RE/MAX Holdings, Inc. announced operating results for the quarter ended March 31, 2020.
“The housing market experienced a strong start to 2020, but that momentum was unfortunately interrupted by the COVID-19 pandemic,” stated Adam Contos, RE/MAX Holdings chief executive officer. “In the current environment, the health and well-being of our employees, affiliates, homebuyers and sellers, and the communities in which they live, remain our top priority. Thanks to investments in our business this past year, our employees are working productively from home, delivering valuable service and support to our networks. Real estate professionals, using technology and adhering to social distancing guidelines, are effectively leading consumers through the buying or selling process in a safe and largely virtual way. What has become clear is the expertise of a skilled real estate professional has never been more important.”
Contos continued, “We have ample reason to be confident in our ability to navigate through this challenging environment. We have the advantages of strong brands, a resilient business model, a healthy balance sheet, two highly entrepreneurial networks—including one that virtually spans the globe—and an extremely skilled headquarters staff. We’ve experienced economic downturns before, and the lessons we’ve learned will help us through this one. We continue to invest in the success of our affiliates – providing financial support, maintaining our brand presence, and developing relevant new tools, training and technology. The goal: helping our people emerge from this crisis in a position of strength.”
First Quarter 2020 Highlights
– Total agent count increased 5. percent to 131,816 agents. U.S. and Canada combined agent count increased 0.2 percent to 84,191 agents.
– Total open Motto Mortgage franchises increased 34.1 percent to 118 offices
– Total Revenue of $70.3 million; Revenue excluding the Marketing Funds increased 0.7 percent to $52.8 million
– Net income attributable to RE/MAX Holdings, Inc. of $2.6 million and earnings per diluted share (GAAP EPS) of $0.15
Revenue
RE/MAX Holdings generated total revenue of $70.3 million in the first quarter of 2020, a decrease of $0.9 million or 1.3 percent compared to $71.2 million in the first quarter of 2019. Total revenue decreased primarily due to agent recruiting initiatives that reduced both continuing franchise fees and Marketing Funds fees, partially offset by an increase in broker fees and the growth of Motto. Recurring revenue streams, which consist of continuing franchise fees and annual dues, decreased $0.7 million compared to the first quarter of 2019 and accounted for 62.7 percent of revenue (excluding the Marketing Funds) in the first quarter of 2020, compared to 64.5 percent in the comparable period in 2019.
Operating Expenses
Total operating expenses were $58.5 million for the first quarter of 2020. First quarter total operating expenses increased primarily due to higher selling, operating and administrative expenses and depreciation, and amortization expenses, partially offset by lower Marketing Fund expenses. Excluding the Marketing Funds from operating expenses, first quarter 2020 operating expenses totaled $41.0 million, an increase of $1.5 million or 3.9 percent compared to $39.5 million in the first quarter of 2019.
Selling, operating and administrative expenses were $34.7 million in the first quarter of 2020, an increase of $0.8 million or 2.3 percent compared to the first quarter of 2019 and, excluding the Marketing Funds, represented 65.7 percent of revenue, compared to 64.7 percent in the prior-year period. Selling, operating and administrative expenses increased primarily due to higher bad debt expense, incremental expenses from the First acquisition, technology investments and increased legal expenses, partially offset by lower equity-based compensation expense and elimination of the corporate bonus.
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