Q4 2022 Re/Max Holdings Inc Earnings Call

Okay.

Tom.

Dan.

[music].

Good morning, and welcome to the Remax Holdings fourth quarter 2022 earnings Conference call and webcast. My name is Laura and I will be facilitating the audio portion of today's call.

At this time I would like to turn the call over to Andy Schulz Senior Vice President of Investor Relations Mr. Schulz.

Yeah.

Thank you operator, good morning, everyone and welcome to remark Holdings' fourth quarter and full year 2022 earnings conference call.

Please visit the Investor Relations section of Www Dot remark Holdings' 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 capital allocation dividends and share.

Our repurchases strategic and operational plans and business models.

Looking statements represent managements current estimates Remax 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 fourth quarter 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 results press release, which is available on our website.

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, Nick Bailey and Ward Morrison with that I'd like to turn the call over to <unk> Holdings CEO , Steve Joyce Steve.

Thank you Andy and thanks to everyone for joining our call today looking at slide three our business showed great resilience during the fourth quarter, while facing the strongest industry headwinds we've seen in more than a decade.

<unk> of our diversified franchise model was on full display during this period of market contraction.

On a year over year basis, our Q4 revenue fell by under 10% a relatively small amount in the face of a nearly 45% decline in U S existing home sales.

All of our notable quarterly highlights included Remax Holdings total revenue was $81 3 million down only eight 9% compared to last year as our recurring revenue model and growing mortgage business helped to counterbalance the impact from the softening housing markets in both the U S and.

Canada.

We generated an adjusted EBITDA of $26 5 million and our adjusted EBITDA margin was a healthy 32, 7%.

Adjusted EPS was <unk> 41.

We modestly accelerated our stock buyback program and repurchased more than a half a million shares during the quarter.

Overall Remax agent count grew by over 2000 agents to 144000 agents worldwide.

Our motto mortgage presence continued to grow as we added to our open office club during the quarter.

The rapid decline in housing market activity. During Q4 was highly unusual and although we expect headwinds to persist. We also see cause for optimism as we enter the spring selling season.

One thing the company has learned over the past five decades is the importance of distinguishing between what we can and cannot control we cannot control the macroeconomic swings with impacting the industry.

But we can prepare for them and control our reaction to that and right now our 50 years of experience highlighted by five decades of consecutive growth is telling us to stay focused on supporting our two networks with the tools technology and training they need to thrive in any environment.

We continue to reinvest in our brands and execute on our strategic growth initiatives positioning us for profitable growth in the future.

With that I'll turn it over to Mick.

Thank you Steve.

Turning to slide four this is an exciting year for <unk> as we are celebrating 50 years over.

Over the past five decades. This network has grown to more than 144000 agents and over 9000 offices and a presence in more than 110 countries and territories.

Our model has proven to be successful in virtually any market, regardless of the economic environment, because people buy and sell houses every year.

With the most productive most experienced agents remax has the best choice for consumers, who want to buy or sell a home, which is the biggest investment in most people's lifetimes.

<unk> is built on more than an economic model. It's the combination of the model the tools the education marketing the network and all the resources that we provide and these are the true advantages that help real estate professionals to succeed.

Although there has been recent contraction in both the U S net agent count and the overall real estate market. We are thrilled that we have thousands of agents join Remax last year nearly 10000 agents in the U S. Almost 4000 in Canada and over 27000 agents in the rest of the world joined throughout 2022 and it.

<unk> of this type of activity combined with our strategic initiatives will be key to our growth prospects in 2023.

We're capitalizing on the market changes and driving innovation, such as our initiatives around teams and mergers and acquisitions and conversions of brokerages. Both programs are showing early signs of success and we are optimistic that the momentum we've built will help strengthen our agent count this year.

In addition, it's important to note the structure of our marketing funds. This is a 100% recurring revenue. So we think we're able to continue to invest in advertising and marketing at a much greater level than the market fluctuation dictate for many of our competitors.

As we start the year. There is also great confidence throughout the network demand for housing remains strong and buyers who have been on the sidelines of jumping back into the game. So we are optimistic to see what the spring market will deal consumers are looking for three things and in Asia Trust knowledge and experience in Remax agents are leaders in all of these categories our agents have been vote.

Number one most trusted in the U S and Canada. The average twice the experienced and production of other U S agents and they hold the most professional designation in the United States.

In less than two weeks, we'll be celebrating 50 years of Remax at our largest annual event or for convention. We believe it will drive more than 9000 attendees from more than 70 countries, making it the highest ARPA attendance in almost two decades and engagement like this shows firsthand the confidence and optimism our agents have become the market ahead.

<unk> was founded on the principle of attracting the best agents and making good agents, great and great agents succeed in virtually any market.

When asked that the market will rebound my responses, we can't have a rebound without a crash and we certainly did not have a crash.

We're experiencing is simply a rebalance putting both buyers and sellers in a more even position and although not without rebalanced pain points. Its overall positive for the industry.

The real estate market is about timing, but not about the timing that people think it's not timing the rates inflation the economy or headlines.

But its timing based on the personal needs and life events for people marriage kids divorced jobs that will be what the 2023 market is all about and that's what we've seen drive the market for five decades.

We also believe the agent is and will continue to be the most valuable part of the real estate transaction.

Technology won't replace an agent, but an agent who doesn't adopt <unk>, we will get replaced and last year, We announced and launched Max Tech powered by <unk> is a world class technology partnership providing agents with a full suite of products to maximize lead generation their presentation their marketing and more importantly, AI in auto.

Nation, two key items that will impact the industry and a much larger way moving forward.

Rollout started in Canada late last year, and we are pleased to report that over 90% of agents there have already on boarded and because of the success, we accelerated the U S launch to the first week in January which was two months earlier than anticipated and this is something rarely seen with tech rollouts.

Significant competitive advantages our scale on the retail market. This suite of products can costs agents thousands of dollars annually and we can offer this tech to agents and teams in the U S and Canada at no additional charge, which is a major win and a significant enhancement to our value proposition.

Now as we look ahead, we continue to solve for gaps in the business and provide the right tools to narrow these gaps real estate is a dynamic changing industry, which means you must adapt and adapt quickly, especially in market shifts like this I believe the outlook for 'twenty three as bright and this is our market to win just as we've done for 50 years word over to you.

Looking at slide five while we experienced solid growth in open offices during the fourth quarter. Our overall business has been sluggish due to the current macro environment that said the two marketing events for potential motto franchisees will be held in January were among the best attended we've had in recent memory and long term, we believe our <unk>.

<unk> remain as bright as ever the mortgage industry has been hit, particularly hard by the fed's moves to crew inflation by raising interest rates, which has in turn put a chill on the housing market and like relax, while we believe motto franchise model Insulates us from a broader industry gyrations that are the most they are not totally immune we've.

<unk> seen a tight correlation between the rise in interest rates and the slowdown in our franchise sales since Q2 of last year.

Shortly module sales have continued but at a slower pace. We sold 40 franchise last year, a very respectable number in today's business climate, but still off the 60% to 70 unit sales pace, we experienced the past few years. The news regarding our motto office openings is better as 2022 was our best year ever in terms of the number of offices opened.

This helped to accelerate our growth rate during Q4, and we ended the year with over 230 open model offices with more in the pipeline.

We remain focused on improving our growth opportunities each model office that had been open for more than one year should bring in roughly the same amount of annual revenue is it 'twenty agent re tax office and a company owned region. It is a meaningful songs and it's why we continue to invest in our mortgage business by ramping up our motto franchise sales and <unk> sales team.

And we aim to be at full capacity by the end of Q2, we believe this sets us up to return to our normal sales cadence within a matter of months and positions us to capitalize on the demand we expect to see as inflation retreats and mortgage rates stabilize. We also recently added to our bench strength as a longtime colleague has come over from <unk>.

Successful result development team to join motto as VP of franchise growth and development.

We believe the growth success and long term potential of our mortgage business is due to the unique and compelling value proposition motto and wingo each offer.

The ancillary services like mortgage provide real estate entrepreneurs with attractive opportunities to diversify the revenue and earnings something that is very important during shifting market conditions over 70% of model sale has been a real estate professionals, we're close to the real estate transactions, namely purchase originations and that process.

<unk> is the key to success for many of our franchisees.

Looking ahead, our future is bright and we expect our mortgage business to continue to grow and our sales to reaccelerate as conditions improve with that I'd like to turn the call over to Kerry.

Thank you Lauren good morning, everyone moving to slide six fourth quarter revenues declined approximately 9% to $81 3 million exclude.

Excluding the marketing fund revenue was just shy of $60 million a decrease of approximately 10% compared to the same period last year.

This decrease was driven by negative nine 1% organic growth and adverse foreign currency movements of one 1%.

Organic growth decreased largely due to lower broker fee revenue higher interest rates have adversely impacted housing affordability and we can housing demand, resulting in fewer transactions and by extension type of fee revenue.

One of the highlights of our 100% franchise model is that it is primarily comprised of recurring revenue streams like continuing franchisees any no deal, which helps lessen the financial impact from turbulent market conditions. For example, excluding broker fee and marketing fund revenue.

Organic growth rate was only down about 2% in Q4 recurring revenue accounted for almost 70% of revenue excluding the marketing funds.

Turning to slide seven our Q4, selling operating and administrative expenses decreased 24, 5% to $35 million due primarily to lower personnel costs.

Principally in the form of reduced equity based compensation lower bonus expense and decrease head count as well as lower acquisition related expenses.

Recall that we substantially completed our restructuring primarily under Remax technology Department during the third quarter of 2022, our fourth quarter <unk> expenses were more favorable than we expected due to a handful of reasons.

Meaning lower legal expenses.

Importantly, we still anticipate reinvesting virtually all of the savings from this restructuring back into our business.

Also on the expense front, we recorded a $7 1 million goodwill impairment related to the wind down of the gantry group in Q4.

Moving to slide eight before I get to our outlook. There are a couple of items I want to briefly mentioned, we modestly accelerated our buyback activity during the fourth quarter repurchasing over 500000 shares throughout 2022, we repurchased just over one 5 million shares returning over $34 million.

To shareholders.

Combined with our dividend, we returned more than $50 million to our class a shareholders last year, which was over 80% of our adjusted free cash flow.

Returning capital to shareholders remains a top priority for us in 2023, however, given the contraction underway within the industry, we expect to slow down the pace of our buyback in the near term second I wanted to call out the impact that today is increasing interest rate environment is expected to have on our earnings.

Typically we expect rising interest rates will increase our Q1 net interest expense by approximately $3 five to $3 7 million compared to the first quarter of last year.

That estimate includes the 25 basis point rate by the fed that was announced earlier this month.

Turning to guidance. This may be the most challenging environment in which to forecast future results that I have seen in my seven years. That's the agile. Consequently, we have brought and annual guidance ranges to help account for the heightened uncertainty.

Company, It's first quarter and full year 2023 outlook assumes no further currency movements acquisitions or divestitures.

The first quarter of 2023, we expect agent count to increase zero to 1% over first quarter 2022 revenue in a range of $82 million to $87 million, including revenue from the marketing funds in a range of 25 million to $22 5 million and adjust.

And EBITDA in a range of $18 5 million to $21 5 million for the full year 2023, we expect agent count to change negative one 1% over full year 2022.

Revenue in a range of 315 million to $335 million, including revenue from the marketing funds in the range of $83 5 million to $87 5 million and adjusted EBITDA in a range of 95 million to $105 million now I'll turn the call over to Steve for closing comments.

Thanks, Gary looking at slide nine we continue to invest meaningfully in our future. We have faced similar circumstances over the past five decades and performed well and we believe we are positioned to do so again.

With a scale global business unmatched brands strong financials, and a proven track record of success, we remain optimistic about and confident in our future.

With that operator, let's open it up for questions.

Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. If you would like to remove yourself from the queue Press Star one again.

We will go to our first question from Anthony Pallone at J P. Morgan.

Thank you and good morning.

First I guess on your revenue expectations for 'twenty, three down about 9% excluding.

Marketing and Thats on Friday agent Count. So maybe can you help us just understand a bit better where you think the biggest drawdown is going to be.

Maybe order of magnitude you're thinking on broker fees and.

What the impact may or may not be on continuing franchise fees.

Yes.

Got carried put the color to this but our forecast is showing where we are now which is sort of in that fourth quarter.

A continuation of a 20 some percent decline in transaction activity and so as we look at the year, we have not built in upside for the year. So to the extent you believe and we are seeing some reasons that maybe things will improve if things improve then we have got significant upside.

To the forecast that we've got however at this point, what we're seeing is a steady continuation of the business.

Deterioration that occurred last year and so we are.

We are setting a baseline number that we feel very confident about it.

At the same time, our view is.

If we get any uptick then we will significantly benefit from that because we are putting ourselves in a position to capture that upside opportunity. The bulk of the impact is in broker fees, but let me, let Gary give you more color Gary.

Sure. Thanks, Steve So Tony Steve is right I think when I look at the guide on the top line I would really break it down into three categories. The first is broker fee. So as Steve Steve noted, we've taken a pretty pragmatic look when we look across kind of the collective of third party.

Existing home sales for next year kind of ranging between five and 20% down and as Steve said, we're kind of on the more conservative than about 20% down for the purposes of hearing loss. If we continue to watch.

So going forward. The second bucket is really on a recurring revenue line, so agent count kind of flattish.

Similar trajectory to what we saw in the back half of the year and assuming that the initiatives are really going to take hold later in the year, but from a financial contribution perspective. This is going to be a little bit less and on that note I just wanted to make sure that we're clear in terms of some of those investments that we're making across team merger conversions acquisition, we think that Thats <unk>.

To be kind of a $3 million to $4 million headwind and the net investment into next year and then the last bucket I would call out is in our other revenue with the wind down of the booze legacy business as well as the Gadberry business also expecting that's going to be kind of a $2 million to $3 million headwind year over year.

Okay. Thanks, that's all helpful.

Second question is as it relates to your capital priorities, you mentioned dialing back on buying back stock can you give a sense as to what you think capex might be for 'twenty three it also.

Just how are you thinking about the dividend versus paying down debt given the higher rates and so forth.

Yes, So let me start.

And then Carrie.

So our number one priority number one is the return of capital to shareholders.

Dave.

Distributed back over 80% of our key free cash flow last year.

We are not changing from that model at all we're simply looking at where the market's going getting you're getting a real sense of okay. We know exactly where we are and where we think we're going to end up and then we're going to continue to aggressively go after both.

The stock and continue to pay the dividend the dividend is absolute.

When.

If you look at our financial position.

We are in a rock solid.

<unk> and balance sheet with a very stable cash flow so.

Our view is that as soon as we see where the market is going to bottom and then begin to come back then we will be as aggressive as we have been and so that is our number one priority. But then we are investing back into the business. Because we think we've got significant upside to that so Kerry you want to talk a little bit about capex.

Sure, Yes, so from a capex perspective with.

With the shift in the technology strategy that we made we do expect that to come down a little bit probably in the $8 million to $10 million range. A lot of that is coming on the mortgage side. So continuing really the viewpoints are in that and the <unk> product.

And the technology.

The offerings, there and then a little bit on the remarks side as well and we continue to.

Reinvest in some of the consumer facing things that we are still doing internally.

And a lot of that is.

We're very excited about as we think about 'twenty three and beyond.

Okay. Thanks for your support.

We'll go next to Tommy John K B W.

Yeah.

Hey, good morning, guys. Thanks for taking my question.

Kerry your walk you through some of the.

The three categories that the headwinds are and I just wanted to clarify one of those.

I think you called out $3 million to $4 million of headwinds related to.

Some of the key pilot program.

Wanted to confirm that that's the only program that applies and then just if you guys could just give us your latest thoughts on the <unk> pilot program.

Packing on top and bottom line.

Yeah.

Sure. So yes, the majority of that yes. The majority of that is that three to 4 million is related to the team's program a little bit also coming from our mergers and conversions program. Both of those we're seeing some early success on and we're happy with and I'll, let Nick jump in here as well, but a lot of it is just pretty early on.

Specially given given the macro but Nick you want to add to that yes.

Yes sure the tip initiative is still new it was announced August of last year.

Early indications.

Show that we've added more teams and the teams that we have added more agents and so early indications we like what we're seeing within the pilot, but it is only halfway through that pilot and so more to come as we move into the first half of this year.

Yes.

Great. Thanks, and then just my second question is can you talk a little bit about the health of some of your franchisees.

It's been somewhat of a tough tax.

Stretch here in terms of housing volumes. So just broadly if you could talk about the health care.

Yes so.

It's a combination of.

We could.

Our monitoring how everyone's doing obviously.

Collections is top of mind and so.

Net news is good news that that our folks are in good shape.

We are going through the toughest cash flow part of the year for them.

But as they come out we are not seeing any significant change.

And any pattern.

Of payment or financial health of the franchisees add Nick and his team spent an enormous amount of time checking in and making sure that we know that so carrier Nick I don't know if you want to add to that.

Yes, Steve I think you summed it up well.

Yes.

Great. Thank you.

We'll go next to Ronald Camden at Morgan Stanley .

Hey, just a couple of quick ones, just going back to the guidance for 2003.

The adjusted EBITDA is helpful.

Trying to get.

Sense of what the flow through is going to be like the operating cash flow because if I look at 22.

And I look at sort of the 102020 122, adjusted EBITDA down to $71 million operating cash flow.

I get to like a 58% flow through I'm, just trying to get a sense. How are you guys thinking about that operating cash flow for 2003.

Carey.

Sure, Yes, so I think that really highlights Ron the strength of the business model.

Even with the trying economic times, the favorable position that we're in and so I think as we look to 2023 that conversion rate.

It looks pretty consistent might go down a couple percentage points just because of us.

Full year, a little bit higher interest expense expectation.

But kind of in that 50% to 55% range.

Is reasonable as we look ahead to 'twenty three.

Okay.

Okay.

I think the other part to keep in mind is.

Depending on if we get upside.

As that upside comes in that flow through is a high margin.

Great.

And then the other question I had just I'm on I think I'm on slide 24, and I'm, just looking at sort of the motto mortgage.

Piece of it that you guys have revenues and sort of EBITDA can.

Can you just talk a little bit more about that sort of adjusted EBITDA.

What's driving that negative number how do we think about that.

That that changing as you go from 225 to over 1000, just trying to get a sense of the trends there.

Carey.

Yeah.

Yes, so I think the mortgage business is something that we continue to be extremely excited about obviously rising interest rates had a direct correlation to the pace of our franchise sales as Gordon Board noted.

We're continuing to invest in it a lot of that is coming on on the <unk> on a real time, and so that put a little bit of pressure from a profitability perspective.

But I think it's important to note that once those offices get up and running.

They are contributing about 120.

<unk> agents are in a company owned region and as we look out over time, we still think it's a 100 million dollar revenue opportunity for us with margins that are comparable to what we see on the <unk> side of scale ex the marketing funds and so we are still continuing to invest right. Now we think that once we get to kind of that three to 300.

50 open motto office as we can get to profitability across the segment and still think that we just need to position ourselves through this headwind, which is why we're investing and will continue to be bullish on the growth opportunity there.

Great. That's helpful. That's it for me thanks, so much.

We'll move next to John Campbell with Stephens, Inc.

Hey, guys. Good morning, how are you doing.

Good John how are you.

Great. Thanks.

So I wanted to start off with maybe you want to comment.

Comment on that and this may be kind of in the prepared remarks.

You mentioned the word strengthen.

Strengthening the agent base.

Around the new initiatives I wanted to see if you could maybe clarify that and maybe unpack that is that an expectation for better growth is that better retention is at more productivity out of agents, maybe all of the above just curious about that comment there.

Net.

Yes, Hi, John Great question it is around growth.

Comment on the number of new agents that joined <unk>.

Not only in the U S, Canada, but around the world and when you look at then that compared to overall, our net gain or loss in each one of those areas. We think that when we look at the initiatives that we're investing in it is all about strengthening the growth.

And assisting the franchisees on how we do that and Thats all based on the initiatives that we started last year and that we're investing in that we believe is key to our growth moving forward, even with the rebalance of the market.

Okay. That's helpful and then.

I'll go ahead to start with.

Yes, so I was just going to add too.

I think.

I've met Amit with Nick and his folks.

The relative positioning and that they are feeling at this point is the most positive.

I've seen since I've been here.

The pipe that they are building and then the expected upside.

Bringing the technology platform to the U S and its impact not only on attracting everybody, but particularly teams because it's got an important teams component to it just gives just gives you a lot of room for optimism so not notwithstanding the current macro environment. We just think we're really well positioned to the things that we're going to do.

You are going to make a real difference in terms of the overall numbers when they turn positive is when the environment lets us do it.

Yes makes sense.

You guys talked about the strength of the franchisees I mean, you've mentioned that a couple of different <unk>.

Parts of the call and then back to Tommy's question around the just general update around franchisees I was curious if you could maybe go down the path of renewals how thats looking obviously there is a difference there can be a difference.

Health of your franchisees and whether they stay with you.

So curious about how that retention rates has been looking over the last year or so and then also on the franchise sales pipeline I'm curious about how in fact I went back to that as by the macro as well.

Okay.

Cary in the mix.

Sure I mean, it's a great question, John as we look at renewals.

On the on the Remax side of the house, we haven't seen significant deviation or variability from that perspective at least from a numbers perspective anything Nick and his team have done really an outstanding outstanding job there and he can probably provide more color as well.

Yes, when we look at.

The way our franchise agreements are structured with renewals and the intent to renew in the timeframe prior to exploration.

Pretty safe to say that were around 99%.

That we renew and we're well in front of those changes and in the event that there is a change in the market or a non renewal for whatever reason.

We are not.

Not taken by surprise, and that's where our sales team and especially with what's happening with our mergers conversions and acquisitions initiatives, it's bringing in what we've seen and experienced thus far last year and even great results. Early this year is independent companies that are marrying if you will.

<unk> companies and depending on if there is succession planning.

Sure.

Any type of merger, it's just a nice way for us to be able to marry.

Also helps drive the really positive renewal rates.

Okay.

Okay. That's a great update thanks guys.

Yeah.

Next we'll go to Ryan Mckenna, <unk> Zelman <unk> associates.

Hey, good morning, Thank you.

Kerry so a follow up on the economics with motto.

I think the detail you gave us was very helpful. But.

So I guess it sounds like more of a as part of the expense growth going forward I guess, if we think about maybe the core tomato X when low is that reaching kind of a point.

What are the expense base is becoming more of that kind of fixed franchise.

<unk> expense base, where whereas revenue ramps you get some more leverage there so that would be part one and then part two just specific to wind load I guess I'm just curious if you could remind us.

The economics, there either kind of per per loan processed or even more generally if you can share.

Qualitatively or quantitatively how.

How much is contributing either on the revenue or EBITDA side of of mortgage and I assume we'll get the segment level breakout within the K.

But I don't think we are more of us necessarily specified so just any thoughts there would be very helpful. Thank you.

Sure. Thanks, Brian Great Great question, and like I said, we continue to be really excited about about the mortgage opportunity we are starting to see.

Better better leverage and flow through all kind of on the on what I would call. The legacy motto business on the franchise sales business now that we do have over just over 230 offices open. So we are starting to see some of that but we really I think reward and the team have done a nice job of really pulling the value proposition together holistically between motto and lean.

So it's a little bit harder for us to kind of say, but I think generally speaking, we're starting to see a little bit a little bit more of that leverage we will we will provide all of the additional kind of segment level detail in the K.

When that gets when that gets filed but what I will turn it over to you to talk a little bit about the additional breakout so Ryan on the economics, it's basically.

We offer some level of discount of about $7 25 to file two models directly.

Whereas the open general public that we also sell to within remote is anywhere from 850 to $11 99 to file depending on which state.

On that basis, so really it's just trying to drive overall loan processing growth.

On a per transaction basis rates of our key there is within motto, we made some changes to our <unk> last year or two.

Mandate with one exception that they start using our service our new franchisees, we can't go back on the existing ones until they renew.

This year, we'll be making somewhat of a similar change.

And trying to drive more models to use.

And then one of the thing we've done is also trying to support margin growth within our franchisees. We've hired some of their processors into our <unk> system access all that service back to them. So we think theres a lot of upside in 2023 and beyond it's just getting that particular entity.

Revenues growing by getting the loan process count up and we have a great team in place to support the mottos and everybody else. We just have to keep pushing the top line.

Okay.

Great.

Hey, Brian one other thing to quickly clarify.

Did actually included in our updated <unk>.

Mr presentation, that's posted on the website, we did post the breakout kind of of that of the segment information. So you can kind of see that.

In terms of the total segment.

Revenue top line a little over 12, and then the net investment on an Opex, yes, Brian it's the wide remax deck. Our main investor presentation that was posted this morning at slide 24 through slide that Ron referred to earlier on this call.

Perfect. Okay. Thank you very much.

And next we'll move to Matthew Matthew <unk> at William Blair.

Hey, everyone. This is Matt <unk> on for Stephen Thanks for taking my questions could you provide some more color on how the rollout of <unk> is progressing northern rollout just started but curious on how many agents are currently leveraging the cave.

Core platform and if any agents have pushed back on the sunset of booths happening sometime down the road.

Yes.

I'll, let Nick answer that but I will tell you.

Rarely do you see franchisees applauded technology program.

One that Nick has selected is actually getting applause lines in our conferences, which I have never seen in 40 years of franchisee Nick.

Well, thanks, Steve well said.

I will tell you it's a homerun.

When we look at the rollout in Canada, we have over 90% on boarded total agent count right now even though we have four phases that started in the U S. We're around 35000 agents.

Of the 85000 agents between the U S and Canada are on boarded but the U S. Obviously is a big chunk of that that just started the first week in January .

That rollout was not initially anticipated to begin until the end of Q1.

And we're thrilled with the fact that we were able to push it two months earlier.

So it absolutely is welcomed people are applauding it to your question.

Is there pushback on the boost sunset the answer is no.

I think any pushback that we see is the fact that new tech means that you have to learn something.

We're investing in the training and the resources to make sure that people have a seamless experience, but the early success stories are pretty incredible and I will note two of them.

One came up that an agent that had never used a database put their context in the system within 14 days got a listing that went under contract within 24 hours had never experienced that one of the testimonials will be showing at the upcoming are for convention I saw yesterday is one of the teams.

<unk> you are now saving the $24000 a year that they were spending with cavy that we're now offering for free and so as this continues to rollout. We believe it's going to continue to be very positive and get us give us a very big recruiting retention advantage.

That's very helpful and Super encouraging to hear as well just had one more question on the alternative fee structure no. It came up a little bit ago, but just wanted to clarify something.

Whats current adoption for that program like I think it's offered in five states. If I recall correctly and then what do you think adoption could look like over the course of 2023 I Suppose said another way do you expect.

The adoption of that program to ramp up over the course of the year.

Okay.

Yes, So I mentioned its still little early we announced that pilot in the five states in August .

And so what we're seeing is there are two ways to grow from this initiative, it's not only recruiting new teams in which we have seen that happen of teams of six agents in larger but it's also existing teams that we have.

That are anywhere from one to five agents now have incentive to grow their teams. We are seeing positive results in both categories.

Im not prepared at this point to give any type of forecast on the numbers because it did just launch in August .

But it's very encouraging and I will I will say outside of the data.

That we're looking at the network is applauding us saying.

That remax has absolutely adopting the wave of the future and where larger teams are going and so the franchisees are very very supportive and the initial data shows that it's going in the right direction.

Still early more to come.

And likely as we move through this year, we will have better numbers to share.

It sounds great. Thank you team.

There are no further questions at this time I will turn the conference back over to Andy Schulz for any closing remarks.

Thank you operator, and thanks to everyone for joining the call today. This does conclude.

Today's event have a great weekend.

And again that does conclude today's conference call you may now disconnect.

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