Q1 2022 Re/Max Holdings Inc Earnings Call
We're materially from those projected in forward looking statements. These are discussed in our first quarter of 2022 financial results press release and other SEC filings also we will refer to certain non-GAAP measures on today's call. Please see the definitions and reconciliations of non-GAAP measures contained in our most recent quarterly financial.
The press release, which is available on our web site join.
Joining me on our call today are Steve Joyce, our Chief Executive Officer, Karri, Callahan, our Chief Financial Officer, and the Presidents and Ceos of our brands Ward Morrison and Nick Bailey with that I'd like to turn the call over to <unk> Holdings CEO , Steve Joyce, Steve. Thank you, Randy and thanks to everyone for joining our call today.
Looking at slide three we had a nice start to the year. Our solid Q1 performance was driven by strong ongoing contributions from our acquisition of Remax integrity, North America regions as well as continued healthy organic growth.
Some of our notable quarterly metrics include.
Overall, Remax holdings revenue was $91 million up 26% driven by our July acquisition of Integra, which comprised 15% of the growth as well as organic revenue growth.
Excluding the marketing funds, we had over 10% organic growth aided by increased attendance at our annual Remax converge.
We generated adjusted EBITDA of $27 9 million up 25% and our adjusted EBITDA margin was a robust 37%.
Adjusted EPS increased 11% to 51.
Overall Remax agent count grew by more than 2000 agents to over 142000 agents in total.
A new record.
And motto franchise sales accelerated with a number of open model offices growing by over 27%.
Before award Nic provides additional details on their respective business lines.
Like to spend a moment discussing our strategic operational plants.
On our last call I mentioned, one of my two focus areas. The CEO is to work with the board and management team to implement a limited number of initiatives designed to increase our near and long term growth.
During the past quarter, we have made good progress evaluating the opportunities. We believe will yield the best results and we are confident about our ability to shape our growth trajectory.
Although we're not yet ready to divulge specific details you can expect to hear more from us soon about these initiatives theyre related investments as well as the anticipated results.
The ideas under consideration are closely aligned with our current strategy. We believe in the path we're on.
We have two terrific industry, leading franchise brands each with their own compelling growth opportunities. We think we could make a measurable difference for smart strategic moves essentially accelerating our growth institutional focus accountability and the proper allocation of resources our focus remains.
Based on increasing rematch USA agent count and continuing to fuel the growth of our expanding mortgage business or.
Our mortgage business has significant upside as we've said previously we think it's a $100 million annual revenue opportunity with margin and cash flow potential that rivals are remax business.
We believe motto and <unk> are each capable of generating $50 million or more in annual revenue.
With respect to motto.
Over 300 franchises to date and have nearly 200 open model offices. We believe we can eventually grow that number to more than 1000 franchises.
Model's unique value proposition is fantastic and we would like to get to a 1000 open offices much sooner than our current growth trajectory forecast.
We think we are up to the challenge with that I'll turn it over to ward.
Looking at slide four our mortgage business is off to a great start this year as both modeling reload experienced accelerated growth in this first quarter.
We sold 17 motto franchises in Q1 and March was our best non December month ever for franchise sales on a trailing 12 month basis Q1 sales re accelerated to over 70 franchises sold.
For the full year 2022, we still anticipate selling between 60 and 80 franchises and are trending towards the top half of that range encourage you and the franchise sales remains solid into April and we continue to see strong demand across many customer types. We think our franchise sales success was driven by a combination of reasons.
Including positive word of mouth, increasing market presence and fine tuning, our sales and marketing incentives as well as our sales structure to name just a few combine that with our counter cyclical aspect of our business model, the increasing importance of ancillary business and our unique position in the purchase market and we are peaking the interest of many real estate.
<unk> and short the secret is getting out model is an incredible opportunity for many real estate entrepreneurs.
A big part of models appeal is that many of its franchisees and loan originators or lows were closely with productive real estate agents, who have an ongoing purchase transaction pipeline.
As a result motto is a higher percentage of purchase volume than the industry average, which is increasingly important during a rising interest rate environment.
For example, during Q1 the purchase versus refi split across the motto network was almost 80 20.
That's up from approximately 65%, 35% in fiscal 2021 and in contrast to the roughly 40 60 split the mortgage industry did as a whole last year.
Given our heavy focus on the purchase market. We believe model is a very attractive opportunity, especially for productive <unk> focused on successfully navigating a shifting market with reduced refi activity.
We're actively evaluating how we can accelerate motto franchise sales growth given the current momentum we believe that additional investment in sales and marketing resources is likely a prudent allocation of capital each sales professionals on our team currently covers a large territory and we think additional sales resources will increase our ability to capitalize on incremental.
<unk>.
Our mortgage business is also focused on the continued development and growth of remote the first third party mortgage processing solution with an all in one digital platform created specifically for the broker channel.
We acquired <unk> in the second half of 2020 to solve one of our motto franchisees primary pinpoints, finding steady dependable and economic loan processing services. The wingo loan processing platform is complemented by a highly qualified team of loan processors, who focus on the details and streamline the loan processing experience.
Thereby helping mortgage loan originators closed loans faster and freeing up more time for them to bring in new business.
During the first quarter, we saw an increasing number of loans processed by <unk>, particularly for the modern network last month, we held our annual motto mortgage innovation in loan excellent summit, where the middle mile as we call it at which motto franchise, you've got to learn network and celebrate their achievements are renal colleagues attended bottle miles and <unk>.
Educated our franchisees about removes one of a kind offering.
Interactions and overall remote presence were well received by our franchisees and we think the connections made at our convention will only add to win those momentum.
Last quarter, we also announced the addition of our new product offerings through our platform Wingo is consistently adding processing services for new product and lender options to provide the flexibility needed to deliver the highest level of customer support for mortgage brokers and loan originators with that I'd like to turn the call over to Nick St. George Good morning.
Everyone moving to slide five the busy spring housing market got off to another strong start according to the most recently <unk> National housing report many of the themes, which are defined the housing market for the past several months, we remain front and center in March high demand strong sales figures rising prices and tight inventory.
Home sales jumped 32, 2% over February while posting a report record medium sales price of $360000.
As buyers continued to far outnumber sellers months supply of inventory reached a record low of one months across to imports 51 metro areas more than half of the survey markets reported a supply of less than one month.
Overall, the housing market remains very active right now, especially on the demand heavy buy side buyers are rushing to meet anticipated mortgage rate hikes as well as buyers ready to go as soon as some right. Let's stay appears so factors, which drive the solid start to the season.
Days on market remains the biggest concern for hopeful buyers, but with sellers watching homes.
Up in record time, the idea of cashing in on their equity gain continues to have great appeal.
As we move deeper into the spring selling season, we expect to see more houses come on the market buyer should have even more choice and purchasing power as additional sellers choose to join the action. One other important dynamic is that in many parts of the country rental rates are increasing faster than mortgage rates, which could push even more people towards buying homes the higher mortgage rates.
Should also partly cool the historically high price gains we see.
That along with an expected increase in new for sale homes coming to the market should help move the housing market toward more equilibrium a positive for all.
Moving to slide six the recently published 2022 real trends 500 survey revealed that Remax agents at participating large U S. Brokerages on average household competing agents by more than two to one last year. The widely respected report showed remax agents averaged 16, and a half transaction side more than doubling.
The average of other agents from the more than 7500 participating large brokerages.
Remax agents have held this $2 one advantage for 12 years in a row.
The real trends 500 ranks participating large brokerages by total residential transaction sides with 500 sides needed to qualify for participate.
So patient among the qualifying brokerages, 28%, where remax brokers more than any other real estate brand.
We're thrilled by the performance of the <unk> brokerages on this prestigious real trends 500 list.
For entrepreneurs productivity is the metric that matters, the most and remax delivers year after year.
In addition to leading the field in periods than the $3 7 million average of all other agents in the survey.
More when the qualifying brokerages.
Our re ranked by average transaction size per agent 86 of the top 100 are affiliated with <unk>.
That's in the market.
Agent count increased more than 2000 agents.
This year over year and reached a new high of more than 142000 agents highlighted by nearly 10.
Percent growth in Canada.
In the U S. We are seeing traditional seasonal our agent count dropped in January .
Mystery before stabilizing over the next.
Gain on agent count across all major geographies, so far in April and we expect that trend to continue.
Inc.
Increasing our U S agent count remains our top company priority and.
Particularly at several compelling opportunities to spur that growth as Steve noted earlier in particularly.
Independent brokerages to the Remax brands.
Adding agents in larger numbers.
We'll have more to say about teams at a later date.
Regarding conversions as you would.
Collection of competitive advantages.
We have global scale agent.
Productivity brand name awareness marketing power and a host of other business building elements that most local or regional operations essentially can't match.
Our data shows that agents, who joined Remax and secretary intend to increase their sales over time, and that's an important message for us to send out into the independent broker community. It addresses a chief concern about agent productivity that holds many of these potential mergers or conversions back.
We've empowered and equipped our franchise sales team to generate more activity on this front as we get deeper into the year, we hope to see more independent brokers working through.
Their perceptions of bringing their agents into our network frankly, we believe it's a win win proposition for all parties involved.
We're already well underway with a targeted effort to prove out the concept and the initial results are encouraging we look forward to expanding the effort and sharing more successes in the future with that I will turn it over to Kerry.
Thank you Nick good morning $91 million.
Putting the marketing fund revenue was just over $68 million also in inks.
Okay up 26%.
Chris was comprised of slightly over 15% acquisitive growth and funding the 5% organic growth.
FX impact this quarter were negligible.
All positive growth came from <unk> acquisition of Remax Integra, North American operation, which continues to perform well.
About half of our double digit organic growth was due to increased attendance at our annual agent convention.
So I mean, what's the car for last year conventional vote for me to due to Covid.
Unless excluding our four we generated mid single digit organic revenue growth ex the marketing funds for the fourth quarter and around.
Outside of our luncheon many drivers contributed to our top line performance during Q1, including rising home prices more targeted use of agent recruiting and sunset.
<unk> and motto standpoint, the most notable one.
If you included that those legacy runoff or organic growth.
By another 50 basis points.
Looking at slide nine our Q1.
Operating and administrative expenses increased primarily due to higher travel.
Hello, Andrew the content and the arena.
The statement of the far along K match to pre pandemic levels, partially offset by lower equity based compensation expense.
Recall that during last year's first quarter, we incurred five.
This is a one time acceleration.
Certain equity awards.
Before I get to our outlook. There are two items I want to briefly mention first a quick update on our share repurchase program looking announced in January .
Compliance reasons, we did not.
Begin purchasing shares until the back half of the quarter. We continue to believe that buying back our stock at current valuation is an excellent allocation of capital.
Second regarding rising interest rates and its impact on our earnings basis point increase in interest rate reduces our full year adjusted EPS by approximately <unk> <unk>.
Yeah.
Sure.
Moving to slide nine the company's second quarter and full year 2022 outlook assumes no further currency movements acquisitions or divestitures.
In fact, even count the inquiry.
To 3% over second quarter 2021.
Revenue in a range of in a range of $22 million.
$24 million and adjusted EBITDA in a range of $32 5 million to $35 million.
The full year 2020, we expect agent count to increase 2% to 4% over full year.
2021 revenue in a range of 366 million to $376 million, including revenue from the marketing funds in the range of 91.
One 5 million to 95 million and adjusted EBITDA in a range of $130 million 535.
Thanks, Gary looking at Slide 11 in summary, we are prioritizing our capital to invest in our best growth opportunities and those efforts will be focused on.
And accelerating the growth of our expanded mortgage basis.
We believe we are well positioned to grow.
And we look forward to sharing more in the near future with that operator, let's open it up.
At this time.
To remind everyone if you'd like to ask a question. Please press Star then one on your telephone keypad.
The question I, just wanted to focus on that.
Motto mortgage business, given given that you lead with it.
I think it's sort of setting your business away from the traditional broker.
<unk> and moving into mortgages.
But I also note that some of that maybe mortgage broker peers have been under a little bit of pressure, but maybe you can just walk us through.
Our competitive advantage to take share.
From maybe some of the traditional mortgage finance companies.
Okay.
Great.
I was just.
I was just going to.
Okay.
We're in I think a <unk>.
Somewhat unique position.
Given the rest of our business.
That puts us.
On a competitive advantage in the evolve in the market, that's evolving where do you want to give the detail.
Sure I think one of our biggest advantage is that we're tied to purchase transactions with a large majority of our motto franchisees, 70% of our sales are to the real estate companies are real estate teams, who have the purchase transaction, we call them sort of diamonds in their backyard and because of that.
I don't believe we will see as much of a downturn as traditional brokers, who had been concentrating more on refinances ours is really purchase driven even in the first quarter, we were 80% purchase 20% revised.
Last year, we were $65 35, when the industry was $40 50. So we are always ahead on purchased because of the sales that we do to those real estate company and real estate teams. So I think that's a positive from autumn report.
Got it that's very helpful. Thank you two more questions for me I did note that the agent count looks like it's supposed to accelerate over the remainder of the year versus <unk>.
Maybe talk through if you can break it down between U S agent Count Canada.
National It looks like Canada is doing really well, so where is that acceleration coming from.
As you think about that.
I do note that there was some commentary about that.
Other strategies to turnaround USA accounts, so maybe put a put that altogether and help us unpack that a little bit.
Yes, so we're in I think a good position clearly the integra acquisition.
Is creating a lot of momentum in Canada.
Expect that to continue on the use side, we're looking at several different approaches to increase that count as well Mick you want to give more detail.
Sure.
As I mentioned in the scripted remarks were looking at the.
A couple of initiatives one of them conversions of independent companies there is.
There is a lot of demand out there currently for independents looking for scale tool systems to be more competitive in the market and so that pipeline is increase we've already seen some successes. Thus far so I believe that that's going to be a continued trend that helps drive that count.
The other thing we announced recently that our four conferences are focus on expanding teams.
And that has been a component of the industry. We have continued we have led a number of teams and team initiatives within the industry, but we are double downing on that Additionally, we have not closed out the end of the month. So we didn't publish April .
But we can say that in terms of the among the momentum it looks really good.
And even looking so far this month.
Over 100.
And so we're going to drive that and continue to drive that momentum and push those couple of initiatives moving forward.
Okay. Thank you and just maybe one more question from me.
The stock's been under pressure, obviously, the broader market has been under pressure and prepared remarks paint a very optimistic outlook for the company.
Can you maybe just talk through the share buyback program and why not.
Target the stock at this point.
Yes, so analog security given a little more detail. So we are obviously market now buying stock because we believe.
It's a great investment on our part and so youre going to see us apply.
Supplier capital basically in three areas one to one to grow agents primarily into the U S. One is dramatically expand motto and the loss will be stock repurchase and we think thats. The best use of our capital carry you want to talk a little bit about the program.
Sure.
Since return of capital in general from a capital allocation back Dave It's been a consistent capital allocation priority for many years, obviously the dividend continued to help support the stock from the valuation perspective, introducing the buyback has been helpful as well and when we look at overall return of capital, we really benchmark that as eight.
<unk> have free cash flow and really looking to differentiate ourselves.
Franchise in the face so kind of looking at that 35% to 45% on there being a little bit more aggressive within that range right now I think of as Steve said, we do believe that buying back our shares right now is an excellent allocation of capital given the current valuation.
Thank you guys that's it for me.
Our next question is from Anthony <unk> with Jpmorgan. Your line is open.
Yes. Thank you and good morning first question relates to the strategic initiatives that seem to be forthcoming.
Can you give a sense as to whether this is all stuff that you want to build.
Inorganically invest in or are there acquisitions that you see teed up here that could add immediately to either revenue or profits.
Yes. The primary focus is going to be organic and we believe that we've got the opportunity and are well positioned to do that on both.
The U S agent count side and the motto side. However, we are also a company that has.
None that we are we can be acquisitive and be successful at it. The integra was just a great acquisition for us and because everything is turned out to be better than we had even hoped and so we will be looking at inorganic opportunities within those priorities.
Okay got it and then.
Then just with regards to U S agent count in there if I will get the Knorr membership in the last year or so.
It's a mid high single digits it seems.
And you guys have been pretty flattish like what is the greatest competition is it or is it a concept is it a group of specific competitors I mean, what do you think is driving this.
Yeah.
Well.
I'll start with Nick to give.
I think so.
A lot of folks into that market as agents, because it's an attractive market.
Those folks don't say, we tend to focus on highly professional agents or agents sell twice as much real estate as the average broker.
That's where we're going to continue to focus but theres also some nuances to a market that.
Nick you can give more detail too I'm sure.
Sure, Yes, I think history is proving itself once again in a strong real estate market, we do see license count increase.
But to <unk> point every license is not right for us when we focus on productivity and in fact, even what we're seeing right now is a great opportunity we've seen this historically as well.
<unk>.
When there is pressure on agents with changes in the market.
We become a great solution for agents that have maybe been successful or semi successful, but want to continue even with the changing market and so we really focus on the productivity and those that want to be productive or more productive.
And thats it.
Sweet spot for us moving into where we see some of the shifts in the market this year.
Yes, I think also if you look at where the growth is occurring a lot of it's already in teams, which is why youre seeing a new.
New energized focus for us on team.
Okay.
Alright, and last one I guess then for Terry can you maybe.
<unk> put any brackets or help us with expenses rolling into <unk>, and maybe how to think about it for the rest of the year as well if theres anything specific there, especially.
You commented about some of these initiatives to build things add some motto franchise sales folks and stuff like that.
Sure. So as you look at Q1, yes. So as you look at the Q1 expense structure one of the things to keep in mind is we did have a very successful annual agent conference again. This year about 7000 attendees from across 45 countries and so that has increased the expense structure.
Sure as you look at the kind of <unk> run rate SKU for the rest of the year.
You look at Q2, and then the rest of the year expecting that to be down in that kind of $4 million to $5 million range in terms of total expenses going forward for the rest of the year.
Okay.
Noncash comp in the fives I think in prior quarters, you've talked about maybe something that could be in the <unk>, but just wondering what that might look like.
Sure So Chris if I could.
Equity based compensation expense it was a little bit lower this quarter due to the transition associated with the CEO role.
Putting it to be kind of in the $6 million range in Q2, three and four this year.
Okay got it thank you.
The next question is from Ryan the company with Zelman and Associates. Your line is open.
Hey, good morning, and thank you.
So to also hit on the kind of strategic initiatives.
I'm curious is there any.
Anything we should be thinking about from a macro perspective.
Converting independent focusing on teams and seemingly more to come don't really seem dependent on on the market, but just curious if we do enter a period of slower housing market grew.
Both.
Is there any contemplation on how that.
Would or would not kind of ultra strategic plans.
In terms of how youre kind of looking to reignite the U S business.
Yes.
Don't see anything.
Barring a black Swan event that we don't expect.
That would slow down our plans in terms of where we think we should prioritize and I think the thing to keep in mind our model is.
Not bulletproof, but it is both proof as you can get.
Our compensation from our franchisees is only roughly 20% variable. So we don't vary that much.
In the scheme of things if you if the market slows somewhat which we're not seeing yet.
And if interest rates go places, where it does begin to affect the market, we're not immune but we are much more.
Protected from the standpoint of this excess.
Excess cash flow machine it will clash flow in great markets and in good markets and so our expectation is we're going to continue operating.
Sort of in this fashion.
We're not looking at changing any forecasts at this point and while we're reading a lot about the markets.
They go right now and we're looking at what we think is still going to be a pretty good year and we're in a position because of our model to a last out.
Significantly better than some of the other competitors.
That's helpful. Thanks, Steve and carry one modeling one just to follow up on the operating expenses.
Particularly in the personnel cost so I guess I noticed in the press release, it mentioned higher personnel costs from head count increases but.
Within the slides it looks like the kind of total personnel expenses was down sequentially and year over year. So is that delta just related to that slightly lower stock comp that you mentioned in the quarter end.
I know, it's volatile on a quarterly basis with the personnel expenses.
At least over the last year. It has been so I guess any any swings.
Within that that we should be thinking about going forward or should we think that we're at a pretty decent run rate.
Yes, Brian Great question. So when you look at the year over year variance one thing to keep in mind in Q1 of 2021, we did have a one time $5 $5 million equity compensation charge associated with some one time vesting of some equity that we issued in conjunction with an acquisition.
And then the recipe and flat in Q1 2021 months overstated kind of if you will on a run rate basis because of that one time event. So when you look at Q1 2022 from a personnel perspective, that's probably a more normalized run rate and in kind of included in that total <unk> run rate for interest.
For the year.
Earlier.
Perfect. Okay. Thanks, Gary.
Okay.
The next question is from Tammi <unk> of joint with VW morning, guys. Thanks for taking my questions here.
So it looks like the mono open counter.
Absolutely decline from January to March 31.
Are you running into any issues that is causing an increase in the backlog of sold but not opened motto franchises.
Is that you can take to kind of speed up the conversion started generating revenue a bit quicker.
Fill out an application apply with the state we are beholding to the states. So sometimes we are slow down by the states, but right now we have about 60 and licensing of some former and other items, but not yet open so were pushing them to get open. So it's a combination.
Job is to try and get these people open as quickly.
The holding some time, it's not only through our franchisee maybe not doing their homework.
<unk> not doing theirs and so.
Progress and do it in chunks this year as we get people through that licensing process. So I still think we can hit a good number. This year have opened its just going to be in a very inconsistent battle.
Thanks.
And Kevin can you talk about what the latest expectation is for the mortgage segments typically to reach breakeven.
A certain amount of revenue that was up.
Matt.
So Karen.
If you can give the details.
The real answer.
One.
The growth of motto and.
We are less concerned about breakeven, but the answer is it's it they can both be achieved.
The near to mid term Carrie.
Sure. Thanks, Steve agreed.
That in our scripted remarks.
We're building momentum.
On the motto side more than 70 franchise installed on a trailing 12 month data.
And because of the countercyclical nature and that approximated a purchase transaction that we're talking about we think that now is the optimal time to continue to invest in it to really accelerate background and if that means that we pushed our profitability, maybe by a quarter or something by investing in some additional resource.
To drive this franchise sales opportunities and then as Laurent that get those offices open faster. So that we can we can get.
Contributing we think that that's a that's a great uses of capital.
Thanks, and you said that kind of over the long term, both mono and we'd love to get to a $50 million annualized run rate can you talk about the difference in mobile gaming.
On profile of those two businesses.
I figure from the models behind.
<unk>.
Organically, we're going to continue to sell the four different types of customers, whether its lows remax Remax has real estate companies independent teams things like that so from organic standpoint, we believe we have legs for there to grow that and increase our royalty fees to our people at different times as we see the value there.
On the <unk> side, we think the Sky's the limit we think still finding quality economic loan processing services is very difficult in the broker channel and the broker carrier cost effective in some of the other channels. So we believe that our adoption within the motto network is getting stronger and we believe as.
As we grow in low we can scale that as well on a per unit basis. So there we get a per transaction fee.
And we believe that will scale up as well and that's a combination of those two things that adds up to that $50 million potential opportunity.
Okay.
Our next question is from John Campbell with Stephens. Your line is open.
Guys good morning.
Good morning, Good morning, Hey.
On the agent growth I mean, that's always been kind of a core driver of the revenue model for you guys.
Of late last couple of quarters, I feel like you've grown organically at a really good rate.
<unk>, a little bit slower Asian growth. So I'm, hoping first if you could just maybe unpack.
Or maybe just talk about some of the key areas of strength that you guys saw outside of the outside of the core and then also maybe how youre thinking about organic growth trends from here.
Nick one should take with.
Yes, so when we look at growth across all the geographies. We've had our strength Canada has been just a great leader for us over this last year, driven a lot by integra, but the Canada market as a whole and we look at seeing that as a continued strength. This year also I think the areas of focus that we put in.
At the end of last year moving into this year to focus on the U S.
We're starting to see that momentum and we're doubling down on that to continue to drive that for the rest of the year.
To really focus on that on that USA truck count primarily as the number one priority, but Canada and still globally. We continue to see some good progress there we've opened some new countries recently, which.
We'll add to that growth in 'twenty two 'twenty three so lots of positives across all the geos that we have right now.
And I agree with everything Mike said, especially from an operational perspective, John Youre right with respect to kind of U S agent count trends as Nick mentioned the strength in Canada is really helping to offset that.
Gideon Asia contributing kind of 75 to 80 cents on the dollar in terms of what we get from our U S agents as it relates to the topline contribution and then also the global is starting to have a little bit of an impact as well and then if we look at overall topline organic.
Revenue growth performance, we really have diversified the company. So we're getting stronger contributions from motto not only in terms of the number of open offices.
Six monthly fee is increasing just because we've got more cohorts that have been with us for a longer period of time.
Starting to contribute gathered various starting to contribute and we're realizing the benefit from price increases and then obviously the strength of the housing market from a pricing perspective on the variable side of the business is helpful as well and so as we look ahead going forward, we've said pretty consistently that we would be kind of a mid single digit organic.
Revenue growth company kind of three 5%, assuming the housing market hangs in there and that the macro phase.
Strong doesn't have to be on fire and I think it was on 'twenty, one assuming that theres not anything catastrophic and we still think that that is achievable.
Given the different levers, we can pull on the diversification, we have been able to achieve.
Okay. That's helpful and then sticking on diversification Kerry I don't know if you have this on hand, but if you look at the all the revenue outside of the <unk> franchise or just the core revenue what percent of revenue is that today and how much of that mix do you think that could be over time.
Yes.
We don't we don't disclose that in total with the exception of kind of looking at what it is.
From the from the mortgage business.
Just in terms of in terms of what that what that looks like so for the mortgage business in general and that's what we kind of break out.
This quarter it was about $3 million.
Operator are there other opportunities as we think about.
The product monetization and things so we haven't gotten to a point that we've disclosed publicly.
Okay. That's helpful. Thank you guys.
Our next question is from Jason <unk> with Jones trading your line is open.
Alright, Thanks, a quick follow up on motto it sounds like we should be thinking about the breakeven.
Crossover in 2023, rather than the second half fourth quarter of this year I just wanted to be clear on the takeaway is that due to the conversion rate or lower gross demand or fallout I just wanted to make sure I'm clear on the takeaway there.
No.
Because we're looking at investing more because we've had so much success.
So we want to get to breakeven, though as Carrie said, it may shift a quarter or two but it's all about investment in what is an incredibly successful franchise for us.
So we have reached stability with a number of units. We've got open we have great word of mouth from everybody. That's involved there is upside because of the way the market shifting.
<unk> going to be looking for work, we can help shift goes into our units because we got more as we had mentioned on on.
On the buy side.
And so it's just a really attractive alternative for us.
Not because of anything because it's doing so well that we want to invest more.
Okay got it and then in terms of the independent region acquisitions.
Trying to think about the right cadence just taking a step back I mean, it's been about a year since integra.
Are you thinking about Chunkier acquisitions.
More time in between there should we be thinking about these where we're going to see a little bit more activity on a smaller scale.
Yes assemblies definition of chunky.
We are we're going to look at.
We will look at primarily growing organically as I mentioned.
On the inorganic side.
We don't believe we're in a position that we need to swim for defense and so the likelihood is youll see acquisitions that are more tuck in for US we like the.
The acquisition of independent franchises, obviously work really well with integra that would be something you can expect us to continue to try to do.
But then on the other side looking at opportunities that are adjacent particularly in the mortgage segment will look at whether or not there's an inorganic transactions that make sense for us, but I would view them more as sort of tuck in type acquisitions versus swing footprints.
Okay, great. Thanks for taking the questions.
Yes.
Again, Thats star one to ask a question. Our next question is from Justin <unk> with <unk> capital markets. Your line is open.
Hi, good morning, and thanks for taking the questions.
Good morning.
Hoping you could provide us with the update on some of the other.
Tech initiative that that window, so that area first.
Yes, let me give you an overview and then carrying one or two for them to jump in.
So in general we are continuing to work with.
Those.
Technology systems, they are providing rich source of data.
For our agents and franchisees.
And we continue to believe that we're in a good position with connectivity that a lot of folks don't have as complete as we do and we're going to continue to work on.
Initiatives that make our agents more productive.
Better lead we've already got probably the strongest networking.
System in the business from the standpoint of agents recurring new business from internationally as well as domestically.
We just had our four where we had.
Over 6000 folks there are lot of international players as well and a lot of that is around networking. So the technology piece will continue to evolve.
Make sure that we've got sort of best in class regeneration as well as tools that allow the agents to be more productive and effective.
And for the.
<unk> brokerages and the franchisees to be more profitable.
Yes, I agree with everything.
Okay.
Go ahead Sir.
Yes.
I agree with everything that Steve that in from now from a financial perspective, we're continuing to see strength in Danbury.
Continued it performed well last year and we're seeing that continue continue this year as well and then from a first perspective.
We're seeing adoption increase kind of steadily.
So work to do in terms of driving increased adoption, but we're very happy with the product given the feedback we're getting from our network is as Steve mentioned.
The feedback on first from the network continues to be very positive.
And I'll add one thing on <unk>.
That's been a winner for us with low inventory and it being primarily driven to find listing inventory. The agents that are utilizing it now we've had it under our belt for a while we can confidently say that those agents that are using it are increasing their business by 12% or more productive and they average eight new listings in the first 90 days they use the product.
So we're able to quantify the first product now.
And it's showing that it's actually driving listings to our network, which is a huge win so we expect that as the market will continue to be competitive with inventory this year.
That that product will gain additional adoption.
Sure.
That's very helpful. Thanks, and then.
One more if I could just maybe along the same lines.
The third party report that.
The <unk>.
Agents are more than double productive life.
Let's focus on is the technology and listen is driving that is that the main brand recognition that it's tracking those agents.
Up to kind of tell what what comes first the aged care. So I'm just hoping you could maybe talk about what.
It drives me to achieve plus high productivity numbers.
Nick once you take that.
Sure.
I think it's a combination of things, it's not one single lever, but I will say that it starts with our economic model that is based on reoccurring.
And that comes from our foundation and it was the idea of reward top producers.
And they are in business for themselves not by themselves and the economics really drive that number one.
Number two is because of that it drives culture, and what we know and what we see in our network is tough.
Top producers like to be around top producers and so the combination of that combined with what we have invested in and tools and education.
Kind of a rapid into one of what the value of <unk>, but.
But I believe as you ask about how do you think about chicken and the egg.
It started 49 years ago was purely the economics and 50 years later it has developed into a combination of the economics.
The culture and the tools training and education.
I appreciate the answer thanks for taking the question.
We have no further questions at this time I will turn it over to Andy <unk> for any closing remarks.
Yes. Thank you operator. This concludes the call for today. Thank you for joining us and have a great weekend.
Yes.
Ladies and gentlemen, this concludes today's conference call and webcast. Thank you for participating and you may now disconnect.
Okay.
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