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The third quarter of 2023 saw RE/MAX Holdings’ revenue tick down yet again for the fifth consecutive quarter, as the real estate franchisor and many other major real estate companies continue to battle challenging market forces like high mortgage rates, low inventory and inflation.
Total revenue was down 8.7 percent year over year to $81.2 million, coming just shy of analysts’ expectations. Revenue, excluding marketing funds (the branch of RE/MAX that holds advertising funds collected from RE/MAX affiliates), also declined by 8.8 percent on an annual basis to $60.4 million.
Analysts had expected the real estate company’s total revenue to decline to $81.45 million, according to Zacks.
Meanwhile, the company also suffered a net loss of $59.5 million compared to its net income of about $100,000 during the same period one year before.
Adjusted EBITDA declined by 15 percent year over year to $16.7 million, and adjusted earnings per diluted share were $0.40 per share.
RE/MAX also took a 3.9 percent hit to its combined U.S. and Canadian agent count to a total of 81,782 agents. Total global agent count saw a modest increase of 0.7 percent to 145,309 agents.
During a conference call with investors Friday morning, RE/MAX President and CEO Nick Bailey noted that agent count figures tend to fluctuate based on the whims of the real estate market at large.
“As there is pressure and contraction in the overall real estate market we see contraction in the number of agents that want to be in the business,” Bailey said. “The easier the market, if you will, the more agents are there.”
Motto Mortgage franchises increased year over year by 14.7 percent to a total of 242 offices.
Steve Joyce | Credit: RE/MAX Holdings
“We continue to make progress driving forward our core strategic initiatives amid the toughest real estate market in a decade,” RE/MAX Holdings CEO Steve Joyce said in a statement.
“We remain focused on aggressively pursuing agent growth opportunities — teams and conversions, mergers and acquisitions — in the U.S., increasing our Canadian and global agent counts, and growing our mortgage business.”
When the market closed on Thursday, RE/MAX’s stock price was $11.19 per share, down about 1.3 percent from the day before. In after-hours trading following the release of its third-quarter earnings, the price inched up slightly to $11.20 per share.
During the second quarter of 2023, RE/MAX had righted its net income out of the red to $2 million compared to the $700,000 loss the company saw during the first quarter, as the industry had just begun to deal with severely curbed market traffic and high interest rates.
RE/MAX’s total revenue in Q2 was down to $82.4 million, and revenue excluding marketing funds from RE/MAX affiliates was $61.4 million.
At the end of August, the franchisor reported in filings submitted to the U.S. Securities and Exchange Commission that it would be laying off about 7 percent of staff to “streamline the Company’s operations and yield cost savings over the long term.”
Joyce also made reference to this restructuring in the company’s Q3 2023 results, in addition to mentioning its recent $55 million settlement in the Sitzer | Moehrl antitrust lawsuits.
“In the third quarter, we also made two difficult but necessary moves in the current environment,” Joyce continued. “First, we streamlined our operations and our cost structure. Second, we entered into a settlement to end costly litigation and protect the Company and RE/MAX network from multiple industry class-action lawsuits. Ultimately, we believe we will successfully navigate these challenging times and grow significantly when industry conditions improve — a pattern we’ve seen repeatedly for 50 years.
“The strength of our brands and networks are unmatched in many ways, and we believe our future is very bright,” he concluded.
Joyce said during the earnings call that RE/MAX franchisors he has spoken with are happy with the company’s decision to settle.
“There is overwhelmingly a sense of gratitude on the position the company took to put this behind them and us,” Joyce said.
On Tuesday, a federal jury ruled that the National Association of Realtors, RE/MAX, Keller Williams, Anywhere, HomeServices of America and two of its subsidiaries, HSF Affiliates and BHH Affiliates, conspired to inflate broker commissions paid by homesellers, and awarded $5.36 billion in damages to about 500,000 Missouri homesellers who were members of the class action lawsuit.
