RE/MAX banks on organic growth in 2022

Despite a 1.6% drop in U.S.-based agent count and a net loss of $15.6 million in 2021, RE/MAX Holding Inc., executives were positive about the Denver-based franchisor’s performance during the firm’s fourth quarter earnings call with investors on Thursday, thanks to RE/MAX’s organic revenue growth.

During 2021, RE/MAX generated $329.7 million in total revenue, up 23.9% from 2020. Revenue, excluding marketing funds, was up 22.7% to $247.3 million for all of 2021, with 11.8% of that revenue coming from organic growth, which RE/MAX defines as revenue growth coming from continuing operations. Organic growth comprised 5% of the $66.2 million in revenue during Q4, primarily due to fewer agent recruiting initiatives versus the prior year, a price increase in RE/MAX continuing franchise fees, increased events-related revenue, and growth in RE/MAX’s mortgage brokerage franchise, Motto Mortgage.

“For the third quarter in a row we generated mid-single digit organic revenue,” RE/MAX CFO Karri Callahan said during a call with investors. “We are witnessing a trend of organic growth developing and we believe it will continue throughout 2022.”

Much of this increase in total revenue, however, came from the acquisition of RE/MAX Integra’s North American regions in July 2021, which included more than 19,000 agents and 1,100 offices across Canada and the U.S.

“Over the past few years, we’ve been strategically investing to expand and diversify our revenue and growth opportunities,” outgoing RE/MAX CEO Adam Contos said during the call with investors. “Our Q4 results affirm that these investments are beginning to pay off.”

While RE/MAX’s agent count in the U.S. dropped in 2021, the brokerage’s Canadian agent count rose 10% and its agent count outside of the U.S. and Canada rose 5.6% for a total of 56,524 international agents. The brokerage’s newest international office opens in Pakistan on March 1. At the end of 2021, RE/MAX’s total agent count came in at 141,998, a new high for the firm.

“We are trying to get 25,000 agents in Canada sometime later this year, which would represent a 25% increase from just a few years ago,” RE/MAX Real Estate CEO Nick Bailey said during the call.

Bailey also noted that 2021 was the best year ever for the number of closed transactions for RE/MAX, with over two million transaction sides completed in 2021.

During the call, Motto Mortgage president Ward Morrison highlighted the company’s growth since entering into the mortgage space in October of 2016. In 2021, 64 Motto Mortgage franchises were sold, bringing the total number of franchises sold since the firm’s inception to over 300. Of these franchises, Morrison said that a little over 55% of sales have been to RE/MAX brokers, while roughly 15% have been to independent real estate brokerages or professionals affiliated with a rival brand.

For all of RE/MAX Holding Inc., total operating expenses came in at $78.7 million during the fourth quarter, an increase of 20.1% over Q4 2020. The firm attributed this increase to higher selling, operating and administrative expenses, increased marketing funds expenses, and high depreciation and amortization expenses. Selling, operating and administrative expenses totaled $6.3 million during the fourth quarter, a 13.6 year-over-year increase and representing 69.9% of revenue, down from 74.6% a year prior.

In early January, RE/MAX announced that CEO Adam Contos will be stepping down at the end of March. Longtime board member Stephen Joyce has been appointed to interim CEO.

On the call Joyce thanked Contos for his work and highlighted further growth and improving U.S. agent count as his first areas of focus. The brokerage said it hopes to increase its agent count 2% to 4% and generate revenue in the range of $366.0 million to $376.0 million in 2022.

In November, RE/MAX announced its preliminary third quarter results after an outside audit on its independent regions revealed some possible reporting error.

The post RE/MAX banks on organic growth in 2022 appeared first on HousingWire.

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