Like other real estate firms, RE/MAX reported weaker financial results during the first quarter of 2023 than it did in Q1 2022, but executives’ spirits were buoyed by the overall resilience of the 50-year-old company.
“We remain squarely focused on growth and we believe we’re positioned for improved U.S. agent count performance in the near term,” Steve Joyce, the CEO of RE/MAX Holdings, told investors and analysts on the firm’s first-quarter earnings call Friday morning. “We’re executing on the strategic growth initiatives we put in place last year, and we remain confident in the upside that they can deliver in the long run.”
During the first quarter of 2023, RE/MAX reported revenue of $85.4 million down 6.2% year over year and a net loss of $700,000 compared to a net income of $1.5 million in Q1 2022. Executives attributed the lower revenue and net loss to a 5.0% annual decrease in organic growth revenue caused by lower broker fee revenue and a reduction in U.S. agent count.
In total, RE/MAX saw a 5.4% yearly decrease in its U.S. count during the quarter, bringing the count to 57,450 agents. However, the firm’s overall agent count grew 0.8% year over year to 143,523 thanks to increases in its Canadian and other international agent counts.
In order to improve RE/MAX’s U.S. agent count, the firm has launched MAXRecruit, which is designed to build the skills of local affiliates to grow their brokerages or teams. According to executives, the initial response to the program has been positive. In addition, Nick Bailey, the president of RE/MAX, noted that the firm’s rollout of MAXTech powered by kvCORE is another potential draw for agents.
“The U.S. rollout is progressing nicely. We continue to hear very positive feedback from our network. Today more than 62,000 RE/MAX agents across the U.S. and Canada have on-boarded or are actively in the process of doing so, giving them access to the enhanced capabilities of this industry-leading technology,” Bailey said. “MAXTech powered by KV core is being provided at no additional cost to affiliates, so it represents another major recruiting advantage to brokerages and teams alike.”
The firm also highlighted the strong performance of Motto Mortgage, which included a 21.5% annual increase in franchise count to 232 offices, with 10 franchise agreements being added in Q1.
The long-term goal for RE/MAX’s mortgage ventures (Motto and wemlo) is to generate $100 million in annual revenue, with half coming from each firm. In order to achieve this goal, executives believe the firm will need between 900 and 1,000 franchises.
“We are encouraged by the solid star to 2023 and the interest we see in the marketplace. We noted last quarter that we witnessed a tight correlation between rising interest rates and a slowdown in our franchise sales since Q2 of last year as a result,” Ward Morrison, the president of Motto Mortgage, said. “It’s positive to see franchise sales accelerate as interest rates began to stabilize in the back half of the quarter. Our pipeline looks good and we expect more encouraging results, especially if the macro environment continues to cooperate.”
