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As the market continued to present challenges to agents during the third quarter of 2024, RE/MAX Holdings‘ revenue declined for the ninth consecutive quarter, according to financial results posted after the market closed on Thursday.
Total revenue declined 3.4 percent on an annual basis to $78.5 million, down from $81.2 million the year before.
The news was a tough hit, as RE/MAX Holdings had noted during the previous quarter’s earnings that the company’s revenue had fallen during each quarter of the last two years. This quarter was no different.
The firm saw negative organic revenue growth of -3.0 percent during the quarter, which it said was largely due to a drop in U.S. agent count and a reduction in revenue from previous acquisitions.
Cash and cash equivalents were $83.8 million as of Sept. 30, 2024, up by $1.2 million from Dec. 31, 2023. As of Sept. 30, 2024, RE/MAX Holdings had $441.8 million of outstanding debt compared to $444.6 million as of Dec. 31, 2023.
However, there was good news, as the real estate franchisor vastly improved its income from the previous year to a net income of $1 million and earnings per diluted share of $0.05. By contrast, during the third quarter of 2023, RE/MAX Holdings saw a net loss of $59.5 million.
“We continue to drive operational efficiency across the enterprise, which helped generate better-than-forecasted third-quarter financial results,” RE/MAX Holdings CEO Erik Carlson said in a statement. “Our team is developing new revenue opportunities while working to run our core business better each day. That effort has contributed to our strong margin performance the past two quarters, which is an encouraging trend.”
RE/MAX Holdings cut its operating expenses by $39 million or 38.1 percent year over year, winnowing it down to $63.3 million during the third quarter of 2024. During Q3 2023, RE/MAX Holdings’ expenses were in part elevated by its settlement payment of $55 million in industry antitrust lawsuits.
The company was also able to increase its overall agent count slightly, improving by 174 agents or 0.1 percent. Still, agent count in the U.S. suffered, as 3,686 or 6.5 percent of U.S.-based agents left the franchisor between the third quarter of 2023 and the third quarter of 2024. During the second quarter of 2024, RE/MAX Holdings reported that 4.4 percent of its agents in the U.S. and Canada had parted ways with the franchisor.
The number of Motto Mortgage franchises also declined 3.3 percent year over year to 234 offices.
“Business optimization, having a growth mindset, and delivering the absolute best customer experience possible are the cornerstones of our playbook,” Carlson continued. “We are making measurable progress on each of these. With increasing optimism about the trajectory of future interest rates, our growing global agent count, and our bold new initiatives — including providing innovative and enhanced technology products to our RE/MAX affiliates, improving the agent-customer experience by cultivating leads, and starting to monetize our digital assets — we are well-positioned to finish the year with positive momentum.”
The franchisor’s third-quarter financial results also noted that many RE/MAX affiliates had been impacted by the recent hurricanes Helene and Milton, which devastated some parts of the southeastern U.S.
As a result of storm destruction, RE/MAX Holdings anticipates its fourth-quarter revenue to be less than previously expected, since the company is waiving fees to affiliates that have been impacted by the storms. The company downgraded its fourth-quarter and full-year revenue estimates by about $1 million to $1.5 million.
The franchisor’s stock price had dropped by about 4.98 percent or $0.61 on Thursday during after-hours trading to about $11.63.
RE/MAX Holdings will hold a call with investors on Friday morning at 8:30 a.m. ET to discuss the third-quarter financial results.
