RE/MAX Holdings, Inc. Q4 FY2024 earnings call

• Fourth quarter results had better-than-anticipated profit performance for the third consecutive quarter, with operational efficiency a focal point. - International agent count increased almost 9% in Q4, over 70,000 outside US and Canada by end-2024, Canada had over 25,000 agents. - Substantially agreed on monetary terms and business practice changes to settle two industry class action lawsuits in Canada. - In US, agent count had decline at year-end, focused on enhancing value proposition and new products/services. - Emphasized culture, leadership, and systems as foundational elements. - Voice of the customer program to improve customer experience. - Lead Concierge launched in US, expecting to test in Canada soon; RE/MAX Media Network has upside. - Two new executives joined the team: Chris Lynn as Executive Vice President and Chief Growth Officer, Travis Saxon as Executive Vice President of Strategy. - Mortgage segment: Motto continues to sell franchises roughly on par with 2023, wemlo fielding more partnership inquiries.

Total revenue was $72.5 million. Adjusted EBITDA was $23.3 million, up almost 2% over Q4 of last year, with an adjusted EBITDA margin of 32.2%, an increase of 220 basis points over Q4 2023. Excluding marketing funds, revenue was $53.8 million, a decrease of 3.9% compared to the same period last year, driven by negative organic growth of 3.5% and adverse foreign currency movements of 0.4%. International agent count accelerated during the fourth quarter, increasing almost 9% over last year's Q4, with over 70,000 agents outside the US and Canada by year-end 2024. In Canada, there were over 25,000 agents as of year-end.

• First quarter 2025: Expect agent count to increase 1% to 2% over Q1 2024, revenue in range of $71 million to $76 million (including marketing funds $18 million to $20 million), adjusted EBITDA in range of $16 million to $18.5 million. - Full year 2025: Expect agent count to change from negative 1% to positive 1% over full year 2024, revenue in range of $290 million to $310 million (including marketing fund $71 million to $75 million), adjusted EBITDA in range of $91 million to $100 million.

• Risk associated with settling Canadian class action lawsuits, including need for court approval and potential impact on leverage ratio. - Uncertainty in housing macro environment including inventory, interest rates, and administration moves.

Q: With regards to some of the personnel changes and initiatives like Lead Concierge and media efforts, what are the additional revenue opportunities?

A: Erik Carlson said they are optimistic, will have initiatives revealed at R4, Lead Concierge drives bottom line, RE/MAX Media Network has upside with potential seven-digit revenue opportunity, mostly ramping in back half of the year.

Q: On broker commissions, thoughts on rates and impact?

A: Karri Callahan said rate has been remarkably consistent in 2024, RE/MAX network adapted well with its competitive advantages.

Q: On cost reduction buckets and further savings in 2025?

A: Karri Callahan said focus on operational efficiency, total SONA in Q4 2024 around $36 million, looking to maintain run rate in back half of 2025.

Q: On US and international agent count attrition and strategies?

A: Erik Carlson said Canada is strong, settled lawsuits in Canada to remove variables, international agent count at all-time high with growth strategies, US agent count has churn in lower tenure and productivity.

Q: On R4 and CCP stance?

A: Erik Carlson said position on CCP hasn't changed, will focus on buyer and seller experience, agent experience, and support network with better value proposition.

Q: On guidance and revenue breakdown?

A: Karri Callahan said from global perspective, outside performance growth muted, Canada flat, US expected to improve, broker fees expected low single-digit growth year over year.

Q: On one-off costs and margin headwinds for new products?

A: Karri Callahan said focused on revenue diversification with low risk, consolidation and conversions, mergers, acquisitions initiative also a focus.