RMAX - Earnings call transcript Q1 2020

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Operator

Good morning, and welcome to the RE/MAX Holdings First Quarter 2020 Earnings Conference Call and Webcast. My name is James, and I will be facilitating the audio portion of today's call. At this time, I'd like to turn the call over to Andy Schulz, Vice President of Investor Relations. Mr. Schulz?

Andy Schulz

operator. you, Thank and earnings everyone, RE/MAX first Holdings' Good call. welcome XXXX conference quarter morning, to Please Relations live the materials replay visit Investor the and earnings for of to related all access today. the call webcast the page and of remax.com

through as If slides note that advance move through the webcast, you you the please need will are to participating we the presentation.

and forward-looking Turning to may questions contain statements. on your Slide X, answers our today's to prepared remarks call

outlook, brand franchise about Forward-looking and models. statements capital sales, to mortgage and and business count, those recovery strategic plans operational markets, statements competition, include financial expansion, market related agent those allocation, including housing dividends, and technology, measures conditions, of

Forward-looking to statements assumes Holdings forward-looking current future. no RE/MAX update represent obligation statements management's estimates. any in the

matters that are and statements. differ that results to risks to may from actual address those in uncertainties materially subject Forward-looking projected forward-looking cause statements

our are Please recent of and Also, contained most SEC quarterly filings. release discussed available XXXX measures in which on press non-GAAP These financial today's is press refer non-GAAP in website. financial and our release, results our reconciliations other the certain definitions on will first we measures quarter results to see call.

are Callahan, Joining and Ward call our our today Officer; RE/MAX Chief Karri Bailey, Contos, Nick me President Executive of our on Chief Officer; Financial Mortgage; Chief Adam Morrison, Motto Customer Officer.

RE/MAX Adam Contos. CEO, Holdings Adam? I'd that, to the to like over With call turn

Adam Contos

today. Thank you, call Andy, and our everyone thanks joining to for

current my going circumstances, of the our set highlights today. unique the employees, our environment. on of provide we're briefly thoughts quarter of do state I'll a and the earnings the Given differently to call address bit present

to insights lines. Bailey a state Nick their about each spend their business minutes asked I've few two our leaders, respective and of the sharing Ward brand Morrison

capital Lastly, Karri and and will review our current address QX measures resources. cost-saving briefly

remains Slide top and the our affiliates, well-being health priority. of and Looking communities employees, our at X, customers

RE/MAX our in March past our staff headquarter every made and from home, Due we and investments our year, went employees business productively Our XX. are delivering day. service to Motto this all working to networks valuable remote on support

significantly and and engaged. digital of video, social to embraced We've use media augmented stay technologies our connected and

In in our originators. time agents this the has spots leadership face-to-face spent all franchisees, virtual our fact, with group and the one experience communicating of bright is loan

work to professionalism work-from-home Our our virtual I of operational was June membership Xst. plan until thank their transition to least and work seamless. continue during their a all times, relatively challenging to our We value environment these and for terrific diligence them delivering team at and stakeholders. proud resilience, I'm members to remote for

although COVID-XX market Turning said, we we increasingly momentum amid to the Slide X, still a first entered pandemic rapidly U.S., the quarter evolving and industry operations. housing our XXXX solid impacted with results. That posted in strong

million, refreshed adjusted first agents up first for adjusted $XX.X and history, app of revenue the of the and consumer-facing count total the of agent RE/MAX of EPS the of X% time launch our our included million, remax.com $XX.X quarter $X.XX, Highlights EBITDA approaching website. XXX,XXX in

housing for to have are coronavirus, on housing indicators and more that remain a that results to we reflect likely sooner optimistic of the recover brunt some already in many have quarter the second full leading will Nick than started moment. industries. Although turn, will

confident Moving strength. of of health we'll position to one I thing X, am crisis this a Slide in is exit that

experienced organization our downturn faced. have is leading isn't rock our The industry of and We entrepreneurial team. Holdings family of foundation first under enviable set including solid. headquarters the has the skilled brands, an affiliates brands This RE/MAX competitive advantages,

Recession of In through key including Nick company Ward, leaders, guide Great ago. a fact, and many our helped the myself, decade the

of we're recessions past. Most the has tactics taking to the XX successful learned battled affiliates of Gail years pivot, benefit modernized overcome steering our ago. years, challenges noted RE/MAX have founded Liniger, since David has adapt for RE/MAX hallmarks Many actions challenging in that their and versions conditions nearly business almost he our market cycles from Chairman, decades. and newer RE/MAX while through the Our six now ability decades, through the become and spirit and not if peers. network affiliates been of five the Entrepreneurial have for and of experience of are

productive business our We the RE/MAX gives recognition which difficult and a we believe cultures is industries, best are validated from competitive to and well-respected we valuable of similar third and parties. have have edge times. multiple models Motto which in us during professional, the by continue receive collaborative, brands

are report consecutive recently leading large one year. to According sides many Trends agents the of widely agents ranking REAL U.S. real average followed XXXX XXXX productive for For than RE/MAX brokerages, confirmed RE/MAX a more as XXX twice transaction XXth that industry far agents estate example, in competing as the the norm. survey,

Motto survey Entrepreneur second for widely time A RE/MAX Franchise consecutive the RE/MAX time. number made consecutive is XXth list and eighth Entrepreneurs named year, the together. the This and XXX this Motto X consecutive real franchise types and honored Magazine's source, RE/MAX of on for These the brand were seventh put second second the RE/MAX estate Earlier our fastest-growing display. recognition XXXX recognized strength the respected brokerage franchise year rankings for year. the time XXXX

all share and Almost others see environment based create where helping an Turning ours, X, the come agents achieve on model By each wins. everybody original was world. results motivate simple a achieve later, their century to together, their goals, a would founded soar. we other premise ideas, half still business Slide to around that productive thriving, RE/MAX relevant and is

RE/MAX positive leading share, Today, presence in territories with estate, than is RE/MAX real sells on the sellers. agents estate real outcomes are RE/MAX and residential transaction leading leading in sides. XXX worldwide and based more the more delivering leading productivity, Nobody market buyers leader brand global countries awareness. world to agent than in and

big home reports. We in multiple are to broker top producer the national annual

X:X. agents other produced out agents RE/MAX

is brand awareness among with unaided of estate highest membership real and Canada in the have U.S. MMR Strategy the footprint Group. in about to our outside the of and consumers half level global according we unmatched, Our U.S.

it's much States. core values a first its brokerage bright. in built moving point history, on national same but Obviously, is Motto its forward a franchise and earlier the the in remains is just the Motto United only at is Motto future and is started, mortgage on path. similar Mortgage getting and

I'll turn that, With to it over Nick.

Nicholas Bailey

Adam. morning, everyone. Thanks, Good

believe while continues of a X, Slide sentiment exist an at when. just transacting. on matter it's absolute consumer Looking near-term lean for housing challenges to We toward basis,

majority just the that to process want they Association According by report, their most National agents indicated Realtors state a move choose shock delay the temporary the delay surprising local Seeing months. buyers Pulse mitigation of variance to in isn't of a of to virus sellers and and wide either with restrictions. the April or and couple or have initial efforts of short sellers buyers the forward given

as the remain estate relatively to quickly We after well while as our about lead ability recovering sales the and recovery occurs. industry real optimistic

While showing of number positive the the decline some momentum. housing in quarter, transactions indicators to expected are materially second forward-looking is

loosening Since orders select many showing municipalities leading see like states indicators, commercial listings new easing say-at-home plateaued mid-March as like some restrictions. are other and have and recovery, to have their a begun and others

tailwinds age Millennials, key Generational for years. demographics largest the in group, several are peak increasing and one their of buying the population housing. are is home The

sudden potential at Headwinds interest So in affordability historic include lows. with and a job especially the inventory are challenges demand constraints, shift remains strong. ongoing Also, rates figures.

the although deferred, Likely of of positive housing coming said, months. transactions metrics velocity and simply That recovery. selling current anticipate and levels uncertainty showing that is of the we signs suggest been spring remain, already increase of the has to in much season weeks

In we focus and deferrals to and continue directly monthly health for we theirs. of offering sustainability optional around X, X fund as the on to Slide continuing success to is world supporting franchise our turning began regions company-owned fees franchisees franchisees fees in of Now to the marketing our tied March, month.

received local partially the both offer for our small being to these an program month. pay now been which pay to fees program about provide by assistance months a direct the the with membership, measures, entrepreneurs two waives extended These that the favored at have for network. our pay of that expanded additional financial deferral we very later level a now our XX% well to by and business option option up initial option Later,

previous in to us shift enhance experience conditions and value our move quickly the to deliver market network. recessions we Our and helped

developing For tours, sellers, to virtual technologies instance, platform series we of to coaching took by Facebook adhering guidelines. while immediate video, a conduct webinars, sessions and live learn deliver University and presentations and steps social to value our leverage buyers agents RE/MAX help connect distancing to new through

a to in agents, also enabling the more vast environment. adapt brokers We their approved relevant of business membership to the and get our supplier to and our into engaged network hands virtual services tools

brokerage Video around through every Pro Additionally, X already agent. Basic enhanced logged a free Zoom world we have temporary conferencing to accounts. account account an to minutes every million offered and of Zoom Affiliates the over these Zoom

We marketing for compassion also that communities. created hope, are materials clients new that speak here customizable while their and agents RE/MAX noting and with

and virtual proprietary platform competitive Our app largely franchisees investments booj give unique in agents as a advantages the First such our RE/MAX innovative technologies, and business in environment.

leading features such as due the first late our networks We're Convention real by over of in we've Las After estate spurred in the specific half. at XX% undertaken, seeing of trial our to downloaded app these Vegas. offering introducing XX-day before it in to gains and the technologies, part adoption attendees initiatives for Annual a February,

tremendous response momentum to initial grow A and continues ever since. the

with by having on just per new Our day agents created network booj platform is XX,XXX as been new more consumer since are fact sites also average, that over launch. the than XXX our embracing the creating websites evidenced

drive increased by As leads April in further marketing to XX% a crisis. the all remainder XXXX. of education XXXX the XXXX, and We're continued tech second XX% and quarter on result, focused adoption despite health in and year-over-year the March during by

regions. our environment, grow their opportunities grow realities current As to franchisees we and in our by brokerages adjust and helping any see network operational to

initiative, In leader. the our confidence committed structure industry Xst, our most fully recruiting growth-minded we fact, recent great May announced with forward position growth which and culture. and believe we reflects our reinforcing moving systems, in our people, to We're on as

With to it over that, Ward. I'll turn

Ward Morrison

Thanks, Nick.

relatively over has in Motto the of entered X, our Slide last the Motto the momentum. Mortgage all, closed served have to pandemic After network a volume with has believe families X,XXX impacted although loan year XXXX. year. strong has real And we billion $X.X over can office we still Moving business,

efforts deferred We, March, they financial and help offered we until no In too, have begin up interest their education franchisees with defer marketing September when to option to April the our repay the franchise fees training, increasing and amount. our franchisees support engagement extending fund by would to programs. stepped and continuing

accordance pay to May franchise to XX% waiver monthly in a in existing fees they program and pay defer provides now these no option until the interest later elect expanded September. their and terms or X we they April, continuing for reduce to fees, repayment and offer with marketing with fees of starting fund option payment May June The could process pay In if options. June and a

opportunity have between Motto we've is relationship as measures for actions franchisees teams. investors services. also taken. prolific business pandemic independent have for ancillary headquarters a to and for Motto an businesses during anything, the opportunity in interested brokerage voiced remains own the compelling open Current It estate estate financial our real firms appreciation network. seeking And strengthened the if and our real well as professionals their mortgage

last deferred of these have demand their April, a Franchise some March event the prospective event We of attended but prospects, continued decision very through the Motto a first continued economic pace, sales Meet in XX until significant because passes. likely types. our in each attendees uncertainty event a year. at during marketing over enthusiastic virtually from purchase XX of see slower April franchisees who and We the customer held increase QX second successful

is will of to network. in goal franchise both the Interest a it in possible. happen. pipeline And XXXX, sales we surpass last working that from Motto we hard it's our The total to achieve At year's unlikely high, events, make attendees is certainly believe franchise most outside full. remains were Motto and team still the owning although our RE/MAX is

inquiries as ownership the renewal ancillary can how see about help In owning the unexpected like had fact, opportunities buffer franchise, we've weeks, hard business, Motto past the several numerous times. in

the turn Karri. like call to that, With over to I'd

Karri Callahan

Ward. you, Good morning, everyone. Thank

or March quarter were initiated health transactions of results. the many close, beginning able Canada, of earlier to our first despite the we of pandemic end the COVID-XX and to to the in Slide the our at industry impact which Turning housing to quarter. In and solid at XXXX, U.S. contributed relatively first had XX, the the began momentum operations the impact and statistics entering the quarter first crisis strong

During the first million, excluding quarter, funds. the total revenue up almost X%, $XX.X was marketing

on is revenue the broker difficult quarter possibly estimate. fee except which for quarter First to impacted revenue, coronavirus, from materially wasn't

and fees recruiting fees Motto Increased announced offset essentially to broker of franchise initiatives. the previously lower continuing related expansion

and impact, the growth, marketing also currency virtually organic funds. Foreign ex resulting acquisitions movements had negligible in a flat

XX, Looking at the selling, compared quarter in of of and the the XX.X% million represented excluding of compared administrative or of marketing million period. first $X.X in X.X% revenue operating quarter the year XXXX, expenses funds, prior Slide And to were an $XX.X to XXXX. XX.X% increase first

operating and expenses legal equity-based offset primarily administrative elimination bonus. investments the expenses technology and compensation due from Selling, expense debt acquisition, increased and bad expenses, incremental the higher of increased first by to corporate partially expense, the lower

jobs conserve preserve cash. our second as the discretionary as and we our reduced implemented in continued designed possible expansion reduce a was support help to expenses much goal to program spend. quarter, early to and the Overall, proposition of value XX, Slide to Moving

marketing the expect eliminating of in XXX(k) and quarter hiring by which address travel a XXXX announced the corporate funds, $X the suspending million, XX, moment, match, will expenses reduce bonus, $X freeze. to events April and a Outside implementing on second I primarily by company's million as to we

marketing recurring the purposes, technology for franchise funds, the of primarily that recall and the of dealer company's that to visibility these We brand importance terms used during a collect be on maintaining subsidiaries and times. the believe Regarding challenging fees agreement. the presence in advertising for basis

marketing dollars, we were By consumer million expect fund reflect to marketing able to save reduce efforts mentioned, we current sentiment. advertising to our As expenses reallocating and Nick strategically second quarter million. money by quickly modified $X to $X.X

maintain Importantly, investments currently are we planning our to technology. in

capital to expected million We were also for plan to expenditures million principally headquarters $X.XX defer remodel. our $X.XX of second to approximately related the outlays quarter. originally These

our expenses judiciously. to expenditure continue manage capital We programs and

believe primarily Slide continues recurring XX, strength a and these. model, competitive times streams be to XXX% sheet balance revenue our our challenging provides like Turning flexibility to We navigate franchise financial business strong to advantage. financial

no and Our XX-month of million was and cash, We cash of $X.X XX% free business March million historically exception, healthy cash generates converting a since year-end. on had with year flow EBITDA down $XX.X of equivalents trailing as adjusted almost just basis cash XX. amounts past as to March XX, the of of

million since at XX. Our quarter end, marketing about funds in million up had cash $XX.X December $X.X

and does covenants which we mature our financial if Regarding down are not $XX only million current financing our facilities, our credit draw applicable we facility XXXX on until December the done. revolver, have not

priorities unchanged. growth. strategically have steps as and allocation We If capital cash preserve the we currently always continue believe investment prudent remain spur change, we we have future continue evaluate We reassess invest we rigor to employed. needed. taken with can to same will to Our believe circumstances opportunities to

of and And and impact at expected the crisis, reasonably The near-term to second operating cannot financial behaviors affect anticipated the unknown. results which to materially, COVID-XX performance therefore, of especially on duration this quarter. are be time. at the magnitude consumer company's the estimated COVID-XX, least Because housing are is decline through negatively from

we As most for model a sheet, cost maintain healthy structure, our and We of success. paid company recurring fees both long-term focused a revenue stable and balance positioning from our fixed low franchisor, fee-based by our historically affiliates. derives remain on short-term the relatively

it turn I'll Adam. back Now to

Adam Contos

Thanks, Karri.

entered of breadth entrepreneurial confidence our to us and we a able of our will and Slide crisis from brands, dedicated we position through networks from employees our give successfully this to strength. professional XX, business strong it navigate emerge geographic resilient be model, Moving and as that

for operator, that, With it up let's questions. open

Operator

line comes Go ahead with our of from [Operator Instructions] And Blair. question Stephen Sheldon the please. William first

open. Your line is

Stephen Sheldon

morning. Good Thanks.

ask of what know wanted here been to side. data on third-party I could I the here. you're growing trends or lifting part either inventory headwind here that internally back pick up indicators, also the any seeing relatively Are listings that's seeing through First you quickly?

Adam Contos

Adam. it's morning, Good

it here But pass to will, We listings Nick and second inventory are constrained wake regards if starting in to just with market significantly. and you up, see still is to the a quite I'll showings. over

to create that the talk anything greater to will Street, the think - else? indicating on pull that we're The there. of the direction. base start And do Nick, rumblings listings a out seeing we Street, on add want you likely pull And supply/demand The However,

Nicholas Bailey

sellers, Yes. their listing when look news as them one. And that number encouraging Association move I is they industry said our with is put just look at showings agree indicators, out where forward But stand. of leading for they delayed. continue plus, example, buyers with property. we Adam. like you a And the report the would sellers to It's National XX% to Realtors entire pulse recently at for and asking of

based so delayed. is we also has which still on different when the locally. market believe leading And on that come coming uptick, been listing showing spring annually, just of And it's inventory indicators, Each listings a this the market at of and pace. most much is driven out state

so markets of essential than leading coming slower. are of look all very some little are those up deemed a are out faster coming seeing that that indicators recovery listings positive. And we're in still But the

Stephen Sheldon

Got have option your on kind questions update short franchisees second, of guess, so out Okay. far, based second and taking point? this rough could of it, point pay the pay uptake upon One, of these now, this the revenue at at what to the franchisees impact overall any then then agents quarter? And profit the your the and what to changes the health in two and I for in later seen you've help term. on measures

Karri Callahan

Karri. it's Good morning Stephen,

been has So now I later heard feedback and the the pay from regards programs, resoundingly we've think positive. pay franchisees to with our that

time that we took them. measures took And excited about so and the in we're - the we which that really

of U.S. elected the to in option. in the about our Canada agents regions elections company-owned With and now XX% point, at the pay regards the this have

usually if our about month that, for So XX,XXX think in U.S. agents and the $XXX between you about franchise They're - continuing about Canada. per fees. roughly it's paying our

you assume months, continuing that headwind of roughly, that's going if quarter to $X couple franchise that XX% it, So a fees kind of a they're million. to second for pay of call of

you now different The other little for other option, looks later it I bit the fee. XX% timing the when we'll just higher recover would elected regards pay revenue recognize recognition point not who option, with we the pay the revenue if via that broker to out thing the because select have that a assume that

isn't we it to that of call although the the that a math, that recognized So it, impact the million of kind an same revenue of, in think But full couple did year. still dollars the year, do would full second would quarter. if out there's roughly you push of be

So that's there. impact kind of the

we're As we seeing franchisees for amazingly kick overall years the RE/MAX has recessions. - to been is to and question, second close over network Nick, that at of - This resilience the network. free, XX on across through XX the health in. look then X strong the But and jump your feel I'll operated in

entrepreneurial weather the to enabled the storm. franchisees our spirit really so And has

indication pay required no were we on that, about now, that I the on of $X.XX better later than had the programs bills. than that pay think our collected our because We March it. collections that saw dollar

from in are their So adjustments have learned necessary a financial They've perspective. the the lessons business. from doing made previous well downturns our overall, and franchisees

Stephen Sheldon

Great. Thank you.

Operator

Zelman. of the from Ryan McKeveny please. ahead line Go comes question from next Our

line is Your open.

Dennis McGill

you? Ryan. for Good domestically. First question with deals just aging It's McGill are count Dennis How the actually morning guys. on

the similar and through that look As tested. decline company, might guys very and been evolve, recessions think a have about showed you've several battle this April you at you in When mentioned, you how you as of agent compared can to this different when you how to might more as has expectations? your maybe to be or declined how some the count recessions talk well? And has recent just that

Adam Contos

into foremost, year we understood growth. on efforts And and the paid tremendous it when last growth into we with year, QX first of Well, in momentum put we initiatives, came off. our

April, for not - The May as it obvious part came of delayed initiative also intentionally launch the we was appropriate We aggressive growth QX to our reasons. time and we Xst. first launching Xst April into until

announce starting very of And have aggressive the forward Xst, to so that to we our efforts move thrilled growth we through better is are which remainder are timing May and taken the QX.

similar now very we're tactics QX did we remainder that drive QX, moving about So into optimistic of in future using to the growth.

Dennis McGill

be. leads to well, second actually into, my going probably And was question, that that

If pieces that's side two agent recruiting you the then normal. of think the about attrition ads, on and the have you the obviously and count, gross losses somewhat

out now think maybe if year at recruiting versus weren't see both difference Given that you this two that pieces, ago and how about net? you did looked losses, a proactively there during much the time as you period, Or this to the just heavily in driving gross decline? being

Adam Contos

that as there stated, occurs you estate No. with within agents. churn natural realize a just, We that the real industry, is

so was overall ads don't difference the look it on gross the we see in focused any what impact. as year-over-year really more like It And of on that. end an front

Dennis McGill

just think second CRM in type that interactions? And also to quickly positive That the would Can getting? around And might conference future question, were first, provide download, what that numbers app had then program. the you sort conference, announced or makes you just you who at it. you downloaded about, lead of attendees adoption beyond had attendees? think negative I you the downloads relation referenced sense. where Were the maybe And of I broader then usage either to measures or are you you be as spoke agent something the the beyond hearing feedback

Adam Contos

going to rates months. in the rate The sellers the or and by hundreds continued listings and it's just the by of have Yes. app, for list, possibly app the sure timing are is where launch better but months. a end machine they entire by on between of AI help and have driven with us, out learning been usage to the The technology to and since the agents saying adoption capture pushed day front not acquisition First could of make to - the delay thousands that two weeks

the XX% basis with we're so XX a of increase. have to looking technology on agents, and already it's approximately adopted at launch, daily U.S. days the continuing our within And

it If of we with of testimonials from this seen have is benchmark we've past. And the technology network immediate surpassing saying, that industry, our far things that against a the seen leaving our XX% downloaded and XX of of listing adopted the And adopting that have app them within and of conference attendees our the that were appointments had their had number it. average in a driving results, has adoption we hours number provided business. mentioned rates we technology we examples

over and So this continues moon the from very our very, we are about be technology to the network feedback positive.

Dennis McGill

near-term have promote recognizing just and Sounds drive people Do a it's it? loop you seems it that that fantastic. adoption, any to plans of adopting the of feedback here more or value like recognizing

Adam Contos

Yes, launched made and to adoption. of growth is have and number we May initiative our a as helping well Xst. which absolutely. focus of trial, front drive we tools we a growth XX-day the offered one X It It is that QX that is that center have

into be this big our forward So that initiative growth will quarter. a we as focus move

Dennis McGill

Thank you all luck for quarter. throughout the the time and info. everything Good with the

Operator

Inc. [Operator line with John from Instructions] next ahead please. the Campbell question Our of Stephens comes Go

Your line is open.

John Campbell

morning. guys Good Hey

Adam Contos

Good morning, John.

John Campbell

It up point. bit deferrals, of out a uncertainty looking like this looks there's there On know lot a metrics looking forward the the obviously fee I are still. little at

get - not you're guidance as I as spots a and some lack full that providing in to of freedom out you're seeing I the of liberty think guess about uncertainty the or, fees we're the the also defer market. is guidance, other kind from things guess, to the update, part kind from of here? part I well choppy reserving or it? of think if Is that way of a that

Karri Callahan

uncertainty there there's Karri. lot market. of now, the still just - its Right is John, a in

that providing things, sure again, are appropriate we're green delivering running things and support, to to leading the as know on race, take seeing prior there And of we've learned assistance. any from is in where that we're measured value end terms we're want as that of be careful the to we're the indicators. basis. is. the how the want make we although about fast some to both We definitely around of we One don't We the shoots recessions want network the a financial some well

And just confident programs at the seen, deferrals evolve. continue things so we'll we offered feel appropriate to right right see we've April we've on now, based reaction time. were May waiver how are that the and the but very the and and for And they

John Campbell

this I'm Okay. sense. just you guys And dialogue Nick. makes increase I right? in kind then know year for about attendance conference. you're with of in You the agents. That a maybe momentum, conversation to is curious significant had this having ton with of came

- these remax.com all had You've the you had rehaul.

Just COVID You have detail to like just facing Project helpful. as the on. still kind it had the Are conversation and consumer additional of then will in going assets. a Dark? Are starting came those conversations? kind I'm momentum. of people those you ton went you of how some conversations looking to pick It seems people back about curious up or later, be

Nicholas Bailey

has The can downturns And Yes. this work before. proven seen model is of market. we've any side into part, beautiful unfortunately, coming our that business the we

with in quickly of all lighting to on for that we're the available; than worldwide that sure tools speaking offices agents Zoom front me, make And agents immediately. that XXX,XXX we we example, And of accounts all our them up have education making virtually in sure X,XXX our technology history, for very and made ever personally because outreach to and and of so very, network. literally our and Adam touched offices responded more our and we interacting behalf

in seen a million of XX% the to back market of Over a the south U.S., it $X.X during we Recession, at not the are the you the just we're When of agents buyer's there look a $X industry have in And million. were X.X Great statistically, the million agents million number at XX dropped realtors years agents. in last the $XXX in and downturn. or

have a We as company.

we it put use for on how downturn, immediately the short-term them into respond, to this able or give to place. whether longer, guidance with and maneuver be that And what is be to network us knowledge exactly and communicate, engage

been so and And our and owners positive from the has support agents. from our response network our the overwhelmingly

John Campbell

more Thanks. or quick you're a And as the pain, conversations same that's you one that. little of think thing. are Karri I That's if follow-up with - franchise the question Similar guys know helpful. on I I independent don't owners. maybe Adam then is feeling having, bit feeling mean, everybody answer, but anything, to

is So of well? conversations are quiet as there everything those Or up? picking kind

Adam Contos

Adam. It's

closer before. continue relationships our system-wide, has everybody it's significant We And that realistically, think like of have the moving in have amount presence created And Nick functionally, just I much think and direction. And during conversations. those increase trust kept to they gotten increase. said, conversation same were than this I a situation

the it's in holistically, positive our like I been franchisees would well relationship with just the regional awakening So as And for Nick a kind said, as certainly, agents, as of that label an owners, independent everybody. future the momentum.

Karri Callahan

only perspective. I up will perspective of Yes. to priorities that, obviously, the independent add continue from on funded our capital to those everything capital has acquisitions be a that is, The think regions thing opportunistic. been a unchanged. just would allocation from But And I do allocation remain currently valuation

drive best allocating continue long the that we so the - those long-term evaluate will capital to opportunities value. to And

John Campbell

guys. Thanks sense. Makes

Operator

from from Kapgate JPMorgan. comes please. Dhiraj question next ahead the Our of Go line

Your open. line is

Dhiraj Kapgate

do is, Dhiraj the if you first for second the - on the were quarter And first the how that bad And franchisees eligible debt quarter? protection for the your question Anthony think what in for Paolone. quarter? of My for It's tends any program. been PC

Karri Callahan

Yes.

bad previously to strength of this morning, And We to bad to during good said, And reserves we network. I also did the now of our it take Karri. highlighting we've some mentioned the as network debt, With program, is relates collections regards for pay has some opted expense about XX% our individual to the approach pragmatic specific debt the related increasing quarter. that a the cash seen. offices. So

the it As provide the evaluate [ph] future. as monitor and progress. the continue and are relates in updates go-forward, of And to to we'll velocity housing accelerate, we'll transactions lifted restriction

affiliates do We RE/MAX we're that them addition of something access our Motto the what perspective, take amount tremendous Act, With regards of that to terms that on support both in to definitely the capital working to networks, an know CARES of able provisions, their were been many offering. support to education CARES the a in to Act education and the to we is we're our to of have businesses advantage side. franchise and providing from

Dhiraj Kapgate

Thank you you. like still have And can liquidity. good just

on wondering like, So these? good opportunities been approaching if how this have anything change downturn does Or just on side? the you acquisition it

Karri Callahan

Yes.

we unchanged. So our with they at regions, looking remarks. regards priorities, capital to current do We're independent in the remain as allocation, scripted stated still

technology. not back we scaled investments Importantly, have our in

reinvest of both to So we at and the on networks side. into back the capital Motto our allocating are RE/MAX still looking

to continue will long-term addition to and And then in at make if to look return we and shareholder value sense other continuing drive can partnerships acquisitions strategic they capital.

So really perspective. nothing that has changed from

Dhiraj Kapgate

more. And one Okay.

the wondering that parts like change think currently. the the [indiscernible] just implemented, virus? of long-term? business what have the how So, in does been stick post So Do you like

Ward Morrison

ever to before. more I'll become seen there digital Motto transaction than jump in side. on the changed We've the

transaction I the but So we are do on the I digital. made think, estate on allow prepared were continue efficient more the in us manner. we've to see digital And for change, we'll to already move very very, mortgage believe that, the and all side both technology side, to investments a real that going

Adam Contos

the have maybe will we forced agree and the somewhat used on moving with have forcing able but look environment in industry adoption the will That would last knowledge, be past, learnings tools When as more within forward. take and a technology and sell been to that average on in our Ward competition to to I X:X increase previously in an to you additional of learn, industry that their that. was at to especially virtual create month. the use agents There on their agents function be agents, those their implement, efficiencies our time RE/MAX didn't stop, now consumers it business.

Dhiraj Kapgate

So one more question.

would local agent this think this? you do of cut because footprint physical fees and So, desk

Adam Contos

Did fees? you mention lower was the want desk question, will they

Dhiraj Kapgate

sir? footprint, Yes. have they Like would physical we can

Adam Contos

Yes.

utilize driving reducing more it look terms agents and more your efficient that costs. transactions. and how to more It's seeing we do offices is more adoption closings in what so be more your versus you about about revenue and how gross the from we're So just at you can technology of it's

Dhiraj Kapgate

you. Thank all. That's

Operator

ahead from question comes please. next Point. from Compass Our of Chris line Go the Gamaitoni

open. is line Your

Adam Contos

you can't Chris, Hey you. are hear on we mute,

Matthew Gaudioso

you Good morning. now? This hear Chris. for is Matt me Gaudioso on Can

Adam Contos

can. We

Matthew Gaudioso

some you expecting, commented complementary. on viewed you With that Ward, color for being we're this Motto it's one as can Maybe recent here? for inquiries wave just as additional refinance Yes. any provide

Ward Morrison

a Sure. that We've applications - I have. recently. seen Motto, They've also own alone mean, obviously, seen We've not RE/MAX's like you said, to let we until down independents the go also we increase. investors who the have a tremendous a lot and started of

stabilizing, we like rates, have feel the they for increased refis. the So opportunities have been as

points to that's go U.S., believe we that do rates So high and be there's the across opportunity as have refinance. being basis a beyond, give QX the rates the propensity be consumers low Xs, below going XX normalize going the the to And XX-year and in a now, right with in to Xs. to back

And I are take like poised own recession refi coming money are from wave to offices the that but to, capture those be next Mottos to the RE/MAX, recession-proof estate that allows proof, let's particularly on. of tied just boom. also who like almost quite not Motto it And that think opportunity to say, a real a able Mottos

them see to Mottos capture and that, do think it. there So we opportunity for we're the is to excited

Matthew Gaudioso

And Great. color. just then shifting gears little Appreciate bit. a the

Are a U.S.? with talk guys international the the the pay. there? Canada hear the little outside of On U.S. electing network about of piece, franchises bit to good you strong can network And agents and it's the that or XX% to supporting you seems health

Adam Contos

health can as there with about of goes internationally. then I'll about Adam. network talk that and Karri start the the is far financial the aid This as talking

contact in And closely constantly much international global pretty this - a globally with them. since franchisees. in and different, are very with been touch are go, We regulations is as have pandemic our everywhere we you

many I in tens significant of agents of a video different have to calls probably so. doing around of been and and number countries on thousands the world so Nick

one In on with I was fact, South America.

I think we had X,XXX agents on that one.

a people business. out lock of lot we're a in So down and unable to that countries. are do their go seeing There's

them that. Some of streets, like military been in have from out, the them things going preventing

to to interesting that social digitally customer continuing to reach all our as and the their agents of franchisees our part we've they're build ability with with positive training our to capability well as pretty video base, media are the a customer maintaining is out even and But deeper those virtually the and given actually their base. relationships and presence

begin some the up set are But their up, businesses, that open things seeing places are to in there pause. transactions. people we of a we're where was seeing So

a 'XX we're However, short-term keep the begin to the in we're through X mind, about of right so now, relatively things, talking struggling but if with. the weeks, anything six built they to add we're most that know businesses, to And the this has in business been grand talking in a years, XXXX eight have strong want part, entrepreneurs I of period, for and of interruption that? scheme working with don't you about Karri, lot to are whereas those

Karri Callahan

Yes.

I our franchise of master think assistance regions and look is operate perspective global U.S. little would from own Canada. bit outside offering financial different. adoption rates a the financial the rights to a only add franchises to the I similar to thing the The we who are

the the on those franchisees we've about XX% So now have elected waiver that April May. XX% option global got master and of pay for

Operator

no further the are back questions I'd to our queue. in to like turn there call over And presenters.

Adam Contos

today's call and for joining weekend. today. thanks - Thank Have you, who concludes discussion. a our great everyone to James, That

RE/MAX (RMAX) 9 May 202020 Q1 Earnings call transcript