RE/MAX revenue rebounds as firm prepares to sublease HQ
Profits down more than 60% year-over-year
Thanks to a strong housing market, RE/MAX Holdings’ brokerage business is returning to pre-pandemic levels.
The brokerage reported revenue of $71.1 million for the third quarter of 2020, just shy of the $71.5 million in revenue the company brought in a year prior.
The firm’s U.S. closings were up 21 percent year-over-year in September, while the average listing spent 39 days on market. The rate of sales was one week faster than a year earlier, according to RE/MAX’s national housing report, which surveys the firm’s business in 53 U.S. metro areas.
“We believe we’ve recaptured the momentum we had at the start of 2020 before the pandemic upended everything,” said CEO Adam Contos during the firm’s third-quarter earnings call on Friday.
Profits, however, have yet to recover. RE/MAX reported a net income of $3.6 million, down 61 percent from the previous year when its net income was more than $9 million.
Operating expenses grew by 25 percent during the quarter, compared to the same period in 2019. A significant new expense was a nearly $8 million non-cash impairment charge related to RE/MAX’s plan to sublease part of its corporate headquarters in Denver at below market-rate rents.
Near the end of the quarter, the brokerage acquired two companies: Wemlo, a 20-month-old mortgage processing startup, and Gadberry Group, a location intelligence data firm that RE/MAX has worked with since 2019. Karri Callahan, RE/MAX’s CFO, said both firms were expected to generate “eight-digit” revenue streams for the firm long-term. The company paid $10.6 million in cash and equity to complete both deals, according to Callahan.
Wemlo will service RE/MAX’s mortgage franchise brand, Motto Mortgage, as well as its own business outside the company’s network.
Contos said the Gadberry acquisition will help RE/MAX’s website generate more leads for agents and, more broadly, allows the company to lock down its “data supply chain.”
“We can dive much deeper into the data world now and that could open up all sorts of interesting new possibilities for us,” he said. Gadberry will continue to work with clients beside RE/MAX.
RE/MAX also reported a 5.1 percent increase in headcount, bringing its total agents to 134,769, up from 128,258 the year before. That gain was largely realized outside North America, with the number of agents surpassing 50,000 for the first time.
The number of agents in the U.S. and Canada was 83,802, down 0.3 percent from the prior year’s headcount of 84,067.