Mixed results for RE/MAX in Q4: Quarterly declines, annual gains
The company noted that it closed out the year with a relatively small drop in revenue considering the sharp decline in home sales in 2022.
RE/MAX posted declines across the board in the fourth quarter, but managed to increase global agent count despite a loss of agents in the U.S.
Looking at the full year, the picture was a bit rosier, with revenue up by around 7% in 2022 compared to the previous year.
Steve Joyce, CEO of RE/MAX Holdings, said the quarterly results should be viewed within the context of market conditions: "Our business showed resilience during the fourth quarter while facing the strongest industry headwinds we've seen in more than a decade," said Joyce.
Key numbers
Revenue: $81.3 million in total Q4 revenue, down 8.9% year over year. Full-year revenue increased 7.2% to $353.4 million.
Cash and cash equivalents: $108.7 million, a $17.6 million decrease compared to Q4 2021.
GAAP net loss/income: $2.6 million net loss in Q4, vs $3.1 million net income in Q4 2021. For the full year, the company reported net income of $4.8 million.
EBITDA (earnings before interest, taxes, depreciation and amortization): $26.5 million, down 14.6% from a year ago. The decline was attributed to lower revenue as a result of lower broker fee revenue and increased bad debt expense. For the full year, adjusted EBITDA eked up 1.7% to $121.6 million.
Agent count: Up slightly (1.4%) at 144,014 globally, but down 4.3% in the U.S. The number of agents in the U.S. — 58,179 — is now lower than the number of agents outside the U.S. and Canada (60,175).
What RE/MAX had to say
Steve Joyce noted that the drop in revenue was not as significant as it could have been, given the dramatic slowdown in home sales and general economic factors.
"Our revenue decreased by less than 10% despite the nearly 35% year-over-year decline in U.S. existing home sales, highlighting the advantages and strength of our diversified franchise model. However, continuing challenging macroeconomic conditions including higher mortgage rates and lower U.S. existing home sales reduced our broker fee revenue, pressured our U.S. agent count, slowed Motto franchise sales, and muted our top- and bottom-line performance," Joyce added.
Joyce also highlighted the company's recent 50th anniversary, "marking five consecutive decades of growth," and emphasized that RE/MAX's model puts the company in a good position "to deliver profitable growth when the industry rebounds."
Notable moves
Despite the challenges in the real estate market, RE/MAX has been successfully growing its mortgage business, Motto Mortgage. The company now has 231 franchise offices across the country, an increase of 23.5% year-over-year. In the company's Q3 earnings release, Joyce said Motto was helping the company diversify its revenue sources and expects growth in that area to continue.
Earlier in the year, RE/MAX was among the many real estate companies to lay off staff, eliminating about 120 positions. Most reductions were in the area of technology as the company shifted from in-house tech to third-party software. In October, RE/MAX hired its first chief technology officer, Grady Ligon, who is focused on streamlining technology throughout the company.