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As it continues to wrestle with a shifting real estate market, RE/MAX Holdings saw revenue and North American agent count decline during the first quarter of 2023, the company reported after trading ended on Thursday.
Total revenue dropped 6.2 percent year over year to $85.4 million, while revenue excluding marketing funds (the branch of RE/MAX that holds advertising funds collected from RE/MAX affiliates) decreased 6 percent to $64.1 million.
RE/MAX saw a net loss of $700,000 during the first quarter, compared to the net income of $1.5 million it recorded during the same period in 2022.
Adjusted earnings before income, taxes, depreciation and amortization (EBITDA) declined 28.6 percent year over year to $19.9 million.
Steve Joyce | RE/MAX Holdings
“We performed largely as expected during the first quarter, as the U.S. housing market continued to adjust to higher interest rates,” Steve Joyce, RE/MAX Holdings’ CEO, said in a statement.
The company’s U.S. and Canadian combined agent count dropped 3.6 percent year over year to 82,393 agents. Broken down, the U.S. lost 5.4 percent of agents while Canada gained 2.6 percent. Its total agent count worldwide increased slightly by 0.3 percent year over year to 143,759 agents.
“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,” Joyce added. “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 business. We remain squarely focused on growth, and we believe we’re positioned for improved U.S. agent count performance in the near term.”
Motto Mortgage built on its steady growth the previous quarter, with franchises increasing 23.2 percent in the first quarter on an annual basis to 234 offices across the U.S. During the fourth quarter of 2022, Motto grew its number of franchises 23.5 percent year over year to 231 offices.
Joyce added that RE/MAX would continue to invest in its strategic initiatives and growth activities, expressing confidence that they would play out long term.
“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,” he said. “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.”
The company also reported that total operating expenses declined by 5.9 percent on an annual basis to $78.5 million in the first quarter of 2023.
During the fourth quarter of 2022, RE/MAX’s earnings reflected the slowing real estate market amid rising interest rates — revenue dropped 8.9 percent year over year to $81.3 million and net losses hit $2.6 million, down from a positive net income of $100,000 during the third quarter of 2022.
Over the entire course of 2022, RE/MAX’s total U.S. and Canadian agent count declined 1.9 percent. Total global agent count increased by 1.39 percent year over year to 144,014.
Looking ahead to the second quarter of 2023, RE/MAX anticipated total agent count would remain about the same, with the potential to either drop or increase by 0.5 percent on an annual basis.
RE/MAX estimated that revenue would hit between $79 million to $84 million during Q2 2023, and adjusted EBITDA between $24.5 million to $27.5 million.
For the full year, the company projected agent count to change between negative 1 percent to 1 percent over 2022, and revenue to hit a range of $315 million to $335 million.
On a call with investors Friday morning, Joyce expressed an overall positive outlook for the rest of the year.
“We’re investing in the business, we’re continuing to return capital to shareholders — particularly through the dividend — and we’re looking at what could be an improving environment,” Joyce said. “If that environment improves — that’s not baked into our numbers — so our sense is we’re seeing some positive signs and we’ll see if that continues through the rest of the year.”
