RE/MAX profits up, revenue down — and U.S. agents keep leaving
The company's net income of $2 million was an improvement after losses in Q1, while revenue fell by more than 10% and U.S. agent count dropped by 6.3%.
RE/MAX Holdings reported a net profit of $2 million for the second quarter and a 6.3% drop in its U.S. agent count, while lowering expectations for earnings for the year.
The company said despite the significant decline in U.S. agents, they have slowed the bleeding.
"The combination of higher interest rates and tight inventory has made for a challenging housing market and agent-recruiting-and-retention environment," said RE/MAX Holdings CEO Steve Joyce. "On a positive note, the pace of our U.S. agent count losses slowed quarter over quarter — which is encouraging, given the market conditions."
Joyce also noted that international agent counts helped offset U.S. losses. "We were pleased to see continued RE/MAX agent count growth in Canada and our global regions.… Despite industry headwinds, agent count in Canada has increased each month since February, and our overall international agent growth also accelerated in the second quarter."
Combined agent count in the U.S. and Canada dropped 4.1%, but international agent count grew by nearly 7% to give the company a small overall gain of .4%, bringing the total number of agents to 144,510 worldwide.
Revenue: $82.4 million, down from $92.2 million in Q2 2022 and off slightly from the previous quarter's $85.4 million.
Net income/loss: $2 million, down from $5.8 million in the same quarter last year, but up from last quarter's $700,000 loss.
Cash and cash equivalents: $96.8 million, a reduction of $11.9 million since the end of December 2022 and unchanged from the previous quarter.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): $26.6 million, a 24% year-over-year decline, but up from $19.9 in Q1.
Global agent count: 144,510, a gain of 0.4%.
U.S. and Canada agent count: 82,205, down 4.1%. Agent count in the U.S. was down 3,838 from the same period last year, a 6.3% drop, but the company added 364 agents in Canada, partially offsetting the U.S. losses.
Motto Mortgage franchises: 235 offices, a 17.5% increase from the previous year.
What RE/MAX had to say
The company remains bullish on its mortgage operations, both the Motto Mortgage brand and its mortgage processing platform wemlo.
"On the mortgage side, wemlo is ramping up, and we continue to expand our Motto franchise sales operation," Joyce said. "The addition of experienced personnel with in-depth franchise experience to our inside sales team is just one reason we are optimistic about increasing the pace of Motto franchise sales in the second half of 2023 and beyond."
Overall, the company is slightly lowering its expectations for earnings in 2023. The new guidance calls for an adjusted EBITDA in a range of $92.0 million to $98.0 million, down from $95.0 million to $105.0 million. It expects revenue in the third quarter in a range of $78.5 million to $83.5 million
The company announced in June that Gail Liniger, RE/MAX co-founder and vice chair of RE/MAX Holdings, was retiring from her board position. Liniger co-founded RE/MAX with Dave Liniger in 1973, and together, they have led the brand for more than 50 years.
Prior to her role as vice chair, Gail Lineger served as RE/MAX chief executive officer for several years. Dave Liniger remains the board chairman of RE/MAX Holdings.