RE/MAX on Wednesday reported company revenue of $70.3 million in the first quarter of 2020, a slight decrease from last year’s first-quarter revenue of $71.2 million. The company reported a net income of $2.6 million, down from $4.4 million in the first quarter of 2019.
RE/MAX reported an adjusted $0.39 per share failing to hit its consensus estimate of $0.40 per share. The company also met its expected revenue of $70.3 million for the first quarter.
The full impact of COVID-19 is yet to be fully reported in company earnings, as the first quarter runs through the end of March. However, the company is hosting is earnings call Thursday morning, where CEO Adam Contos may further discuss the disruption.
“The housing market experienced a strong start to 2020, but that momentum was unfortunately interrupted by the COVID-19 pandemic,” Contos said in a statement. “In the current environment, the health and well-being of our employees, affiliates, home buyers and sellers and the communities in which they live remain our top priority.”
“Thanks to investments in our business this past year, our employees are working productively from home, delivering valuable service and support to our networks,” Contos added. “Real estate professionals, using technology and adhering to social distancing guidelines, are effectively leading consumers through the buying or selling process in a safe and largely virtual way. What has become clear is the expertise of a skilled real estate professional has never been more important.”
The decline in total revenue can be attributed to agent recruiting initiatives that reduced containing franchise fees and marketing funds fees. Those losses were partially offset by an increase in broker fees and the continued growth of Motto Mortgage.
As of April 30, there were 122 Motto Mortgage franchises opened, an increase of 25.6 percent.
Across the globe, RE/MAX’s total agent count increase 4 percent year-over-year to 131,134 agents, as of April 30. Agents count for U.S. and Canada decreased 0.8 percent year-over-year t to 83,374, however.
Like many other publicly-traded real estate companies, COVID-19 has taken a toll on the company’s stock. RE/MAX stock reached a high of more than $40 per share in late February, before plummeting to a low of $14 during the height of the economic slowdown. As of 4 p.m., Wednesday, the company’s stock was $23.41 per share.
“We have ample reason to be confident in our ability to navigate through this challenging environment,” Contos said. “We have the advantages of strong brands, a resilient business model, a healthy balance sheet, two highly entrepreneurial networks — including one that virtually spans the globe — and an extremely skilled headquarters staff.”
“We’ve experienced economic downturns before, and the lessons we’ve learned will help us through this one.”
RE/MAX has taken proactive measures to cut costs and pass some of those savings onto its franchisees due to COVID-19. The company announced last month that it’s allowing its franchisees to defer or reduce fees for April and May.
At the same time, the company announced anticipated cost savings from the elimination of the 2020 company bonus, the temporary suspension of its 401k match, the suspension of travel and events and the implementation of a hiring freeze.
Prior to the COVID-19 filed slowdown, RE/MAX had continued to learn into launching new technology in the first quarter, specifically launching its new consumer-facing website and app.
“We continue to invest in the success of our affiliates — providing financial support, maintaining our brand presence, and developing relevant new tools, training and technology,” Contos said. “The goal: helping our people emerge from this crisis in a position of strength.”