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RE/MAX Holdings released its fourth quarter and full-year 2022 results on Thursday afternoon, which reflected the continuing impact of an increasingly difficult real estate market amid rising interest rates and slowing home sales.
RE/MAX Holdings’ total revenue — which includes RE/MAX and Motto Mortgage — decreased 8.9 percent year over year to $81.3 million during the fourth quarter due to diminished broker fee revenue, a 1.9 percent drop in its North American agent count and costs related to increased recruiting incentives.
While the franchisor was able to hold onto its profitability in the third quarter with a net income of $100,000, it was unable to pull off the same performance for the fourth quarter, with net losses ballooning to $2.6 million.
Despite decreases across multiple metrics, RE/MAX Holdings Chief Executive Officer Steve Joyce remained bullish about his subsidiaries’ long-term prospects.
The CEO pointed to Motto Mortgage’s double-digit franchise growth. While its real estate franchise arm struggled, the number of Motto Mortgage franchises increased 23.5 percent from a year ago, to 231 offices nationwide.
Joyce also highlighted a robust stock buyback program that saw RE/MAX Holdings repurchase and retire $34.1 million in Common A stock during 2022, as evidence of the company’s resilience.
“Our business showed resilience during the fourth quarter while facing the strongest industry headwinds we’ve seen in more than a decade,” Joyce said in a prepared statement. “Our growth in Canadian and global RE/MAX agent counts continued, as did our Motto open office count, and we accelerated our stock buyback program.”
“Our revenue decreased by less than 10 percent despite the nearly 35 percent year-over-year decline in U.S. existing home sales, highlighting the advantages and strength of our diversified franchise model,” he added. “However, continuing challenging macroeconomic conditions including higher mortgage rates and lower U.S. existing home sales reduced our broker fee revenue, pressured our U.S. agent count, slowed Motto franchise sales, and muted our top- and bottom-line performance.”
Joyce leaned on the franchisor’s full-year 2022 performance as evidence of RE/MAX’s strength, where the total revenue increased 7.2 percent annually to $353.4 million. While the company’s profitability slid during the fourth quarter, it still generated a net income of $4.8 million for 2022.
However, RE/MAX struggled to maintain gains for its full-year U.S. and Canadian agent count, which decreased 1.9 percent to 83,839. However, the franchisor’s total global agent count increased 1.39 percent year over year to 144,014.
“We remain steadfast in our belief that our global scale, industry-leading brands, financial strength, principally recurring-revenue model, and 100 percent-franchised businesses set us up well as we navigate the current environment,” Joyce said while mentioning the franchisor’s 50th anniversary on Jan. 30. “By continuing to reinvest in our brands and execute on our growth initiatives, we believe we will be well positioned to deliver profitable growth when the industry rebounds.”
Looking forward, RE/MAX Holdings expects the agent count growth to remain flat in the first quarter of 2023, with revenues ranging between $82.0 million and $87.0 million.