Is RE/MAX starting to turn things around?
Numbers were down, but revenue declines slowed. Leadership painted a cautiously optimistic picture — and presented its point of view on Clear Cooperation.
Despite making bold moves last year — shaking up its leadership and negotiating an early settlement in the commissions cases — RE/MAX can't seem to gain much momentum.
The company again reported lower revenues and declining U.S. agent counts, though CEO Erik Carlson offered a glass-half-full assessment of RE/MAX's third-quarter performance. The company beat forecasts, he noted, and efforts to "develop new revenue opportunities" have improved margins, "which is an encouraging trend."
That improvement was reflected in the numbers: While revenue was down 3.4% year-over-year, it was the smallest annual decline in two years.
The company continued to add agents globally, with a small net gain of 174 agents overall. But as in previous quarters, U.S. agent count fell considerably, with nearly 3,700 agents, or 6.5% of those in the U.S., departing the brand during the quarter.
What RE/MAX had to say
During the earnings call, after opening remarks, Carlson took time to speak about one of the more divisive topics facing the industry in recent months: NAR's Clear Cooperation Policy. RE/MAX's point of view? Squarely pro-CCP.
"We support full transparency in real estate transactions. Agents and companies who promote listings to the widest possible audience are serving the best interests of buyers and sellers alike and honoring their fiduciary responsibilities. Buyers deserve equal access to available properties, and sellers deserve the broadest possible exposure for their homes. We stand for trust, transparency, and professionalism. We believe in prioritizing consumer interest over practices that benefit a few at the expense of many," Carlson said in a prepared statement to investors.
Moving on to more typical business matters, he highlighted growth initiatives including the company's new Max Tech Lead Concierge program, which delivers conversion-ready referrals to participating RE/MAX agents. "It's exciting to see this capability take hold and show signs of success so early on," Carlson said.
The company's mortgage business produced more mixed results, however, a sign that "rates do matter," Carlson acknowledged. "September was the best month of Motto franchise sales since March of 2023," he noted, but added: "Despite this recent bright spot, continued elevated mortgage rates have made it a tough time to be in the mortgage business. We're feeling the effects — the number of open Motto offices is declining slightly for the first time ever as franchise sales have slowed, and a few existing franchises have terminated due to their financial position."
Key numbers
Revenue: $78.5 million for the second quarter, down 3.4% from a year ago, but unchanged from the previous quarter.
Cash and cash equivalents: RE/MAX ended the second quarter with $83.8 million, an increase of $1.2 million from the end of last year. The company had $441.8 million in outstanding debt at the end of the third quarter, down from $442.7 million in outstanding debt at the end of the second quarter.
Net income/loss: A gain of $1 million for the quarter, a significant improvement over the net loss of $59.5 million a year prior, which was largely due to the settlement in the commissions case.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): $27.3 million, up 2% year-over-year.
Agent count: Globally the company had 145,483 agents at the end of September, a gain of 174 agents from a year ago. U.S. and Canada combined agent count fell 4.4% year-over-year to 78,201. The U.S. market has 3,686 fewer agents than a year ago.
Motto Mortgage franchises: Office count decreased 3.3% to 234 offices.
Notable moves
While North American agent counts have declined overall, RE/MAX has managed to notch some wins recently. The brokerage gained nearly 100 agents through affiliations or mergers in Oregon and Utah last quarter, in addition to the conversion of a 200-agent firm in the province of Ontario in July.
Carlson expects to see more conversions in a post-settlement world as agents from small firms seek out the resources offered by an established brand like RE/MAX. "Independents are struggling — agents aren't finding the coaching, the mentorship," Carlson said. "We're laying the foundation to help improve some of those conversions going in 2025."