The new quarter saw a continued trend for RE/MAX Holdings in declining revenue and the number of US agents, but the franchisor also significantly improved its net income year over year.
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As the market continues to present challenges to agents in the third quarter of 2024, RE/MAX Holdings’ revenue fell for the ninth consecutive quarter, according to financial results posted after the market closed Thursday.
Net income fell 3.4 percent for the year to $78.5 million, down from $81.2 million a year earlier.
The news got worse, as RE/MAX Holdings noted during the last quarter that the company’s revenue has declined during each quarter of the past two years. This quarter was no different.
The company saw negative organic revenue growth of 3.0 percent in the quarter, which it attributed mainly to a decline in the number of US agents and lower revenue from previous acquisitions.
Cash and cash equivalents were $83.8 million as of September 30, 2024, up $1.2 million from December 31, 2023. As of September 30, 2024, RE/MAX Holdings had outstanding debt of $441.8 million compared to $444.6 million December 31, 2023.
However, there was good news, as the real estate franchisor significantly improved revenue from last year to $1 million in revenue and earnings per diluted share of $0.05. In contrast, during the third quarter of 2023, RE/MAX Holdings saw a net loss of $59.5 million.
“We continue to drive strong business performance across the company, which helped produce strong 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 every day. That effort has contributed to our strong average performance over the past two quarters, which is an encouraging trend.”
RE/MAX Holdings reduced its operating expenses by $39 million or 38.1 percent year-over-year, to $63.3 million in the third quarter of 2024. During Q3 2023, RE/MAX Holdings’ expenses were partially boosted by its settlement of $55 million in industry antitrust lawsuits.
Despite the continued lack of US agents – 3,686 agents, or 6.5 percent, departed between Q3 2023 and Q3 2024, the overall agent count grew slightly, adding 174 agents worldwide general.
In an investor call Friday, Andy Schultz, Senior Vice President of Investor Relations, highlighted international growth, as agent numbers rose nearly 6 percent in Q3 to a record of more than 67,000 agents outside the US and Canada. Markets such as Brazil and Argentina have contributed significantly to this growth, supported by effective recruitment and retention strategies.
RE/MAX also reached a record 25,400 agents in Canada, even amid stiff competition and market share challenges. Chief Financial Officer Karri Callahan noted that Canada’s growth includes significant changes in companies joining RE/MAX.
Earlier in Q2 2024, RE/MAX Holdings reported that 4.4 percent of its agents in the US and Canada left the franchisor. Additionally, the number of Motto Mortgage franchises decreased 3.3 percent year over year to 234 offices.
“Growing the business, having a growth mindset, and delivering the best customer experience possible is the foundation of our playbook,” continued Carlson. “We are making significant progress in each of these areas. With growing optimism about the trajectory of future interest rates, a growing number of global agents, and our bold new initiatives – including providing new and improved technology products to our RE/MAX agents, improving the agent and customer experience through lead cultivation, and starting to monetize our digital assets – we are in a good position to finish the year with good momentum.”
The franchisor’s third-quarter financial results also noted that many RE/MAX executives were affected by the recent hurricanes Helene and Milton, with Schultz sharing the sad loss of the franchisee and their partner.
As a result of the storm’s devastation, RE/MAX Holdings expects fourth-quarter revenue to be lower than previously expected, as the company waived payments to franchisees affected by the storms. The company lowered its fourth-quarter and full-year revenue estimates by about $1 million to $1.5 million.
The franchisor’s stock traded down about 4.98 percent or $0.61 during after-hours trading on Thursday, reaching about $11.63.
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