Re/Max Holdings, Inc. the public parent company of real estate giant Re/Max generated $52.6 million in revenue in the first quarter of 2018, an 11 percent increase over the same time period in 2017, according to its Q1 2018 earnings report released today.
The company’s total agent count rose to 120,821 agents, marking a 6.2 percent increase.
“Steady performance across our primary operating drivers highlighted first quarter results,” said Adam Contos, Re/Max CEO, in a release. Contos was named sole CEO last year after Re/Max founder and former co-CEO Dave Liniger retired following an internal investigation that found both men had violated the company’s code of ethics through a loan and various other improper conduct. No disciplinary action was ever specified, but the investigation caused the company to delay its Q3 and Q4 earnings for 2017.
Re/Max’s organic growth was anchored by increased revenue from its annual agent conference, an agent count increase, rising home prices and expansion of Motto, Re/Max’s mortgage franchise. Motto reached 80 franchises sold in the first quarter of 2018.
“We grew our worldwide network by more than 7,000 agents year-over-year, we continued to expand Motto and, as previously announced, we made a bold and significant investment in our network by acquiring booj, a highly regarded real estate technology company,” Contos added. “Strong attendance at our annual agent conference also favorably impacted the quarter.”
Booj is a tailored platform that begins with a branded website and mobile app for agents and franchises. It also has predictive analytics tools and systems that help cultivate and generate leads.
“It’s basically a single platform encompassing the flow of the real estate business for an agent,” Contos said during a conference call with investors on Friday. “It takes all of the components and wraps it up in one platform.”
The investment in booj marks a significant change in Re/Max’s technology strategy, Contos added.
“This acquisition will enable us to go beyond third party vendors to fit broker team and agent needs,” Contos said. “Moving forward Re/Max will leverage the capabilities of booj and other strategic parters to deliver enhanced, scalable solutions specifically designed for and with Re/Max affiliates.”
Contos touted the strong production numbers from agents affiliated with Re/Max franchises. Re/Max was named the second most productive franchisor in 2017, according to the inaugural Swanepoel Mega 1000. Re/Max agents also outsold others at large franchises on average, with agents averaging 17 transaction sides, according to the Real Trends 500 survey. Second place Realty Executives International agents averaged just 11.1.
“Re/Max agents continue to be productive in virtually every market condition,” Contos said. “When inventory is tight, multiple offers are common and the competition for listings is fierce, our network of highly productive agents combined with our differentiated business model give us a built-in and unique competitive advantage. Homebuyers and sellers should not settle for anything less than an experienced, productive agent.”
Recurring revenue streams — which consist of continuing franchise fees and annual dues — increased by $2.7 million over the first quarter of 2017 and accounted for a total of 64.5 percent of revenue.
Operating expenses saw a significant uptick from 2017’s first quarter. Total operating expenses were reported to be $38.9 million, a 19.3 percent increase. According to the report, operating expenses increased, “principally due to higher selling, operating and administrative expenses.”
Looking forward, Re/Max expects agent count to increase by 5.25-6.25 percent next quarter and 5-6 percent over the next year. The company expects total revenue to fall in the range of $213-216 million by the end of 2018.
