RE/MAX Holdings reported rising revenue and profits despite difficulty growing its agent count in the U.S. and Canada, according to Q4 and year-end results released Wednesday.
Fueled in part by the acquisition last year of RE/MAX Integra, the largest franchise purchase in its 49-year history, RE/MAX Holdings on Wednesday reported a fourth-quarter revenue of $89.2 million — a 23.1 percent increase from Q4 2020.
Outgoing RE/MAX Holdings CEO Adam Contos said the acquisition of RE/MAX Integra’s North American regions in June 2021, which included more than 19,000 agents and 1,100 offices across Canada and the United States, provided the needed momentum to help RE/MAX bolster its agent count, revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) after a topsy-turvy 2020.
“Continued solid organic growth from our core operations and strong contributions from our acquisition of the RE/MAX INTEGRA North American regions drove our fourth-quarter outperformance,” Contos said in a statement. “The INTEGRA acquisition has been more impactful than we anticipated, generating higher-than-expected agent count, revenue and Adjusted EBITDA.
RE/MAX Holdings revenue excluding Marketing Funds — the branch of RE/MAX that holds advertising funds collected from RE/MAX affiliates — RE/MAX Holdings’ revenue rose 21.2 percent annually to $62.2 million, made up of 5 percent organic growth, 15.3 percent growth from acquisitions and 0.9 percent growth from foreign currency movements.
The company posted a profit of $3.1 million, with an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $31.1 million that translates into an adjusted earnings per diluted share (EPS) of $0.60.
The addition of RE/MAX Integra North America helped spur robust agent count growth in Canada, Contos explained, which helped offset slower growth in the United States. As of Jan. 31, RE/MAX’s agent count in the United States and Canada increased 1.1 percent from Q4 2020 to 84,911. Meanwhile, its total agent count — which accounts for its international affiliates — increased 2.9 percent year-over-year to 141,716.
The company’s mortgage arm, Motto Mortgage, grew its footprint 35.2 percent year over year to 192 offices nationwide.
“We added more than 2,000 RE/MAX agents in Canada year over year, which more than offset softer results in the U.S,” Contos said. “On the mortgage side, Motto Mortgage opened nearly 60 offices in 2021 – a record – and we continue to sell franchises at a healthy pace. We believe both brands are well-positioned to grow meaningfully in 2022.”
In addition to its Q4 results, the Denver-based franchisor also shared its full performance for the year, which saw RE/MAX Holdings rake in $91 million — a 28 percent increase from 2020 when many real estate companies were still reeling from the pandemic’s early impacts on the housing market.
The revenue excluding marketing funds increased 25.9 percent to $67.7 million and represented 6.9 percent organic growth1, 18.3 percent growth from acquisitions and 0.7 percent growth from foreign currency movements. RE/MAX Holdings posted a net loss of $25.1 million, with an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $35.0 million that translates into an adjusted earnings per diluted share (EPS) of $0.71.
RE/MAX’s total agent count increased 4.6 percent to 140,936 agents in 2021, while its agent count in the United States and Canada increased 2.2 percent to 85,656 agents.
RE/MAX Holdings Director and incoming Chief Executive Officer Stephen Joyce thanked Contos for his work and said his first area of focus is recharging RE/MAX’s agent count growth.
“Over the past few years, Adam and the leadership team have done an outstanding job investing for growth, expanding our services and positioning RE/MAX Holdings for continued future success,” he said in a written statement. “The strategic investments we’ve made have significantly diversified our revenue and broadened our growth opportunities.”
“Those investments started to pay off in 2021, and, as evidenced by our 2022 financial guidance, we expect that to continue in the year ahead,” he added. “I look forward to working with our talented team to further strengthen RE/MAX Holdings. My goals as CEO are straightforward. First, amplify our growth – and revitalize our U.S. agent count growth, in particular – by focusing on a few core strategic initiatives.”
Joyce will officially take over as interim CEO on March 31, as the company continues the search for a permanent replacement.