RMAX - Earnings call transcript Q3 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the RE/MAX Holdings Preliminary Third Quarter 2021 Earnings Conference Call and Webcast. My name is Julianne, and I will be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Andy Schulz, Vice President of Investor Relations. Mr. Schulz?

Andy Schulz

operator. you, Thank and XXXX everyone, RE/MAX Preliminary Holdings Good Conference welcome Call. Quarter Earnings Third morning, to Please Investor live related materials of visit all call and for the the to Relations section access the today. webcast replay remaxholdings.com and of earnings

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

Turning to Slide X.

Our contain forward-looking may on today's prepared call remarks and answers to your questions statements.

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

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

subject call. are financial results statements preliminary those materially filings. uncertainties risks XXXX from and may discussed third will in definitions quarter on and XXXX our quarterly to release and Forward-looking Also, are note measures release, information results available financial is Please recent this related to non-GAAP and statements. our forward-looking are in we differ on third matters which refer call that projected see discussed address our results These to SEC most other of today's and non-GAAP website. other cause contained our that press that the financial on press in actual measures results certain preliminary. quarter reconciliations Please

for quarter discussed may XXXX information third vary the the and call. this on information financial preliminary from Our financial final results materially

of With RE/MAX Adam Joining I'd Officer; Financial Nick RE/MAX; the Adam? Officer; Holdings our turn Morrison, and of me today Chief to Motto our Contos. over that, Executive Karri Bailey, Callahan, on Franchising. call CEO, to Chief President Contos, Adam like call are President our Ward

Adam Contos

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

Slide X, quarter. in record at third results we Looking the financial posted again

better both US our healthy regions, operations We by market strategy. and from from believe in the of Integra's acquisition RE/MAX based was driven our was the a broad housing core and of North results than a affirmation American third anticipated quarter recent performance contributions strong Our our Canada. strong

past revenue we've investing the diversify few growth opportunities. expand to our Over been years, and and

results diversification. birthday are paying the and up coming XX% celebrated those quarter off. its Motto expansion best office third sales Motto the perhaps open the quarter. third recently of of was example illustrate brand is than that count remained fifth Our and is Franchise and age. brisk more year-over-year during truly the efforts how

a outperformer, increase profit. third Holdings exceeded achievement all another start year-over-year profit We our Integra a expect quarter recent year, the notable a with Among our beginning which much generating $XX revenue for for was on million, was our Group, Motto the that RE/MAX other now of Overall, by Gadberry franchise. a called to has is far high an start next up GXX which acquisition, in so moment. More acquisitions, expectations. our recent quarterly driven posting time

start-ups XXXX. from First, expect both more two we our and contributions steady progress a meaningful revenue in Wimo, see them showing tech to in are

third company. quarter funds, almost contributions multiple marketing revenue the with generated across the core in the Excluding organic our from X% business facets growth

be their As which respective more first we're digits. see continued we'll bucket, our anniversaries and lap expect the organic of acquisitions start organic to we fill confident to single the year growth, mid in

just XXXX. minutes. our $XX adjusted increase million and a of of outlook update model that of as revenue saw We Karri leveraging translate profit These into results few revenue incremental generated as growth, record of will adjusted to much organic diluted the record strong play continue in out tends additional EPS strength dollar our of drive to $X.XX. business in We again each dynamic enabled our QX for us EBITDA we to profit. guidance will

start. great noted integration already I important Integra we the with customer-facing As earlier, of support, off Tremendous businesses. a a portions to has completed, prioritized a our large, where and and date job The made is investment. grow significant that elements been they complicated and and focused receive to This primarily to progress on franchisees agents ensuring of is have acquisition continue involved teams terrific the our to them services are the are the doing need help business. outstanding products their transitioning

and least For this trajectory future this growth focus the part of on a we'll the smooth immediate remainder XXXX, future, of of investment. first the significant transition year and enhancing facilitating at largely the

X. to Moving Slide

some more robust are days cool beginning down trends more seasonal near on by We're sales, run multiple sales and quickly offers happening seeing home towards step are and sales was of faster having sustained Homebuilders a Report, X surveyed some being and the stabilization buyers dip year X.X the rates, time October Sellers prices market. inventory. immediate months price and high. to from well the it has inventory overdue On low the double it the the be. a any to and a XX the down homes RE/MAX. appreciation effects be sales of XXXX. The September's even be home this the in turn full September multifamily month decline. event, somewhat remain at active The dropped construction, prices and of heels as typical months but toward than strong than home with in but will of to record XX real estate National especially be the month-over-month October orders and that sales relief and detail shortages value been more professional Inventory welcome than see to competitive many as more the time coming from coming XX pinched of supply Housing be more was getting chain as October in remains by that, may slightly Nick housing bit. a property are levels year. X.X the markets, of than during supply delayed history average reflected Overall, October continuation earlier gap balanced were would in almost price on supply continue up are With record days a seasonal are very and XXXX them slower could stay X.X% issue. market the year this interest days market in should a of In materials RE/MAX Homebuyers in rebalances still fill labor metros market to as earlier on the the In a on evident in is an in general year. of trying skilled second more sales find a sales home advantageous most pace I'll day the even for position sales many any strong average and This wane. months every for norms. greater with even but as over remains on news. September virtually long, of challenges. should market Sales in September, October's relatively bidding XX

Nick Bailey

morning, Good everyone. Adam. Thanks,

exceptional X,XXX in X% of agent agents almost Looking X, record by growth year-over-year increased over agents. Canada. XXXX, new a highlighted nearly added We've worldwide XXX,XXX count at since September overall to Slide

stay circumstances years In year. count a and year-over-year, is competitive haven't the and despite combined agent unusual and the resiliency Productive agent highlighting of RE/MAX US held US to agents their especially tend marketplace agent our of be count fact, however, productivity, they consistently, approaching model. we agent the levels the to of aggressively an attractiveness advantages. brand. seen recruiting by our benefits network, past dozen value steady in over because Because with many with agents and recruited its brands our

proposition launched earlier US that in To new arena, in more you full gain consumers, open countries XX% best XX% our territories, to that agent alignment reasons the a as to it close we agents spur has efforts a on seamless other in is future. region the bringing professionals. our agents. continue continues officially Canada even so our to Integra where of value viewed more significant will would in complex happening increasing Canada than this among this exciting, structures, across for other choice during in their strategy XX,XXX in proprietary time. unified little will services. even will the global best We opportunities our RE/MAX from focus Recall all it's and prospects In presence focus in operations. to the professionals time to increasing many X,XXX count region continue a build create who Canada, due Canada technology scale and country, helping and Atlantic company of XXX Canada to be is technology, to a us owned one Canadian XX,XXX with our surpassed together region can strong buyers a in the over force a Quebec, across with summer become growth. Our and us to greater sellers and we sales. discount agents year The RE/MAX pandemic Canada. the productive we XX,XXX When rather growth growth Adding a was services be long Western a invest competition. is time independent franchisees, Canada The owned productivity sound work, being geographies recruit We've a that brand. introduction X.X% RE/MAX we the providing and compensation to other from growth, us transaction on minded by booj move already into It's accelerating. real with Shifting the our over believe enhances but further estate suite new enabling when now the been Ontario, international shifting as work for Canada right profession, consumers and leadership industry continue time also year-over-year. over our factor month agents agents agents. And desire is more affiliated appealing outside the market more over and the than positions experience those for than announced The more agents, where the differentiates the to in more options leader despite an up is and portion with our who filled the added to was associated over so greatly and impressive even full want a widely company being market agent market like is Canadian the our of strong the marketing things the in even our XXXX, to of increased and point,

Guyana Pakistan, past Uzbekistan. the and come news During countries; XX sales announced rights to of sales master three the into we've opportunities these with additional grow. days, Very franchise exciting additional and

Turning to Slide X.

control what invest to intuitive thing continue in develop enhance of It's new earn. Built RE/MAX announced and our learn, We user We an up you University RE/MAX they new modern RE/MAX will overall complete to experience affiliates a to the professional level the on University their in our more value agents designed a where, our help platform, good and believe our Learning to puts Hub exclusive skills. reinvention you when, based mobile proposition. how because agents technology, and business of expertise. a we recently help more learn. it that's And

prepared decades, Having In been on time. a comes and that becomes average Ward. more transactions who ahead example turn future working I University RE/MAX understands a shift agents may fact, us that With whatever the found change over place. for that, commission. University for earned engaged will and another has closed that RE/MAX bring. curve of education leader new markets will the over When with It's in more RE/MAX be more RE/MAX priority, immediate being to of the and it already

Ward Morrison

Nick. Thanks,

Looking X. time been days The a last very at segment. have for XX our mortgage exciting Slide

almost we more year On XXX to or franchises, before franchises significant as franchises end. that to continue side, milestone year. we through now the expected. near have eclipse expect sell XX a office sell accelerate to date, this we openings we September at expect Motto and sold continue Lifetime to to XX, Notably, record rate

franchise QX. year-over-year than We are sales effect in seeing the year's grew in openings, experiencing which and in a similar more echo uptick of are XX% inflection office last

XX solve wemlo. economic been development first A big In Motto points, a of have offices processing history. now we We one dependable services. we acquired in of year primary are for opened this area over pain XXX our finding our Mortgage loan continued offices in almost end. fact, wemlo of last have and organizational to XXX steady, We we have open Motto sold, year-to-date, to more open business year have franchisee’s our focus and than by has franchises the states year Motto aiming

broker system other navigate our believe system is software brokers revolutionary Motto through to to held offices operating exact which or LBS come streamline We importantly, to have With a third news And doesn't the a Mortgage introduction team, to we the exciting purpose wemlo, is processing announced a needs brand. loan landing define channel. channels. ingrained LBS the standards access the in technology, that now of last have of brokering Motto high loan the service same addition of an loan the designed party built professional was LBS. address to the of operationally mortgage the wemlo's suite for wemlo month tasks The customer originator require relevant

past years systems channel. resource, world we precisely where LBS, most gathering the real the time. In understand leverage Motto how to from developing assessed valuable loan spent broker short so for have better have traditional a origination been experiences broker's about five mortgage originators wemlo of could We the hundreds fall we

that through knows franchisees developing spend team be to high loan their system, lost that consumers. loan in service unneeded integrated precious quality components our time time to spent for Our and originators better navigating solutions value-add often

January deserve officially Motto first brokerage and call ready product Karri. the features. well onboarding platform the XXXX, their offerings that no modern like LBS built the this fee affiliates more receiving platform are to will that, mortgage begin Motto industry workflow. of unique Our on affiliates is to access exclusive over LBS discounts but broker With as Motto additional a the and integrated will and initial technology in be channel year. turn loan at the efficiencies wemlo granted I'd offices as purpose simplifies LBS The launch processing the for than wemlo

Karri Callahan

Thank you, Ward. Good morning, everyone.

million. revenue XX% a to Moving $XX record grew to Slide Total X.

marketing almost regions North Integra million. RE/MAX incremental XX%, $XX overall the increased Excluding by revenue revenue funds, Acquisitions the to revenue primarily due was from American acquisition.

growth revenue broker a However, X%. FX growth impacted the almost was we this quarter after negligible organic in a both is amount. Notably, are and revenue aside seeing wemlo second by year-over-year our also up fees, performance Gadberry. for Even to targeted to pricing, Motto mid name notable row organic single strong including top we during count incentives, generated recruiting growth QX, contributed digit our growth. the agent agent organic of setting Many growth, ones. line most more use drivers and

improved believe mid If you We exclude almost the book legacy points. foreseeable runoff, further our basis growth another see continued drive which should expansion. single organic margin organic by the future, we'll growth digit XX for

not comparisons million last up in and at XXXX, are significantly related spend operating pandemic administrative QX due the to the of X. Looking over in for SO&A third in the year. expenses our Selling, year. were items $XX.X quarter onetime of The year-over-year Slide particularly reduced prior to meaningful and XXXX

North to the expenses included SO&A quarter acquisition third American related of XXXX our operations. Additionally, RE/MAX Integra's

of customers XXXX. participate events While up that and spending travel to eager our behind picking well are in not prepandemic in remain importance is levels training our levels the in-person staff to response our our in,

terms margins our businesses, acquisitions we our see to In trending from the of right continue direction. newer in recent

While a generate of our in Gadberry wemlo profit expectations, slower. a to has already ramping bit monthly are ahead first started

Motto XXXX. well, with continues business Along by mortgage place expect profit plans thereafter. XXXX revenue accelerated we a bolstered office the openings. to and have to in boost offering generate in in to our each We perform wemlo,

XXXX quarter Moving outlook acquisitions and divestitures. assumes movements, currency company's full further fourth to Slide XX. no year or The

in the X.X% range agent range increase revenue of to including $XX fourth million. to quarter XXXX, million, X.X% to revenue $XX and the of range a marketing $XX fourth quarter million in million XXXX, of to EBITDA $XX.X million from $XX $XX.X to over funds expect count For the in we million of a adjusted

tightening expected our third year guidance increasing slower For than the global due quarter EBITDA than and full adjusted to growth, our better to due guidance decreasing agent XXXX, results. we're revenue our expected range count

revenue X% count including to in down $XXX.X marketing funds a full We $XXX.X the increase X.X% million to XXXX, range revenue year X%, over to expect from from in agent million, to million X.X% $XXX range of million, in million up to a $XXX change of million. $XXX from million a million, and $XX.X $XX.X $XXX to million EBITDA to of $XXX to range million adjusted $XXX from

turn I'll Now it back to Adam.

Adam Contos

Karri. Thanks,

Looking at Slide had third many We a XX. in quarter record respects.

really a Our terrific start. begin investments RE/MAX recent of acquisition to our seeing pay off to regions off. many American North is We're Integra's

XXXX have finishing We a diversified through XXXX. having and strong forward We upon strength now operator, to With are we're open momentum foundation and we up more right plentiful opportunities. let's to build set with with questions. business a growth it for that, believe looking real

Operator

Instructions] question [Operator Your first from Richard Hill Stanley. Morgan from comes

Richard Hill

the prepared and per additional some Thanks decreased? seeing that in maybe home agent. to talk about trends color. do a like, that want that valuations more and remarks maybe for about you that relative your where are agent I the did look the revenue bit count? think little How you're has to What of does going your

Karri Callahan

trajectory to As Obviously, did agent, the of in fee the as recurring fee model with well broker we helps macro broker contributions in think and of revenue increase consistent difference pretty environment. we fee we've in us continuing really about recurring here continuing really $X,XXX our per $X,XXX owned and especially fee and upward nature. in revenue increase our per in regions that's And think highlights franchise protect agent. kind seen just RE/MAX of our been pretty in kind revenue price But this model differences That XX% per year. the consistent America upwards, that nature any being agent, over business as earlier moving with in agent. per appreciation revenue with North to the our I the it has from that home

Richard Hill

comment. putting hopefully, you not it. not And the through I'm maybe that? measure words I'd in you're your a little mouth, productive guys how brokers. on most bit a transparency that made then you back like And on keeping you do that. I'm think more How pushing pretty And interesting to get but just

Nick Bailey

something radar. our That's on that's been actually

make performing as across and we number a sure ways as As levels. we that that look at with they're franchisee a of system each look we required large have to footprint the ours, at the every

have of all regular on look so franchisees. our to as analysis not of a we that of basis And those taken, unfortunately, we underperforming part an at may do be we the system. And have and are

And terminations for those our just some of of the part so recently been but regular we have quarter. business, had that course of in we've underperformance few had has a third

Operator

Your next Zelman comes from Associates. Ryan from question & McCagney

Ryan McCagney

then profit. over of few of kind terms acquisitions out the in So I hoping quarterly mentioning there model can model XXXX, the the economic is maybe called you so when first, years, is on one revenue in sounds the flips. we still mode, us the that in or that like the outlook think but was there? remind about one investment was also you past particular, GXX And maybe

for I than and about growth at franchise there you is if kind curious on some the ancillaries, better modeling. the there, just least flowing guess, should I we then within the all think was sales was other of model hit the believe, again that? economic and how I this can through, there And So GXX

these some question come businesses reflection starting the to. ramp up new second I'll of of then to a back So And revenue a side? there have is on I that

Karri Callahan

a the holistic see all part we're to over a the years that we in at As starting been the it's just of some business, couple we've investments. investments diversification perspective. across the of last of momentum And from made effort broad look

of are it's that perspective, Gadberry stream revenue. on is through subscription just sold. the based other It a from running a sales based and So revenue more products franchise

top think excited that said profit. into We And of what top our contributing the about. the the performance we're so that's given translate line was And so strength that some would can I to franchise if model line. overall get going we of

a so ourselves but 'XX for positioning little bit continued future we slower the first as growth adoption future. in ahead and and in Gadberry look to wemlo ramp on And beyond, across XXXX well profitable

Adam Contos

bit. really that capability years over consumer so base I'll the of efforts just for a what a kind helping provide in technology is we and much of This our obviously, the and the little the been our results And and agents about of our knowledge we've past franchisees, ensure add our of deeper talking efforts better. couple of data with to

the is starting the different the now the technology and that and we're see dependence, thing some what and to allows to better hey, network we're our because we've on saying, seeing to occur from we So out results going for now But it system see value results and been effort of and a going lack also areas in these desiring of you're what independent that. pretty in we're from data good us in technology acquisitions provide our industry integrations these with this agents that's that our the network. see

the we're of progress and headed proud pretty continued in it's So these. anticipating direction

Ryan McCagney

And then for the Ward on question follow-up side. mortgage one

So to with system, clarify LBS the your comments. wemlo and just

like the free Motto access So discounted to sounds that. will get or brokers either it

-- that the maybe at And revenue through it sounds its profit of outside question effectively brokers, might as for then of want an brokers RE/MAX even the fees? or network potential is my area suggesting guess pay is about amount that and should there terms LBS system, through of think would for I that to be loan incremental brokers opportunity or brokers broker we revenue their Motto the might of So the in wise kind of of mortgage use that greater product. you're like Motto this least franchise

the what on side the clarify access and you the or either made So there around just about access potential of there kind Motto free comments maybe discounted is?

Ward Morrison

all provide be platform no of our the owners will to it the on Therefore, motto used to people that [Technical platform to be Difficulty] of that [Technical on no wemlo cost was our because it the cost onto encompass prior. be to be and we Motto on So Difficulty] LBS. side, encompass, platform off will we

service they're now, because process wemlo. platform button a of in it now just now with they'll the that of processing the says wemlo, side drive However, that the house, will because we believe hit

start So you are But needle we right. believe to the that's going move to processing. on the wemlo

will wemlo we LBS out January, the roll a the broker of to mortgage Software-as-a-Service. as As channel

So program we believe we roll it we the believe incremental there's offer upside industry. start additional there we to can we the and revenue be that out as will that And as move to forward. do gain share on

Operator

Your next question comes from Anthony Paolone from JPMorgan.

Anthony Paolone

is more to perhaps agent question or regions why outlook? first the what with about specifically maybe that, reduced where talk and the you regards driving reduced what's count growth. changed My Can -- are also

Adam Contos

and made coming So around that bright is we've globally. recruiting terrific. and and see, the obviously, into of around investments begun to had the overall Canada have we 'XX doing into quarter, a lot coming the attention from especially just spots areas

add of performing US just in we We had throughout year have that hundreds expected indicated, early to the the are that agents as we within states year. the

into from Something franchisees -- QX. that did actually we New into were underperformers that we significant on interrupt at had at somewhat three as looked the and had coming and in mentioned Jersey we those that terminated QX, were is the looking and have in that of system look Ohio momentum that when US that some the some question, we our areas, Indiana impacted that that I states, coming California, QX us we earlier we specifically, around

what that the far on unexpected the the around is business of originally and continuing of adds in because news And thing even of then had lockdown North momentum at countries affect we continues as that's believe than as here seeing -- as as thing specific what to America. one globally global, still more don't that, we the much that's some mean, QX the of some hinder seeing with And line, severity Europe and completely recent just So unlike but forward. top restriction growth. we we're amount moving continues one yesterday, Canada, into mention, looking is significant I as in happening had pandemic US terminations the coming much and that the we're the of to that the we forecasted. gross expect the

Anthony Paolone

And where Just Canada you're called where you you you the now, that you might brackets out think there to about that trying your understand put or and some growth runway market had go? the talk strength there. see the in achieving still? can Can then have you share around

Adam Contos

I think region upwards that market great Quebec all in, strength been which and the say, share to XX%. XX% has Canada, our Canada across approximately a across average contributor all we plus even always of

position So franchise the market across And we well. with strongest even you very, sales. a of market, where the estate And we strong see markets amount very strong we ability of cities market grow. it that country. throughout have the I share, think the couple US our strength greatest real that enhances the to have as the In and

count the strength have agent in greatest growth. We

so share grow And we organically. helping us driver a market just whole, in is believe Canada a as major

Anthony Paolone

for anything noncash normalizing in looked might, in Because then us with and like help comp those it the or of just And sounds SOA just should mind you like also I last Karri. maybe basis? one, quarter. maybe like we were go-forward kind it keep noise if Can in

Karri Callahan

related what So of kind a noncash based for up year rate. regards prospective With of little per terms due it bit kind wise quarter to Integra. expense. of of the in at we charges looking A a amortization of of the beginning get to other the onetime to QX equity some run was quarter. and compensation, basis beyond, in back thought $X little On things, million there's bit to the noise some in couple a of to

expecting of Integra. expense kind $X amortization expense incremental to amortization incremental some run acquisition. rate as Quarterly the of of result the So we from in Integra a coming million $X million are

Anthony Paolone

that so be hit EPS will an or… And adjusted

Karri Callahan

affect that EPS. adjusted Yes, will

Anthony Paolone

I'm sorry, will or will not.

Karri Callahan

[That will]…

Operator

next Your from James Instructions] Hawley [Operator question comes Q from Stephens. -

James Hawley

light on and here, working was first that cited also recruiting the you the release, dropped initiatives. you some initiatives earnings well? fewer a that revenue you may I just in some that have that Could kept So are then shine -- driver you briefly

Karri Callahan

bit when initiatives, holistic other holistic might from placed proposition the value So done. previously, a focus look really of on been the view some several were of over little new we've incentives we've we last a recruiting that utilization and the waivers. proposition transitioned then focusing the view we focus It's incentives of really and at we fee pull less that across XXXX, on it's really value heavier value financial We a much on as a really really perspective. into proposition. had more enhancing the of financial And years. delivery That's while nothing a

what financial And perspective. of year-over-year that's terms seeing so comp the a in you're from

James Hawley

And relative one quick count agent Integra, also pre-acquisition how been across share with Could trending US then the and and you to owned? its Canada it's here. more just RE/MAX

Karri Callahan

regions have So Integra as on forefront of growth perspective. the they count the from holistically, been we look agent an at

we our the And the US excited Canada against noted in about of of scripted why and as both reason our outsized so even That's the of growers part the remarks, asset we So the were have the performed expectations. quarter, rest better the than third operations. opportunity. comparisons been in terms on

that outsized performance, both as leading well. to of that and contributions And so terms count in as well revenue agent growth as see to continuing earnings

Operator

for We have Andy turn to like Schulz call back over to remarks. I'd in closing no the further any queue. questions

Andy Schulz

call the the US. everyone great and us week operator, on in today. you, call. the for concludes This Have to a holiday those Thank joining thanks

Operator

Thank conference you concludes your This for today's participation. call.

You may now disconnect.

RE/MAX (RMAX) 23 Nov 212021 Q3 Earnings call transcript