying to be strategic in terms of allocating every dollar that we spend so that we can run the business as efficiently as possible. I think it's nice to have seen it show up in the financials, obviously, not only this quarter, but it has been a trend that I think we've been able to demonstrate. And so I think we've made some good decisions too. We got a lot of the litigation behind us, so we're seeing some relief from a professional fees perspective.

Speaker 3

And Eric mentioned earlier really being thoughtful from a personnel perspective, making sure we've got the right people on the team and and really, you know, trying to contain everywhere that we can. So it continues to be a laser focused. We continue to look at at everything around every turn, and it's really been more ingrained in our culture over the last probably twelve to eighteen months than it was previously. But I think right now, we're really focused on turning that around and, again, focusing on the top line, The strong franchise model that we have, if we can keep the cost contained and get the top line going, you're going to see that really expand from a profit perspective, not only in terms of the absolute dollars, but the margin performance as well.

Speaker 4

Okay. Thanks and best wishes, Ward.

Operator

Your next question comes from the line of Nick McAndrew of Zelman. Your line is now open.

Speaker 5

Hey, guys. Thanks for taking my questions. I just have a couple on the new Aspire program. And I think it seems like a really encouraging step towards narrowing the gap with some of the more flexible cap based models in the industry. And I'm just wondering kind of how are you thinking about the competitive positioning of Aspire maybe versus some of your peers?

Speaker 5

And does it now give you a seat at the table with agent cohorts that might not have considered REMAX before? And maybe just start there. Thank you.

Speaker 2

Yes. Thanks, Dick. This is Eric. I appreciate the question. The team's kind of worked hard on the Aspire program.

Speaker 2

And I think I said it on the last call, I mean, we are looking to turn over every rock and make sure that our value proposition stacks up at least equal, if not better, to our competitors. Now we still have work to do, but you're starting to see some of the fruits of that labor in the some of our announcements that are poor. And Aspire is just one of those tools that are in our belt right now to help our brokers be more successful in recruiting agents. So I do think it opens up the top of the funnel along with other things that we've done, like, you know, showing up a bit differently in social and on digital with the brand, some of the other pieces that we're talking about with our Max Engage or our platform on our Max Tech. So these are things that, you know, agents and brokers are interested in.

Speaker 2

And so I do think that our our top of the funnel is, is widening. People are saying, hey, you know, what's happening at REMAX? I might take another look. And, you know, part of the, the challenge in running a small business is obviously economics and making investments and being able to have the capital to do that. And so we're sharing the financial risk with our brokers to help them, one, be able recruit agents.

Speaker 2

But I think more importantly is onboard those agents and make sure that there's a path to professionalism and productivity. Because as we looked at new agent onboarding over the last few years, you know, you you see some higher churn rates in those folks that, you know, are in the kinda one to twelve month or the thirteen to twenty four month period. And maybe this chick just takes me back to my subscriber days in TV. But, you know, bringing on folks and having them turn out at a higher rate actually just kind of it it it wastes a lot of time, money, effort, not only at HQ, but more importantly, with our brokers. So we wanna make sure that we're providing tools, processes, systems that help our brokers, you know, and agents win more listings, save time doing it, and, can make a little bit additional money and really bring profitability back to brokerages.

Speaker 2

And so Aspire not only I think opens up the top of the funnel, but you thought about kind of the mid and the lower, I think it pushes those it'll push those agents into a productivity and performance category that will help them in month six through twelve and thirteen through 24. So the success rate will be higher long term. And really, I mean, that's what we're that's what we're here to do, you know, build long term businesses.

Speaker 6

Yeah. Thank you, Eric. That's really helpful.

Speaker 5

And I guess one going off of that is, I guess, how do you see Aspire coexisting with maybe your more traditional high performing agents and teams? Like, is this something that could eventually evolve into a suite of flexible models that allow brokers to compete? Or is it just I'm curious kind of how both models coexist.

Speaker 2

I know you guys really want me to talk about the strategy, don't you? But look at looking forward, you know, we I I think I've discussed it before. I mean, the the economics of being part of, you know, REMAX, obviously, we're we're looking into those. Right? And so I think Aspire is our first step in trying to provide some flexibility in what agents and brokers need to set up a, a successful Remax and, gain and build market share in their local community.

Speaker 2

And so, know, more to come on that, but, you know, we will have flexibility more flexibility in our models, more flexibility in our tool set. So today, you know, Aspire can be used along alongside kind of our, you know, we'll call it, for lack of a better term, our standard model that we've had in place for some time. As we move forward, you'll see, more tools, products, services, again, to help agents, and brokers be more successful to build that market share in their local community.

Speaker 5

Great. Thank you, guys, and congratulations, Ward.

Operator

Your next question comes from the line of Stephen Sheldon of William Blair. Your line is now

Speaker 7

Hey. Thanks for taking my questions. And just kind of following up on some of the new initiatives. Great to hear about all those. Can you just give more detail on how the early feedback has been across the system with, I guess, Aspire and others?

Speaker 7

And and do you think these initiatives could be enough to stabilize US Agent count and an eventual return to growth? Just any thoughts there.

Speaker 2

I mean, feedback feedback's been positive. Right? Adoption rate has been higher than I thought, through the month of, April. You know, as you can imagine, you know, we we have, at HQ, we have programs that we put in place, to help, brokers and agents. Brokers then have to adapt those programs, to what, you know, specifically works in their market.

Speaker 2

It's part of really the beauty of the REMAX model. Right? Having kind of a, you know, a a national or international umbrella, but then, you know, very, successful, tenured, you know, professional, brokers in the local community that can help to adapt our programs to what their specific agents at their specific time of life in the community, what the customer demographics look like. Right? They do those things.

Speaker 2

And so we're working through that with our with our brokers today. But, you know, to to specifically answer the question, I mean, look at the adoption rate is better than I thought, so I feel great about that. I do think that we are building a value proposition that, is making, you know, agents, within the REMAX network, very happy. And outside of the REMAX network, look at, some of the things that we're providing and, you know, thinking again about, hey. What's going on over there?

Speaker 2

I'd like to be a part of that. So we're seeing some, some great inbound traffic, from agents, from other brokerages, and it's exciting times. So do I think I mean, look at overall, real estate has some pressure on us. I think that, again, we're better positioned than others, because of the professionalism, the productivity of our agents, and the trust factor that they bring. And so on hard times and with, you know, consumer demand a bit low, I think that, you know, our network is poised to be more successful, than not.

Speaker 2

Do I think that we can we can stabilize agent count and get back to growth? Absolutely. I do.

Speaker 3

Yeah. And one thing I would add just from a from a numbers perspective with regards to that stabilization, when we look at US Agent count in particular in April, it was actually the best month of April going back to 2022. So we did lose kind of tens of agents in The US in April, but it was better than the April performance that we saw both last year and in 2023. And I think that really is hopefully some start of really building into the numbers, the momentum that Eric was talking about that we're really hearing not only from the network, our franchisees, and our agents, but also, I think, to Eric's point, how the, how we've shifted the narrative from a broader industry perspective.

Speaker 7

Got it. That's helpful and and really good to hear. Maybe following up on Motto, and and first there, congrats to Ward on the retirement and the great run. But just on the revenue trends, I think, Carrie, you gave some commentary. You know, we saw a bigger decline there than than, you know, I think we were expecting.

Speaker 7

Was that more about the market backdrop? I know it's a it's a very challenging backdrop, but, was that more about the backdrop, or is there anything on the execution side? And then just any update on leadership plans there going forward.

Speaker 3

Sure. Yeah. I'll kick it off, from the beginning. So from from a revenue perspective, it is a lot of it is just really macro driven. It's obviously a a tough environment for both kind of the legacy Motto business as well as what we're seeing in terms of the processing business from a Weimlo perspective.

Speaker 3

So obviously, our open office count is down a little bit year over year. And so that's really probably the biggest driver there. But as I said in the scripted remarks, we really have seen some stabilization there over on a kind of sequential quarter basis, which is good to see. And I know that the engagement that we had at our Motto Mile, our event in April, was very, very positive. So people still see the importance in the field in terms of ancillary services and mortgage.

Speaker 3

It's something that we think is still a tremendous growth opportunity for us. Just kinda gotta weed through the the macro to kinda get on to the to the other side of it.

Speaker 2

And then Ward's retirement, obviously, we're, you know, we're we're super sad and sorry to see him go, although really excited that he's he's able to ride off into the sunset and start this new chapter. Look. We have a great team in place at Motto and Winlow, and so that team is doing great things right now. I think that, you know, like, first off, Ward is just irreplaceable. I'll say that.

Speaker 2

But we we do have an active search both internally and externally. Obviously, with the the mortgage market, there's a lot of great candidates out there. And so we'll look both within the walls and outside the walls, and we'll have an announcement on that, I hope, you know, before our next earnings call.

Speaker 7

Sounds good. Thank you.

Operator

Your next your next question comes from the line of John Campbell of Stephens Inc. Your line is now open.

Speaker 8

Yes, thanks. Good morning, guys. And I'd like to extend the sentiment toward as well. It's been a pleasure working with you all over years and wish you the best. So piggybacking off of Tony's question earlier about the ability to grow margins and profits, I think that's been four straight quarters for you guys despite the top line pressures.

Speaker 8

It sounds like from Carrie's comments, maybe a little bit of a culture or corporate shift around a greater focus on cost control. So Carrie, my question for you is once you guys get back to revenue growth, are there areas of the business where you feel like you'll need to revisit from a reinvestment standpoint? And then bigger picture, where you feel like you can take margins over maybe the medium term just assuming better revenue growth?

Speaker 3

Yes. It's a great question. I mean, we are really it has been pretty broad based. And I think right now, it is the focus right now in terms of where we're allocating dollars and allocating time is really getting back into that value proposition. So really looking at everything from products, services, tools, platforms to really help our agents win more listings, be more efficient and really help to drive profitability.

Speaker 3

So that's really where we're focused right now, really kind of looking more in that marketing area from a technology perspective and also making sure we've got the right service and support staff to be able to deliver that value out into the field as efficiently and effectively as possible.

Speaker 2

And John, this is Eric. Would just say, you know, look at the investments we're making. Some are, you know, success based like we've talked about in the past, which are good things for us to sink our teeth in. I think the other thing is like, you know, as we're kind of rebuilding the foundation of the flywheel, you know, we will I think you're spot on. Obviously, we will be making additional investments to grow the top line, but we'll be very purposeful about those.

Speaker 2

Not only is it, you know, cost control and thinking about how how to do things more efficiently, but being purposeful in our investments and making sure that we're getting a return on our capital for our shareholders. So, you know, more to come on that, but we really appreciate the questions you're spot on there.

Speaker 8

Okay. Appreciate that. And then on the acceleration in international agent growth, that's been great to see. Just two questions related to just bigger picture on international. I guess, first, just kind of what's driving that momentum.

Speaker 8

And then secondly, I think you're getting to roughly, I think it was $2.20 per agent per year. Last year, that was about 9% of The US Agent you know, revenue per agent. What what what stops you guys from just being a little bit more aggressive on the international pricing front? Is is there is there a little bit

Speaker 2

of low hanging fruit until I

Speaker 8

can get to over time?

Speaker 2

Yeah. Look, I mean, I think on the growth part and the momentum, we've got we just have some outstanding operators out there. And I think when you think about the time that the brand has been there, it's gaining momentum in certain markets. Some of that is the brand and kind of like the groundswell. A lot of it is just the outstanding operators we have.

Speaker 2

I mean, I was in Argentina in in March visiting one of our operators that was celebrating twenty years. I mean, John, thousands of agents. And you can imagine with the Argentinian economy, I think 94, 90 five percent of the deals are all cash. But thousands of agents enthused about what it is to be part of the REMAX brand and opportunity that exists. Life changing events that happen with agents.

Speaker 2

You know, I wanna say, you know, our our agents are, you know, somewhere in a three and a half, four times as productive as others. So it's really it's exciting to see, and we're seeing growth in South America. We're seeing growth in Portugal. And I think that part of it is just, obviously, the brand, and part of it is a big part of it is really the operators. And you're right.

Speaker 2

I mean, I think we're trying to provide an approach where the operators can be successful with the the fees we charge for the, you know, for the for the brand that we provide. And there's other opportunities. I mean, we talked about our, you know, our marketing services platform at r four along with our Max Engage app. You know, both those are gonna be in Spanish, and, you know, we'll have additional worldwide opportunities than maybe just a few traditionally that that you and the team have thought about as it relates to the international business at REMAX.

Speaker 8

Okay. Thanks for the color. Appreciate that.

Operator

Our last question for today comes from the line of Tommy McJoynt of KBW. Your line is now open.

Speaker 6

Hey, good morning guys. Do you have a real time view of how REMAX's agent market share in The U. S. Is trending? Just want to get a sense of if some of the declines that you've seen are as much a function of the industry at large?

Speaker 6

Or is somebody still going to remax on specific things? Yes,

Speaker 3

Tony. Mean, we look at market share across multiple different dimensions in terms of agent count and productivity. Because our agents are twice as productive as the industry average and have been for seventeen years, looking at a percentage of agent count to NAR or something isn't necessarily as representative. Mean, obviously, the industry as a whole has contracted. Obviously, we're doing what we can to kind of turn the ship in terms of stabilize and return to growth, as we talked about earlier.

Speaker 3

And as I mentioned, we're looking at some of the green shoots in April from our efforts really starting to impact that. And so I would say that the trends around our performance from an agent perspective is actually a little bit better than the industry just given, you know, the overall productivity in terms of how our agents actually impact the market and the number of transactions that they do.

Speaker 6

Okay. Got it. Thanks. And then switching gears, with regard to to NARA's update to the clear cooperation policy, does does REMAX, you know, corporate have a house view, that that it kind of provides to its franchisees around the revised rule changes? I know that some players in the industry have been anchoring themselves to to one extreme or the other.

Speaker 6

Or is your view just to kind of let the franchisees, you know, maintain compliance with their local MLS, is, you where the new, NAR rule seeded some of the decision making to?

Speaker 2

Yeah. I mean, a great great question, Tommy. And, obviously, we've had some kind of, you know, published statements in, the industry rags, and I think we we chatted a little bit about it in the last call. I mean, one is we obviously, we provide education and guidance to our brokers and to our agents. Obviously, we want our brokers to comply with all kind of the state, local laws, rules, etcetera.

Speaker 2

But look, we're really we are steadfast on the side of standing for what's best for the consumer and that consumer experience. So I think that overall, you know, as I said in my opening remarks, we're standing for transparency in the broadest distribution of listings. We think that's best for the vast majority of consumers who are trying to transact in real estate. That doesn't mean that there are not times when a private listing is needed or, by the way, being used. And, you know, we'll be we'll be set up to help our brokers and agents with that process.

Speaker 2

Some of our brokers use their own private listing processes today, but we just think the vast majority of of transactions or listings should be have the greatest the greatest distribution, And we're really going to stand on the side of the consumer and the agent experience. And so we think that that's served us well for the last fifty years. And we're really thinking about the business long term, not for kind of short term profits or to try to win agent count by, you know, having, special offers. So, you know, we're trying to build something special here again and, building the foundation and building a long term view on what's best for brokers, agents, and, and consumers.

Speaker 5

Great. Thank you.

Operator

I'd now like to hand the call back to Andy Schulz. Please go ahead.

Speaker 1

Thank you, operator. Thanks to everyone for joining us on the call today. This concludes today's call. Have a great weekend.

Operator

Thank you for attending today's call. You may now disconnect. Goodbye.

Powered by Quartr
Earnings Conference Call
RE/MAX Q1 2025
00:00 / 00:00