Q3 2020 Re/Max Holdings Inc Earnings Call
[music].
Hello, and welcome to remarks, holding well thought 2020 earnings conference call on webcast. My name account on my we'd be there seems to be picking up.
Portions of todays call at this time.
Time, I would like to turn the call over so on the shelf Vice President of Investor Relations Mr. Shah.
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Thank you operator, good morning, everyone and welcome Threemacs Holdings third quarter 2020 earnings Conference call.
Please visit the Investor Relations page of remix Dot Com for all earnings related materials and to access the live webcast and replay of the call today.
If you are participating through the webcast. Please note that you will need to advance the slides as we move through the presentation.
Turning to slide two our prepared remarks and answers to your questions on today's call may contain forward looking statements.
Forward looking statements include those related to agent count franchise sales financial measures and outlook brand expansion competition technology housing and mortgage market conditions, including statements about recovery of those markets capital allocation dividends strategic and operational plans and business models.
Forward looking statements represent management's current estimates.
Remix Holdings assumes no obligation to update any forward looking statements in the future.
Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those projected in forward looking statements.
These are discussed in our third quarter 2020 financial results press release and other SEC filings.
Also we will refer to certain non-GAAP measures on todays call. Please.
Please see the definitions and reconciliations of non-GAAP measures contained in our most recent quarterly financial results press release, which is available on our website.
Joining me on our call today are Adam Contos, our Chief Executive Officer, Terry Callahan, Our Chief Financial Officer Ward Morrison President of motto mortgage and Nick Bailey remix Chief customer officer with that I'd like to turn the call over to remix holding the CEO Adam Contos Adam.
Thank you Andy and thanks to everyone for joining our call today looking at slide three remarks holdings had a very encouraging third quarter execution of our strategy continued investment in our businesses and a focus on profitable growth alongside the housing industry is remarkable run has helped our business recover quickly.
We believe we have recaptured the momentum we had at the start of 2020 before the pandemic abandoned everything and that we are well positioned for future growth overall.
Overall I'm proud of our results I'd like to thank our entire team for their continued diligence dedication and perseverance amid these historic conditions.
Highlights of the third quarter included revenue of $71.1 million adjusted EBITDA of $30.3 million.
Adjusted diluted EPS of 64 cents total.
Total remarks agent count increased up over 5% and finished at almost 135000 agents.
Total franchise sales continued at a record pace and we completed two exciting tuck in acquisitions, we know and Gadberry group.
Turning to slide four I want to talk about our overall M&A strategy and then provide a bit more color on our third quarter acquisitions, we're very fortunate or re Max holdings to have two accomplished seasoned industry operators in ward and Nick as well as a strong team behind US together, we continue to surface creative ideas on how.
To grow our company, both organically and via acquisitions.
Vinay has been an important part of our growth strategy for many years much of our focus over time has been on Reacquiring independent regions, but we also continue to explore intriguing complementary opportunities in and around our core businesses of franchising mortgage and real estate.
Ultimately as part of our ongoing and disciplined capital allocation process, we focus on those opportunities that we believe have the highest value creating potential.
A key objective of our M&A strategy is reinforcing and enhancing the value proposition of our two franchise brands and helping drive their long term growth.
We're also interested in opportunities that diversify and broaden our revenue and growth potential ideal M&A candidates such as of September acquisitions, we blow and Gadberry group enable us to pursue both goals simultaneously.
We view, both we more on Gadberry as nice bolt on acquisitions that naturally enhance and expand our business.
In early September we announced the acquisition of we model a 20 month old startup reshaping loan mortgage processing and the mortgage broker channel.
We love developed the first cloud service for mortgage brokers, combining third party loan processing with an all in one digital platform. It's.
Its product offers the only enterprise grade solution of its kind in the mortgage brokerage space.
We'll integrate we move products into the motto mortgage ecosystem and importantly, also continue to market to independent mortgage brokerages.
Ward will provide more on relo in a moment.
Later in September we announced the acquisition of Gadberry group, an industry leader in location intelligence data.
We've done a client of their since March 2019, and their location data is integral to remix dot com.
Founded in 2000 Denbury is comprised of a team of outstanding engineers data scientists and customer success experts to help clients solve geo spatial challenges through accurate and precise location data.
We are very excited to bring this experienced world class data talent in house.
Ultimately offer the remarks network is attracting more consumers to re Max Dotcom, which we believe will in turn increase the number and quality of leads generated for re Max agents.
Location intelligence has never been more critical especially in the real estate industry address data must be precise complete and properly correlated to unlock value for brokers agents and consumers and this is Gadberry group specialty.
By acquiring Gadberry group, we're retaining our current services with no disruption locking down our data supply chain and integrating high demand quality talent with existing resources, but that's just the start we can dive much deeper into the data world now and that could open up all sorts of interesting new possibilities for us.
Gadberry group has a variety of clients spanning many industries, we plan to grow its existing business and retain its diversified client base, providing remarks holdings with a new revenue stream.
Turning to slide five the U.S. housing markets Historic stretch continued in September as closings rose, 21% from a year earlier. According to the re Max National housing report on average home sold in a mere 39 days a full week faster than in September 2019, based on the 53 Metro surveyed.
The led by pandemic related Lockdowns Summer's peak home buying season has pushed into the fall September sales were only 3% lower than August in sharp contrast to the average 15% seasonal August to September drop off over the previous five years high demand and tight inventory are driving higher prices the median sales.
Price of $289900 was 13% above September 2019.
September's large year over year increase in home sales with the latest reminder of the housing markets overall strength and resiliency.
Man remains strong buyers are coming into the market determined to improve their quality of life through amenities and community and they continue to value the security that comes with homeownership.
They are working through the challenges of tight inventory high prices and competing offers to take advantage of historically low interest rates and in many cases, the greater mobility. They now enjoy working remote.
Generational factors at historically strong interest rate environment, and the continuing rebound in home construction support the notion of an active housing market moving into next year. So.
The limited housing supply, however remains a potential headwind inventory fell almost 32% year over year as the number of homes on the market dropped to an all time low in the 13 year history of the report in.
In addition to carefully watching inventory, we're also monitoring employment trends.
As well as the effects of the ongoing pandemic.
In general we see the current trends in the housing market as reason for optimism and we're confident that our brokerages agents and loan originators are positioned to take full advantage of the more favorable conditions with that I will turn it over to ward.
Thanks, Adam moving to slide six model had another quarter of strong results accelerating franchise sales and the acquisition of Meanwhile were the highlights first robust franchise sales continue we sold 70 franchises on a trailing 12 month basis through September Thirtyth, a record and through the first nine months of 2020, we have nearly matched our full.
Your sales total for 2019.
We have multiple marketing efforts still scheduled for the remainder of 2020, and we remain focused on leveraging our existing franchise base for referrals. Both efforts continue to yield positive results. Our market presence continues to grow as word of mouth about our many successful franchisees has contributed to our momentum.
Our headline from Q3 was the exciting acquisition of when will that Adam mentioned base near Fort Lauderdale, Florida, We most products uniquely combined third party loan processing with an all in one digital platform, providing customers software and services, we most innovative system automate and streamline processing task.
And is marketed and sold to mortgage brokers and loan originators across the country.
Processing support has traditionally been one of the biggest pain points in the mortgage brokerage channel brokerages across the country struggled to recruit and retain talent load processors, whether they are in house or third party, which can negatively impact turn time and quality simultaneously.
Simultaneously non standardized and often outdated mortgage systems present challenges, we lose technology helps solve both issues first it's automated task at speed and efficiency second it's intuitive framework enables loan processors, regardless of experience to efficiently manage work flow and provide a high level.
Sales service to loan originators. The result is a streamlined solution that enhances the experience for the consumer and that can be tailored to meet the needs of any size mortgage brokerage but.
So we will platform also help solve the industry probably of technology fragmentation as it covers virtually all the steps in the mortgage loan processing workflow in one convenient easy to use system and because the platform is agnostic users enjoy freedom of choice and can plug in their preferred software from a menu of leading mortgage vendors.
Remix holding that bullish about the mortgage brokers channel and expect market share to continue to grow you also expressed by many wholesale lenders divestment.
The best in class, we low technology provides the only enterprise solution of its kind in the mortgage brokerage space, while purchase primarily to support motto mortgage franchisees, we will continue to serve clients and market its products throughout the mortgage brokerage industry, serving as an additional channel of growth for re next holdings.
We believe we most total available market opportunity is substantial perhaps as large as or even larger than matos potential. We are currently ramping up resources to handle processing or anticipated modeled loan volume we expected to begin processing loans from motto franchises. After the new year model as the first and only national mortgage brokerage franchise or in the U.S.
And we believe our consultative support motto is unlike anything in the industry further differentiating us from the other mortgage organizations with more than 130 open offices in over 30 States models footprint continues to expand and we believe it is poised to accelerate current interest in owning a mild franchise remains strong and the status of.
Our pipeline is encouraging we have real momentum right now, particularly when it comes to franchise sales and our recent acquisition of remote only adds to our future growth potential.
With that I'd like to turn the call over to Nick.
Thank you ward and good morning, everyone looking at slide seven agent count rebounded nicely during the third quarter with sequential growth in each month, we added over 800 agents in the USA and Canada combined since June 30, importantly about half of the total was from our company owned regions.
Despite the pandemic, we have brought a tremendous amount of focus to recruiting retention over the past year and we believe our efforts are paying dividends, we craft unique comprehensive recruiting campaigns quarterly and they have contributed to our recent success.
We continue to challenge at virtually every facet of the organization our value proposition and how we partner with our brokers to ensure they are taking full advantage of the many competitive advantages that remix has to offer strong agents and teams create strong offices, our business and during the great recession and now during.
The pandemic by not cutting costs, but by providing value.
At a time when the average agents and teams are looking to low service low fee models remarks really stands out by focusing on productivity, we want agents to be drawn to what we offer and what Rina ex offers is about making money and selling more real estate.
We also see the success playing out internationally outside of the U.S. and Canada during the third quarter, we hit a milestone by surpassing 50000 agents internationally for the first time ever. This represents a doubling of our total from just five short years ago, We've got tremendous momentum worldwide and believe that this will continue to be a strength in our growth.
Strategy.
Now turning to slide eight over the past couple of years, we've added many talented colleagues and powerful technology and functionality as we've acquired boost first and now Gadberry group alongside our very experienced remix technology team.
We've recently completed a substantial organizational realignment to create one technology team a team of over 200 members that maximizes collaboration focused on user experience and operates with purpose passion and exports.
The goal is to harness our tremendous capabilities to deliver the best unified Asia consumer experience possible we.
We continually solicit and received valuable feedback from our network concerning our technology, especially during the locked out.
And our environment, coupled with our network feedback allowed us to move very quickly to provide tools that agents consumers needed. During this time tools such as virtual experiences websites and we continue to drive further adoption and overall usage. For example, we have had over 20000 websites created on Arbors platform, which is a notable milestone.
And to expand the digital brand footprint, our enhanced web presence and mobile App usage. In addition to an enhancer next dot com experience continued to drive business in our network of highly productive agents. We saw leads grow year over year by over 75% for each month in the third quarter. This is Phil.
Terrific progress given the new platform was launched less than a year ago.
In addition to the ongoing expansion, we have seen with respect to our boost platform our web site and App. Our network continues to see the value in our proprietary first half the industry is experiencing overall shortage of inventory and the first half is specifically designed to help agents identify and drive new listings, we have over 3000 paying cut.
Customers and the number continues to grow each quarter.
We're also in the process of determining productivity gains of these agents who use the first half and although it's early the initial results are showing on average a first user has higher productivity than a non user with that I will turn it over to Carrie.
Thanks, Nick Good morning, everyone turning to slide nine we had a strong third quarter and it was encouraging to see the sequential increase in our key leading indicators. We next agent count, especially in company owned region and motto franchise sales revenue profit and margin all recovered from earlier in the year and our cash.
Third generation remains solid as we convert it almost 70% of adjusted EBITDA into free cash flow during the trailing 12 month period ended September thirtyth.
We also expect our recent acquisitions have been low end gadberry to broaden our revenue base and enhance our future growth opportunities.
Other revenue was $71.1 million, a decrease of approximately 500000 or just under 1% compared to the third quarter of 2019.
Excluding the marketing funds fees revenue increased a half a percent to 53.8 million as higher broker fees stemming from higher existing home sales incremental revenue from acquisition and modest growth offset the impact of previously announced agent recruiting initiatives and lower agent count.
Recurring revenue stream, which consist of continuing franchise fees and annual dues decreased $1 million compared to the third quarter of 2019, and excluding the marketing funds accounted for 61.3% of revenue in the third quarter, absolutely 20 compared to 63.5% in the comparable period in 2019.
Looking at slide 10, selling operating and administrative expenses were $28.2 million in the third quarter of 2020, an increase of $3.7 million or 15.3% compared to the third quarter of 2019, and excluding the marketing by represented 52.5% of revenue.
Compared to 45.7% in the prior year period.
Selling operating and administrative expenses increased primarily due to higher equity based compensation expense increased head count principally from acquisition and higher legal fees.
Partially offset by cost saving measures implemented in 2020, many of which we expect to remain in place through the end of the year.
Moving to slide 11, we acquired Wanelo and Gadberry group using a combined 10.6 million of cash on hand, plus three nights holdings equity, notably this is the fourth time, the sellers of an acquired asset to equity as part of their compensation, which we think is a testament to the inherent and future value they see and read that clothing equity.
Our equity continues to be a competitive advantage for us including in our M&A efforts.
Well is it fair enough.
I guess it doesn't necessarily not alone, but we think it near term growth prospects are compelling we are making strategic investments in the lab during Q4, focusing on fortifying its compliance infrastructure and hiring additional long profit there to be able to support the expected inflow of loan processing activity from our motto franchisees once.
Roll out the program to the network sometime early next year.
In contrast, Gadberry group is a more mature slightly profitable business at the time of acquisition. We will also invest in it during Q4, particularly in securing additional sales and development resources.
We expect that to acquisition to adversely impact adjusted EBITDA in the range of one to one and a half million in Q4.
Looking ahead, we expect that modest net investment to unwind during 2021 and turn slightly profitable sometime in the second half of next year before becoming accretive in 2022.
Turning to slide 12, the company's fourth quarter and full year 2020 outlook includes the acquisitions that we will end gadberry grip and assumes no further currency movements acquisition or divestiture.
For the fourth quarter of 2020, we expect agent count the increase.
During the quarter percent to five in the quarter percent over fourth quarter 2019.
Revenue in a range of 69 million to $72 million, including revenue from the marketing fine in the range of 17, and a half million to 18 and a half million.
And adjusted EBITDA in a range of 20 million to $23 million.
For the full year 2020, we expect agent count increase 4.25% to five in the quarter percent over full year 2019.
Revenue in a range of 262, and a half million to 265, and a half million, including revenue from the marketing funds in the range of 64 million to $65 million.
Adjusted EBITDA in a range of 88, and a half million to 91, and a half million now I'll turn it back to Adam.
Thanks, Kerry moving to slide 13, we enter the fourth quarter with positive momentum and we're encouraged to see the positive trends in our key leading indicators as well as the continued strength in housing our end markets are enjoying a nice tailwind right now and we have made some targeted strategic moves to capitalize on those dynamics as we continue to execute on our.
Strategy and make strategic investments to support our long term growth. We believe we are well positioned for the future with.
With that operator, let's open it up for questions.
To ask a question you will need to press star one on your phone.
So we draw your question press the pound all husky.
Please stand by while compared to Q on that.
Your first question comes from Ryan Candidly of Hillman Associates. Your line is open.
Hey, Thank you very much.
One quick one on the.
Agent count growth. So so nice to see the sequential kind of uplift both in the us and Canada.
I'm curious when you look across the country geographically. So obviously housing has picked up in a meaningful way across.
The vast vast majority of markets, but I'm curious when you when you kind of dig into things are there any specific.
States regions or anything geographically you can point to where you guys are either incrementally focused or seeing a stronger better performance relative to other parts of the country on that's my first question and then secondly.
One for carry on the on the expense side of things. So personnel costs. The first three quarters. This year I think have averaged around.
16 million a quarter and I think there is some benefit in there from kind of the cobot actions, especially into Q I'm curious.
Without giving specific guidance or anything on 2021, but I'm just curious with the different moves you've made.
Related to this cobot actions this year and what comes back and also some of the M&A side of things, how we should think about the personnel expense side of things in to next year relative to to this year. Thank you so much.
Sure. Good morning, Ryan. Thanks for the question I know how to answer your second question first and then pass it over to Nik on the agent count side. So, yes, I mean, we definitely in conjunction with the pandemic did.
Put into place some cost containment measures that did impact our personnel and were definitely in the planning process for 2021, and we'll continue to provide more guidance. As we look ahead next year a couple of things on does I can't talk about for next year that will impact personnel you mentioned the acquisition.
No. We're really excited about both of the acquisitions over that.
We're waiting to see really how quickly we can ramp some of those up obviously, we model being a.
Longer company more of a startup gathering more established but as we look at what we're really focused on next year. If the revenue ramp I really think that both acquisitions could be kind of eight digits over over time in terms of revenue contribution and then in the cost structure side, we'll continue to manage.
Investment both on development and sales.
Sales resources as I mentioned as well as loan processing, so really a lot of excitement there and we'll have more more visibility there and then lastly, with regards to personnel. There was some equity based compensation that was issued in conjunction with those acquisitions.
Expected equity comp will increase on a quarterly basis call. It a million and a half to 2 million that will run through personnel per quarter going forward. So that I can turn it over the next to talk about that agent count.
Yes, Thanks, Gerry Hi, Ryan.
First off we're obviously very pleased with where agent count is going and the investments, we're making in our growth initiatives and engagement from our network continued to show signs of success as far as specifically the question around the country I was our footprint is very large and there is not one particular area that we could point to one or two.
That we see it coming from it's up.
Fairly consistent across the country, but usually what we see and what Weve continued to see is the Midwest always.
Doesn't.
Doesn't fluctuate as much as the coast lines and.
And so all around the country. The coastlines, usually have the highest amount of growth. They have the highest amount of contraction when when markets change and that has been consistent for us this year.
As well.
Got it. Thank you so much appreciate it.
Your next question comes from see Crown Malhotra of Morgan Stanley. Your line is open.
Thanks for taking the questions.
Maybe just first one on.
The agent itself you, you've obviously spent.
And acquired various platforms and tools.
To help position the agent kind of driving that incrementally more growth and I'm, just wondering sort of at a high level.
Where revenue in this process so.
Bolt on acquisitions or new programs, our technology to kind of help.
Well position the Asian in a place where you are where you would like where are you in that process is more to go do you see more bolt ons from here on and then.
It's sort of.
Now positioning the age into kind of book.
You know kind of the vehicle.
A competitor in the brick and mortar space and maybe in the new were.
Kind of platform that that that people talk about in terms of the intermediation Im just wondering where are we in this whole process.
Bolt ons and positioning agent for the future.
Hey, good morning, Vikram its Adam.
Great question. Thank you you know the reality is I don't think were in a polarized either or marketplace with respect to agents I think what.
What the future holds and the Directionally, we're headed is taking great agents and making them extraordinarily efficient. So when you look at the the amount of effort that goes into getting a listing or helping a buyer when a.
A contract on a purchase.
It takes.
Great deal of skill as well as a great deal of data and insight into the transaction itself and all of our bolt ons are pointed towards how do we help great agents do more business through efficiency and the use of big data. So.
That's really what we've been working on behind the scenes quite extensively and.
Everything from the first App too on the on the motto side with we low where we control a lot of the efficiencies we control a lot of the information behind the scenes in order to help our agents do what they do best which is that that work with the customer in the <unk> the highly emotional process of.
Buying and selling situation as well as.
Being that expert counselor during that process and leading in and out of that process. So.
Where we're just if you could think of utilizing the available data utilizing the infrastructure and all of those key points that are out there getting rid of the noise and helping them focus on what matters in order to create the efficiencies and effectiveness is in the the home buying and selling process as well as the mortgage process.
Yes, Nick do you have anything you want to add a couple of things you talked about disintermediation I think what this year has shown the entire industry is the agent is at the center of the transaction and if you look at the Millennial group, which is the number one demographic or first time homebuyers are using agents more than any other generation.
And so the agent continues to be first and foremost as we position them, though couple of things that we're seeing I mean were less than a year since we've launched phusion and some of the other products, but we're positioning agents to make sure that they are at the heart of the consumer experience and so we've seen an increase in leads of 121%.
Less than a year of launching a product.
As well as increased traffic and usage of all the tools that help connect the consumer to the agent and we believe that's exactly where we need to position the agent moving forward.
Okay. Great. Thanks, that's helpful and then how does that translate into sort.
Sort of pricing far for Wi Max with respect to sort of view than franchise fees can you remind us.
What the with all the tools that now your provider for the Asian, what's the net increase is whether these reviews and is there an ability to sort of start.
Start to have a program where you systematically increase this going forward, even if it's just very modestly.
Yes, good morning background. So I think Thats a great question I definitely would point to our first app, it's something that we're really excited about as Nick mentioned in our in the scripted remarks, you know thousands of agents now using that App and the initial analysis that we've done we're seeing some productivity less now as we think about pricing on.
First anything about the overall revenue per agent contribution.
It's definitely significant kind of 20% uplift in terms of revenue in terms of people that are utilizing that.
And then obviously pricing continues to be an arrow in our quiver as we continue to expand the value proposition.
So we're always evaluating as we are enhancing the value.
What levers can we pull in terms of profit pricing because we do think in times of a healthy housing market Thats, one lever that really can help propel us back to that kind of low to mid single digit rate of organic growth and the third quarter was a step in that direction and and all of the acquisitions that we're doing is really focused on accelerating.
That topline performance.
Okay, Great and then just last one if I may.
Where I'm sure I can I can do some calculation to get to that number but if you have it can be where is that agent penetration today for re Max versus say a few years ago and specifically if you can give us some examples of where the penetration is in the regions you acquired over the years.
Last few years.
Yes, so in terms of in terms of kind of agent count as a percentage of NRE you know we've been pretty consistent but I think the thing that's really important to realize rate is there room. After then for everyone right. We like to say that our remarks agent can work anywhere, but not any agent and the industry is going to work at re Max.
So we've been kind of pretty consistent in that 5% of NRE.
Transactions market share has also been pretty consistent on you mentioned some of the acquisitions. We continue to have some outsized penetration I'm, especially up in the North East we had a lot of opportunity to grow our market share and New York and we successfully executed on.
That opportunity and so I think everything that we're doing in terms of enhancing the value that we provide really focus on focusing on enhancing the tools that improve productivity are really all kind of in the right direction as we focus on the productive agent.
Thank you.
Your next question comes from Anthony Paolone of JP Morgan Your line is open.
Great. Thank you good morning.
My first question is any carry you mentioned each of the acquisitions you felt like they had eight digit.
Revenue potential just wondering how.
If you could put a little bit more color around.
Our timeline or just what we should be looking at to see if thats.
We're on track or what that looks like over time.
Yes, so I mean, just to frame that a little bit on the lean last side. If you think about the just motto network last year. The motto network did served about 5000 families that about 5000 transactions given the momentum that we're seeing in Mato looking to double that this year, we believe given the animal.
In time from that business, you know that that could even double into the future and then you couple that with pricing in terms of loan processing services, you know kind of in that 700 to 1000 dollar range our profile and so that's how we can just kind of frame up what we think that opportunity looks like now obviously we are.
Where and where can jump in here as well, but where there are constraints on just on the market in terms of hiring and just given given the strength in the mortgage market right now and that's really what we're focused on as we think about rolling out the product to the networks onto the model network and then also more broadly throughout the mortgage brokerage channel and so once we have a little bit more visible.
Beyond that we'll be able to provide some more color.
In terms of timing of that revenue that revenue ramp or anything else on motto that you then.
You hit on the fact that we will be selling outside of models. So that opens up the market thinking about the mortgage broker channel. We're still bullish on it continues to grow.
Probably finish a little bit about 20% market share this year.
Probably almost 8 million loans, so mortgage broker channel has potential and Thats, where we think we will not only within the motto network, which is very important to service our current customers, but does provide us opportunity outside the model network just like we are selling models outside the network.
Definitely opens up the total addressable market, it's a great point and then on the Gadberry side and it's just a more well established company a little bit larger revenue base to begin with and again, we'll have more visibility and that in February as as well, but as we think about how we can leverage that to further support.
Our remarks, Steve really improving the quality and the quantity of leads that are generated and other opportunities. There I will have more visibility in that in February as well.
Okay, and then just stand on modern for a minute.
It seems like the sales are going real well the openings.
And I think six from.
In the last quarter, what is the lag time like there or is that just a timing matter to get them opened or how does that work.
There's a couple of factors going on we have had some.
Slowdowns and state agencies as a relative related coated.
Leisinger has slowed down a little bit at the state level.
The thing is we did have quite a few investor sales in that sort of quarter and because of that.
The market being so frothy on the mortgage side that some of them getting their qualified individual to open up.
It has been.
More difficult than let's say prior quarters. So we really made a new focus recently on getting back to selling to mainly real estate companies and real estate teams and we're already seeing their ability to recruit that qualified individuals much easier in this marketplace because they have the transactions and people realize we're going to move out of.
By market into a purchase market at a certain point and being around real estate agents going to be key. So I think we're going to see the open start to accelerate in Q4.
And I think we'll be able to move the needle a little bit more than we have so that being covered related some of it now, but I think our new focus on some of those other people will allow us to open more quickly.
Okay. Thanks, and then just last question you made a couple of these acquisitions and so just trying to understand like how should we think about just capex.
I guess either for the year or maybe just outside of the dollar amounts from the acquisitions that you outlined.
Yes, so in terms of Capex for the year range right now kind of in that.
$9 million to $11 million range again, as we move forward and finalize our plans for next year, we'll have more visibility on that in February.
Okay, great. Thank you.
Your next question comes from bromine market spine of KBW. Your line is open.
Hey, good morning, Thanks for taking my questions.
On the topic motto I.
I think last year. It was on EBITDA basis, many lost about $2.7 million any sense of what what this year is going to shape up today.
Our business continues to scale.
Yes, so I mean, we're still anticipating model will be a net investment this year, but that net investment is declining well. We're really excited about you know if you go back to 2016, when we launch motto, we've been saying pretty consistently that we thought that.
Given the focus on driving the topline performance, we thought that we would turn over to profitability and hit breakeven in.
In the middle to back half of 2021, and even with Covance and everything else and we're still on track. We believe at this point for that.
Okay and is that assuming that they claim sales pace in terms of all things that are going to open stays pretty constant around it's about 50 to 60 per year.
Yes that would be pretty correct and we think we really have sort of reached Flushing point, we've been on a trailing 12 month selling about 70.
So we have seen an increase I think some of the even the virtual that's what we've been doing where we do we call a virtual meet matos, we're having three coming up very quickly just had one or two more remaining.
Some of those have been actually.
Better than some of the reimbursement events, we've had Soviet attendance has been.
Fantastic our validator that we're putting on are raised so I still think we'll sales at that time as a mottos, but above 50 ended at 60 plus range is very very doable when we report.
Okay. Thanks, and then just last one looking at the the broker fee revenue line, obviously had a very strong third quarter as many sales.
Sales rebounded here any impact sales the contribution from the brokers that selected or the Asians that selected the pay later option from earlier in the year.
It was nominal Tommy the vast majority of our franchisees selected the pay now option. So that really didn't have a material impact on the broker fee performance.
Okay got it thanks.
Your next question comes from Matthew Gall Gil So of Compass point Research. Your line is open.
Hey, good morning.
A question on the international piece, obviously, another solid quarter there.
Agents above 50000.
Just wondering have international real estate markets recovered in a similar manner to the U.S.
And then just wondering if you have any any latest thoughts on kind of developing these to technology solutions.
To monetize on.
The international agent front.
Yes. Thanks, Great question, we have been very pleased with the global growth, notably Europe has done very well.
We have pockets, Portugal, Brazil, Turkey, Peru, Paraguay, those all our standout regions for us that have grown what were seeing that has been similar is the recovery by most markets and in some countries. It varies however in general.
Housing being deemed an essential service has pretty much gone through most of our countries just as it has in the us.
And when you look at some of the unemployment numbers in some of these countries, it's driving people to the real estate industry and they are they're looking at franchise instead of unknown and so thats a big piece, that's pushing it as well.
As we continue to expand the tech offerings. It's.
It's too early to get overly specific on global boat is a discussion and opportunity for us to consider taking our tech R Tech assets outside of Us in Canada, and looking at ways to monetize those possibly.
But a little early to give you more.
More detail than that.
Got it thanks, and then just.
Shifting gears on first you mentioned that there were 3000 paying customers.
Wondering what the demand looks like or kind of where you think penetration for first can ultimately go.
In your network.
I'll start on that one.
As as I mentioned in the remarks, it's it's coming up close to a year and so what we're watching very carefully not only the usage, but the productivity.
And early signs as we've just recently seen is the average user.
First user is significantly more productive than a non first user and so as we get more detailed coming up to year one.
Launch I think that being able to take that message to the network to show where people can gain inventory matches beautifully to what what's happening in the industry, because we have an inventory shortage and we have a tool that.
Seeks out and finds inventory per agent. So I think those two things coupled together going into next year.
We're optimistic about.
Increasing overall usage and adoption and I think one other thing that I would just add to that.
Give me is that when we look at M&A opportunities. We're also looking at opportunities that can be synergistic across both brands. So in addition to what Nick was talking about it we do think that theres opportunities for first on the motto sites and other opportunities that we can leverage that technology to continue to help our franchisees and.
Our agents both grow their businesses across both brands.
Appreciate it thanks.
There are no further questions at this time I will turn the call back over to the presenters.
Thank you operator, and thanks to everyone for joining the call today.
This concludes the call have a great weekend.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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