RE/MAX HOLDINGS, INC. REPORTS SECOND QUARTER 2023 RESULTS

Total Revenue of $82.4 Million, Adjusted EBITDA of $26.6 Million

DENVER, Aug. 2, 2023 /PRNewswire/ --

Second Quarter 2023 Highlights
(Compared to second quarter 2022 unless otherwise noted)

• Total Revenue decreased 10.6% to $82.4 million
• Revenue excluding the Marketing Funds¹ decreased 11.4% to $61.4 million, driven by negative 10.5% organic growth² and adverse foreign currency movements of 0.9%
• Net income attributable to RE/MAX Holdings, Inc. of $2.0 million and earnings per diluted share (GAAP EPS) of $0.11
• Adjusted EBITDA³ decreased 24.2% to $26.6 million, Adjusted EBITDA margin³ of 32.3% and Adjusted earnings per diluted share (Adjusted EPS³) of $0.40
• Total agent count increased 0.4% to 144,510 agents
• U.S. and Canada combined agent count decreased 4.1% to 82,205 agents
• Total open Motto Mortgage franchises increased 17.5% to 235 offices⁴

Operating Statistics as of July 31, 2023
(Compared to July 31, 2022 unless otherwise noted)

• Total agent count increased 0.6% to 144,583 agents
• U.S. and Canada combined agent count decreased 4.1% to 81,983 agents
• Total open Motto Mortgage franchises increased 15.6% to 237 offices⁴

RE/MAX Holdings, Inc. (the "Company" or "RE/MAX Holdings") (NYSE: RMAX), parent company of RE/MAX, one of the world's leading franchisors of real estate brokerage services, and Motto Mortgage ("Motto"), the first-and-only national mortgage brokerage franchise brand in the U.S., today announced operating results for the quarter ended June 30, 2023.

"We were pleased to see continued RE/MAX agent count growth in Canada and our global regions during the second quarter. Despite industry headwinds, agent count in Canada has increased each month since February, and our overall international agent growth also accelerated in the second quarter," said Steve Joyce, RE/MAX Holdings Chief Executive Officer. "In the U.S., we remain focused on our growth initiatives, and we continue to build our related pipelines. The combination of higher interest rates and tight inventory has made for a challenging housing market and agent-recruiting-and-retention environment. On a positive note, the pace of our U.S. agent count losses slowed quarter over quarter – which is encouraging, given the market conditions."

Joyce continued: "On the mortgage side, wemlo is ramping up, and we continue to expand our Motto franchise sales operation. The addition of experienced personnel with in-depth franchise experience to our inside sales team is just one reason we are optimistic about increasing the pace of Motto franchise sales in the second half of 2023 and beyond.

Second Quarter 2023 Operating Results

Agent Count

The following table compares agent count as of June 30, 2023 and 2022:

Revenue

RE/MAX Holdings generated revenue of $82.4 million in the second quarter of 2023, a decrease of $9.7 million, or 10.6%, compared to $92.2 million in the second quarter of 2022. Revenue excluding the Marketing Funds was $61.4 million in the second quarter of 2023, a decrease of $7.9 million, or 11.4%, versus the same period in 2022. The decrease in Revenue excluding the Marketing Funds was attributable to negative organic revenue growth of 10.5% and adverse foreign-currency movements of 0.9%. Organic growth decreased primarily due to lower broker fee revenue and a reduction in U.S. agent count, partially offset by growth in our mortgage segment.

Recurring revenue streams, which consist of continuing franchise fees and annual dues, decreased $2.5 million, or 5.7%, compared to the second quarter of 2022 and accounted for 66.3% of Revenue excluding the Marketing Funds in the second quarter of 2023 compared to 62.3% of Revenue excluding the Marketing Funds in the prior-year period.

Operating Expenses

Total operating expenses were $69.3 million for the second quarter of 2023, a decrease of $6.0 million, or 7.9%, compared to $75.3 million in the second quarter of 2022. Second quarter 2023 total operating expenses decreased primarily due to lower settlement and impairment charges, reduced Marketing Funds expenses, and lower depreciation and amortization expenses.

Selling, operating and administrative expenses were $40.2 million in the second quarter of 2023, a decrease of $0.6 million, or 1.4%, compared to the second quarter of 2022 and represented 65.5% of Revenue excluding the Marketing Funds, compared to 58.9% in the prior-year period. Second quarter 2023 selling, operating and administrative expenses decreased primarily due to changes in the fair value of the contingent consideration liabilities, lower legal fees, partially offset by higher bad debt expense, higher personnel expenses, and higher events-related expenses.

Net Income and GAAP EPS

Net income attributable to RE/MAX Holdings was $2.0 million for the second quarter of 2023 compared to $5.8 million for the second quarter of 2022. Reported basic and diluted GAAP earnings per share were each $0.11 for the second quarter of 2023 compared to basic and diluted GAAP earnings per share of $0.31 and $0.30, respectively, in the second quarter of 2022.

Adjusted EBITDA and Adjusted EPS

Adjusted EBITDA was $26.6 million for the second quarter of 2023, a decrease of $8.5 million, or 24.2%, compared to the second quarter of 2022. Second quarter 2023 Adjusted EBITDA decreased primarily due to lower Revenue excluding the Marketing Funds resulting from lower broker fee revenue and a decrease in U.S. agent count, in addition to increased bad debt expense. Adjusted EBITDA margin was 32.3% in the second quarter of 2023, compared to 38.1% in the second quarter of 2022.

Adjusted basic and diluted EPS were $0.41 and $0.40, respectively, for the second quarter of 2023 compared to Adjusted basic and diluted EPS of $0.68 each for the second quarter of 2022. The ownership structure used to calculate Adjusted basic and diluted EPS for the quarter ended June 30, 2023, assumes RE/MAX Holdings owned 100% of RMCO, LLC ("RMCO"). The weighted average ownership RE/MAX Holdings had in RMCO was 59.1% for the quarter ended June 30, 2023.

Balance Sheet

As of June 30, 2023, the Company had cash and cash equivalents of $96.8 million, a decrease of $11.9 million from December 31, 2022. As of June 30, 2023, the Company had $446.4 million of outstanding debt, net of an unamortized debt discount and issuance costs, compared to $448.3 million as of December 31, 2022.

Dividend

On August 1, 2023, the Company announced that its Board of Directors approved a quarterly cash dividend of $0.23 per share of Class A common stock. The quarterly dividend is payable on August 29, 2023, to shareholders of record at the close of business on August 15, 2023.

Share Repurchases and Retirement

As previously disclosed, in January 2022 the Company's Board of Directors authorized a common stock repurchase program of up to $100 million. During the three months ended June 30, 2023, the Company did not repurchase any shares. As of June 30, 2023, $62.5 million remained available under the share repurchase program.

Outlook

The Company's third quarter and full-year 2023 Outlook assumes no further currency movements, acquisitions, or divestitures.

For the third quarter of 2023, RE/MAX Holdings expects:

• Agent count to change 0.0% to 1.0% over third quarter 2022;
• Revenue in a range of $78.5 million to $83.5 million (including revenue from the Marketing Funds in a range of $20.0 million to $22.0 million); and
• Adjusted EBITDA in a range of $23.5 million to $26.5 million.

For the full year 2023, the Company is tightening its guidance ranges and expects:

• Agent count to change 0.0% to 1.0% over full year 2022, changed from -1.0% to 1.0%;
• Revenue in a range of $320.0 million to $332.0 million (including revenue from the Marketing Funds in a range of $82.5 million to $86.5 million), changed from $315.0 million to $335.0 million (including revenue from the Marketing Funds in a range of $83.5 million to $87.5 million); and
• Adjusted EBITDA in a range of $92.0 million to $98.0 million, changed from $95.0 million to $105.0 million.

Webcast and Conference Call

The Company will host a conference call for interested parties on Thursday, August 3, 2023, beginning at 8:30 a.m. Eastern Time. Interested parties can register in advance for the conference call using the link below:

https://conferencingportals.com/event/dBDfkybm

Interested parties also can access a live webcast through the Investor Relations section of the Company's website at http://investors.remaxholdings.com. Please dial-in or join the webcast 10 minutes before the start of the conference call. An archive of the webcast will be available on the Company's website for a limited time as well.

Basis of Presentation

Unless otherwise noted, the results presented in this press release are consolidated and exclude adjustments attributable to the non-controlling interest.

Footnotes:

¹Revenue excluding the Marketing Funds is a non-GAAP measure of financial performance that differs from U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and a reconciliation to the most directly comparable U.S. GAAP measure is as follows (in thousands):

²The Company defines organic revenue growth as revenue growth from continuing operations excluding (i) revenue from Marketing Funds, (ii) revenue from acquisitions, and (iii) the impact of foreign currency movements. The Company defines revenue from acquisitions as the revenue generated from the date of an acquisition to its first anniversary (excluding Marketing Funds revenue related to acquisitions where applicable).

³Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EPS are non-GAAP measures. These terms are defined at the end of this release. Please see Tables 5 and 6 appearing later in this release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.

⁴Total open Motto Mortgage franchises includes only "bricks and mortar" offices with a unique physical address with rights granted by a full franchise agreement with Motto Franchising, LLC and excludes any "virtual" offices or Branchise^SM offices.

About RE/MAX Holdings, Inc.

RE/MAX Holdings, Inc. (NYSE: RMAX) is one of the world's leading franchisors in the real estate industry, franchising real estate brokerages globally under the RE/MAX^® brand, and mortgage brokerages within the U.S. under the Motto^® Mortgage brand. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Now with more than 140,000 agents in over 9,000 offices and a presence in more than 110 countries and territories, nobody in the world sells more real estate than RE/MAX, as measured by total residential transaction sides. Dedicated to innovation and change in the real estate industry, RE/MAX launched Motto Franchising, LLC, a ground-breaking mortgage brokerage franchisor, in 2016. Motto Mortgage, the first-and-only national mortgage brokerage franchise brand in the U.S., has grown to over 225 offices across more than 40 states.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," "anticipate," "may," "will," "would" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to agent count; Motto open offices; franchise sales; revenue; operating expenses; the Company's outlook for the third quarter and full year 2023; non-GAAP financial measures; housing and mortgage market conditions; growth; the Company's focus on its growth initiatives and building related pipelines; ramping up of wemlo; expansion of the Motto franchise sales operation; and the Company's optimism about increasing the pace of Motto franchise sales in the second half of 2023 and beyond. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include, without limitation, (1) changes in the real estate market or interest rates and availability of financing, (2) changes in business and economic activity in general, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations, (6) the Company's ability to enhance, market, and protect its brands, including the RE/MAX and Motto Mortgage brands, (7) the Company's ability to implement its technology initiatives, (8) risks related to the Company's CEO transition, (9) fluctuations in foreign currency exchange rates, and (10) those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remaxholdings.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances.