RE/MAX Holdings, the parent company of real estate franchise RE/MAX and Motto Mortgage, released its Q1 2023 earnings report on May 4, 2023. The company reported a total revenue of $85.4 million. This is a 5.04% increase from the previous quarter’s revenue of $81.3 million, but a 6.2% decrease compared to Q1 2022. Revenue excluding marketing funds was $64.1 million, a year-over-year decline of 6%.
RE/MAX’s total operating costs during Q1 2023 were $78.5 million, a 5.9% decrease year-over-year (operating expenses in Q1 2022 were $83.4 million). This decrease is cited as stemming from “lower settlement and impairment charges.” The bulk of Q1 2023 operating expenses were classified as “selling, operating and administrative expenses” and totaled $49.1 million.
These results totaled a reported net loss of $0.7 million for RE/MAX Holdings. In comparison, the company posted a net income of $1.5 million in Q1 2022. Lower revenue in turn resulted in a substantial decrease in EBITDA: in Q1 2023 it was $19.9 million, $8 million/28.6% less than the year before. The company attributes these results to market fundamentals—rising interest rates and lower demand—impeding its organic growth.
At the end of the quarter, RE/MAX reported that it had cash and cash equivalents of $96.8 million—a decrease of $11.9 million from the end of Q4 2022. This compares to the company’s current outstanding debt of $447.4 million, net of an unamortized debt discount and issuance costs. This debt is a slight reduction from where it stood at the end of Q1 2022 ($448.3 million).
Agent count in the U.S. and Canada decreased by 3.1% year-over-year, from 85,160 to 82,521. However, due to an increase in agent count outside the U.S. and Canada, RE/MAX’s overall agent count increased by 0.8% from 142,405 to 143,523 agents. Motto Mortgage franchises also increased by 21.5% to 232 offices.
Despite these mixed quarterly results, RE/MAX Holdings CEO Steve Joyce painted a picture of a sturdy company dealing with expected and surmountable losses.
“We performed largely as expected during the first quarter, as the U.S. housing market continued to adjust to higher interest rates,” said Joyce. “Given the industry conditions, we anticipated pressure on our U.S. agent count to start the year, but did see some encouraging trends toward the end of the first quarter. The quarter had several other operational highlights including agent count growth in Canada and the global regions, regained momentum in Motto franchise sales and a continued ramp in Wemlo’s (mortgage processing firm) business. We remain squarely focused on growth, and we believe we’re positioned for improved U.S. agent count performance in the near term.”
As part of its report, RE/MAX included projections for both Q2 2023 and its end-of-year results.
Q2 2023 projections:
- Agent count to change -0.5% to 0.5%
- Revenue in a range of $79 million to $84 million (including revenue from the Marketing Funds in a range of $20 million to $22 million)
- Adjusted EBITDA in a range of $24.5 million to $27.5 million
2023 at-large projections:
- Agent count to change -1% to 1%
- Revenue in a range of $315 million to $335 million (including revenue from the Marketing Funds in a range of $83.5 million to $87.5 million)
- Adjusted EBITDA in a range of $95 million to $105 million
On May 3, 2023, RE/MAX also announced that its shareholders had approved a quarterly cash dividend of $0.23 per share of Class A common stock. The dividend will be payable on May 31, 2023.
“We’re executing on the strategic growth initiatives we put in place last year, and we remain confident in the upside they can deliver in the long run,” Joyce continued. “We also continue to invest in critical growth-related activities such as our annual RE/MAX and Motto conventions, both of which had robust attendance, demonstrating the value our affiliates continue to derive from coming together to share ideas. We are directing our capital opportunistically so that we are best positioned to grow profitably when market conditions improve.”
Read the full report here.
