Q1 2024 RE/MAX Holdings Inc Earnings Call
Earnings Conference call and webcast. My name is brianna 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 shells, Senior Vice President of Investor Relations Mr Shelf.
Thank you operator, good morning, everyone and welcome to <unk> Holdings first quarter 2024 earnings Conference call.
Please visit the Investor Relations section of Www Dot Remax holding dot com for all earnings related materials, including our standard earnings presentation and to access the live webcast and the replay of the call today.
Our prepared remarks and answers to your questions on today's call may contain forward looking statements.
We're looking statements include those related to agent count franchise sales and open offices financial measures and outlook brand expansion competition technology housing and mortgage market conditions capital allocation credit facility dividends share repurchases litigation settlement strategic and operational plan.
And business models forward 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 first quarter 2024 financial results press release.
<unk> 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.
Speaker Change: Joining me on our call today are Eric Carlson, our Chief Executive Officer, and Karri Callahan, our Chief Financial Officer.
Brand leaders work Morrison Amey lessons.
Are also here and will join us for Q&A with that I'd like to turn the call over to <unk> Holdings CEO Erik Karlsson Erik.
Thank you Andy and thanks to everyone for joining us today.
In the short time has passed since our last call several events of note that's taken place.
On the housing front the industry appears to be in the early stages of recovery industry reports and feedback from our network pellets demand remains robust and the supply of for sale homes continues to rise providing some relief to frustrated buyers in this most unusual housing market. However interest rates have moved up during the number of transactions.
Adding uncertainty.
The fed will cut interest rates later in the year as some had expected and hoped it would be the case.
While there are a lot of factors currently affecting the real estate market. One thing remains constant remax agents leverage their skills experience and competitive advantages to serve as many customers as they can.
Key differences between our business model and that of many of our peers are model incentivized as agents to help buyers and sellers.
Their housing goals, while some other models and set their agents to recruit other agents many of whom are productive.
In contrast, our agents commitment and drive sustained the remax culture of productivity.
And this was recently confirmed by a widely respected industry survey.
The 2024 real trends verified best Brokerages rankings revealed that Remax agents at large U S. Brokerages on average outsold the competition two to one and residential transaction sides last year.
And the survey of more than 1300 participating large brokerages.
<unk> agents averaged 11 eight transaction sides more than double the average of other agents plus when the brokerages are rates by transaction sides per agent.
88 of the top 100 are remax firms.
This marks the 16th straight year in which the real trends data confirms that remax leads and average per agent productivity.
Speaker Change: Known for being skilled experienced and very good at what they do our agents have made remax the world's most productive real estate network as measured by residential transaction sides.
In addition, remax agents in the U S and Canada have been voted as the most trusted for several years straight and trust as a top consideration among consumers when they're selecting their real estate agents.
Speaker Change: Our industry, leading trust and productivity are key competitive advantages our iconic brand is the number one name in real estate, we have an unequaled global presence a distinct value proposition of services and most importantly, the best agents and brokers in the business.
As I've said previously Remax agents are simply the gold standard.
Our competitive advantages should serve us well considering recent industry developments, taking place amid a lot of noise and misinformation.
To recap at March 15, the National Association of Realtors announced a proposed nationwide settlement agreement that would release.
Association owned Msas and most of its membership from liability and multiple seller initiated commission lawsuits the proposed.
Settlement includes a payment by <unk> as well as several changes in business practices in our industry.
Speaker Change: Two proposed business changes that are most relevant to remax affiliates are expected to go into effect mid July 2024.
First while offers of compensation the buyer's agents are still permitted by the agreement they cannot take place in the MLS.
And second written agreements will be required for MLS participants.
Notably about 20 states already require written by our agency agreements let.
Let me stress that we continue to remain steadfast in our support of buyer agency and buyer broker compensation emphasizing the significant advantages of having buyers and sellers represented by trustworthy seasoned real estate professionals.
These skilled agents ensure that consumers receive guidance and advocacy, while navigating the complexities of the home buying and selling process.
This representation generally drives better outcomes and experiences for the consumers involved.
So then our news broke we quickly moved to communicate with Remax affiliates and help them understand the changes.
<unk> brand president any lessons or immediately held informational sessions for our brokers and our agents.
With 51 years of history, we've had a front row seat many sudden changes in our industry and the wisdom that comes with experience continues to serve us well education and outreach to other core strengths of Remax.
Our top priorities following our announcements.
Now our preparation we have developed and have now deployed materials and resources to help our affiliates navigate the post settlement landscape from education and consultation on marketing and consumer messaging Remax will continue to support affiliates in every possible way.
We advised our network that there were four primary things that they should be focused on first.
<unk> affiliates to continue to conduct their business the security of being released and protected from liability related to these industry lawsuits.
Pending final court approval of the Remax settlement slated for hearing next week on May nine.
Second they should start preparing for the two proposed rule changes expected to take effect in July.
This includes updating their marketing materials by our presentation and buyer representation agreements.
Third they should continue to speak to their clients and a clear transparent way about the value they provide and how they're compensated.
Speaker Change: Court they should stay updated on ongoing industry developments the.
The terms and the proposed settlement would change some aspects of the business, but remax agents are well positioned navigate these changes and we will help guide them as they evolve.
Given the extensive experience within our network our affiliates are able to lean on and learn from the <unk> community. That's the power of our network filled with full time productive professionals.
It's in our settlement announcement, many have asked us how the proposed or changes might impact the industry.
Only time will really tell.
All commissions are negotiable as they always have been.
Ultimately the responsibility to set feeds to clearly communicate value.
Speaker Change: Lives within the individual brokerages teams and agents that has always been the case within our network.
We're moving intentionally and methodically given these unusual times.
Speaker Change: We're in a period of transition and some uncertainty.
Have a better read on how these developments will impact the industry and remax as the year unfolds.
In the meantime, we will continue to operate our business as efficiently and effectively as possible maintaining a growth mindset and staying laser focused on delivering the absolute best customer experience.
We're leaving no stone unturned.
Speaker Change: We're challenging each process and function to.
To improve not only the velocity, but our outcomes. These.
These efforts should yield measurable results in the aggregate and we believe we have additional revenue opportunities and the potential for margin improvement driven by control over operating costs.
Now as we said last quarter. This will take time, but we are moving with the requisite sense of urgency.
We've got a great foundation to build upon our team.
They are passionate passionate about our brands about each other and.
And about innovating growing and simply getting better each and every day.
We recently held our annual agent convention called <unk> in Las Vegas, with thousands of attendees from 60 countries. The event was both inspiring and reassuring.
Speaker Change: Personally my first our core I've spent most of my time listening trying to learn as much as possible from our network and other industry leaders. It was a fantastic experience our agents and brokers.
Not only confidence and enthusiastic.
Excited about the opportunities ahead and can't wait until next year's events.
Regarding our growth initiatives, we continue to iterate digging into detail getting insight and uncovering additional opportunities to date, we've seen positive results, though not large enough yet to overcome the overall contraction currently being experienced throughout the real estate industry.
Speaker Change: We launched our expanded teams initiative April one and we're seeing the first brokerages unlock the benefits by adding the required six new team members.
Notwithstanding the macro pressure, our conversions mergers and acquisitions or M&A program continues to add brokerages and agents to the network. It also continues to evolve as we work through our pipeline of compelling prospects identify new target and developing new approaches.
Speaker Change: We are laying the groundwork, which should serve us well when the market resumes its growth cycle.
Now on the mortgage side. Despite one of the most challenging end market conditions. The mortgage industry has faced in recent history, we continue to grow.
Here too we're focused on what we can control our recent franchise and loan originator convention at good participation. Despite the market conditions.
We're excited excited about the future prospects of the mortgage industry motto is going through its first renewal process as the original cohort of franchises are completing their seven year franchise terms and we're off to an encouraging start with that thank you and I'll turn it over to Kerry.
Thank you Eric Good morning, everyone effective cost management amidst a challenging housing market standup financial performance for the first quarter.
Some of the notable quarterly financial highlights included total revenue of $78 3 million adjusted EBITDA of $19 million with an adjusted EBITDA margin of 24, 3%.
And adjusted diluted EPS of <unk> 20.
Looking closer at revenue.
Excluding the marketing pattern revenue was $58 1 million a decrease of nine 3% compared to the same period last year driven by negative organic growth.
Organic growth decreased principally due to a reduction in events related revenue and lower U S agent count, partially offset by higher mortgage segment revenue with respect to event.
All that last year, we celebrated our <unk> anniversary at our annual agent Convention, which led to exceptional attendance and revenue This year's conference with smaller in comparison.
Q4, selling operating and administrative expenses decreased six 9% to $45 7 million, primarily due to lower expenses from our annual convention and reduced legal expenses, partially offset by higher equity based compensation expense.
From a capital allocation perspective, we continue to be disciplined and patient, particularly in light of the fact the rate cuts appear less likely to occur in the second half of this year and our pending settlement that have not yet finalized.
<unk> housing appears to be rebounding. It is a slow process for all these reasons, we continue to be responsible stewards of capital and think it's best to focus on replenishing our cash in the near term.
Simultaneously, we believe we still have the financial flexibility to pursue those growth opportunities, where we see the greatest potential.
Our second quarter and full year 2024, our outlook assumes no further currency movements acquisition or divestiture.
For the second quarter of 2024, we expect agent count to change negative one 5% to zero percent over second quarter 2023.
Revenue in a range of 75 million to $80 million, including revenue from the marketing funds in a range of 19 million to $21 million and adjusted EBITDA in a range of 24 million to $27 million and for the full year 2024, we continue to expect agent count to change negative.
Half a percent to positive one 5% over full year 2023.
Revenue in the range of 300 million to $320 million, including revenue from the marketing funds in a range of 78 million to 82 million and adjusted EBITDA in a range of 90 million to $100 million with that operator, let's open it up for questions.
Okay.
Thank you we will now begin the question and answer session.
You have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.
If you would like to withdraw your question simply press Star one again.
Speaker Change: If you are called upon to ask your question and our listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking a question.
Stellan Bundle: Our first question today comes from Stellan bundle with BTG. Please.
Stellan Bundle: Go ahead.
Stellan Bundle: Hey, guys. Good morning, hope, you're all doing well.
Maybe first one for Amy or Eric doesn't matter.
Stellan Bundle: Do you feel like the NAR settlements are enough to sort of satisfy the Doj is concerned as you speak to folks around the industry or do you think they may look to include some other additional stipulations before we get final approval.
Yes. This is this is Eric and then I'll pass it over to Amy for some additional color.
We don't know necessarily what the Doj is making and so it would be tough for us to speculate I think that the.
Eric Carlson: Settlement, although there's changes that supports what we've been.
Promoters of as such since transparency around the transaction and representation on both the buy and the sell side.
Eric Carlson: Coming back from our four recently.
Over the past month, and Amy might have some more color here.
Definitely agents and brokers are there.
Eric Carlson: They are chatting about obviously the changes.
Eric Carlson: Potential impact what.
Eric Carlson: What <unk> in the industry.
During Q help support them and they are hearing from customers there are more questions about.
Does this mean from a compensation perspective, what does it mean from values you offer and.
From the <unk> perspective, we're comfortable with that because obviously, we've got full time agents and they are highly productive.
Eric Carlson: <unk> they.
They are in the business, they're good at negotiating they provide great value.
And so although we have to make changes to.
System business practices. The good thing is it's already happening in about 20 states. So we will learn from that not to say that those are perfect representation, but they're helpful to guide kind of what the future path looks like.
Eric Carlson: No.
As it relates to the Doj.
Hard to tell.
Speaker Change: I'll leave that to them I'm sure they'll make great decisions.
But from us for US we're trying to right now control what we can control. So Amy maybe you have a bit more color obviously, you've been in the field a bit sure in talking to our brokers out there. They are highly focused on ensuring they're educating their agents and we've provided a lot of support there and I'll Echo Erik.
Sentiment and the fact that our agents are already experience, but they are probably getting a few more questions from buyers and sellers than they have in the past and I think that we welcome the conversation in our agents welcome the conversation.
<unk> always believed in transparency in the transaction and I think that it's that.
It's absolutely right and perfect that were already prepared we had already prepared education, leading up to the end and.
Speaker Change: So our brokers in the field I think thats the point of differentiation as well.
They are at the local level supporting their agent on a day to day basis, and we have provided them with the education through our Remax University platform, where they can hold classes and bring everyone up to speed on what they need to do to facilitate a conversation about what it means to be represented in a transaction and how compensation work.
Speaker Change: Yeah.
Speaker Change: And then I guess, just curious are you seeing any pushback from buyers on the commission rate.
Early on or are we still sort of status quo.
It's interesting.
<unk>, we are not widely hearing that the reported 90% of buyers last year engaged.
Speaker Change: Being represented and so in the U S. In particular buyers are used to being represented and they understand the value of being represented there are interests are protected.
Speaker Change: Value local market market expertise the ability for an agent to negotiate on their behalf.
It really streamlines the process and so really.
The questions that we're getting is what does it mean to be represented and so.
We've always been able to negotiate on their behalf and commissions have always been negotiable, but I think it's really diving a little deeper into what is true buyer representation needs.
Okay and then.
Maybe one long term wine as we sort of think about the next three to five years I think the.
The consensus seems to be that is going to be fewer agents in the industry, but those that remain are going to be more professional in nature, which is.
Positive for the Remax model.
But it also means that competition for some of those best agents, who is going to probably intensify as well so.
So can you maybe just talk about what changes or potential refreshes you may have to do for the Remax model as you kind of adapt to introduce enhanced competition for the best agents in the industry.
Yes.
Speaker Change: Look.
I appreciate the question I think that we compete for the best agents.
And the industry today, so I think it's something that.
Has been in our 51 year history.
We're good at it not to say that we're not going to have to evolve.
Speaker Change: Which is what I talked about in my opening comments I do think it is.
It's a little bit early to understand.
Speaker Change: The changes that will occur.
Over the over the summer and the.
The impact however, obviously, we focused on what we think we can control and that is look at the power of our network with 140000 agents worldwide means something the number of brokers that we have a local communities means something.
Have their finger on the pulse theyre able to.
Serve the needs the warrants.
Help with questions communication education, not only the materials that we provide and argue a remax university, but at that local level and thats.
The importance of the broker and the relationship living and working in the community with agents and helping them understand the value that not only that brokerage provides but obviously the remax.
Brands.
Speaker Change: And community provide and so I think we're well positioned to compete but I do agree that we will have to continue to compete and competition.
We'll get more fierce.
Will part time agents leave I think that as I think I agree I totally agree with that consensus to what level I don't know.
But I do think that we're well positioned because we are full time and productive and we've got the support of a great community.
Speaker Change: We're in a better position than not not to say that we don't have work to do and that we're going to have to.
Keep our eye on the competition and work hard every day to help brokers and agents to be successful in their market, where I think I'd add to that too and so on everything.
Everything we do here for decades has truly been designed to help an agent being more professional.
Dave and ultimately lead them to a path and an opportunity to sell more houses and so we're not playing catch up there, but I also echo Eric's sentiments about the fact that.
We can continue to evolve and make sure that we stay in the most competitive position possible.
Alright, thanks, guys.
Your next question comes from Ryan Mckenna, <unk> with Zelman <unk> Associates. Please go ahead.
Ryan Mcmahon you Mike Your line is now open.
Ryan McKeveny: Oh I'm sorry, hopefully you can hear me now have us on mute sorry about that.
You guys for taking the question.
On the capital allocation side of things longer term, obviously near term, it's kind of a rebuild of cash mentality.
Ryan McKeveny: Maybe for Terry is there a level at which you want to see the cash balance get to before thinking rethinking about things like like share repurchases or dividends.
Just any any framework on if there's if there is any certain level, you're targeting getting back to before reintroducing that or.
Just general thoughts on that thank you.
Speaker Change: Sure Good morning, Ryan.
Great question as you said right now there is just a fair amount.
Of uncertainty from a macro perspective, and we're obviously laser focus.
On on getting the settlement that settlement be behind us in terms of the.
The things that we're focused on we're really focused on leveraging over the long term.
Strong economic and cash flow characteristics of the business.
Speaker Change: And we've got our eyes focused on a couple of different leverage levels that are stipulated in our in our credit agreement. The good news is the franchise model the strong economics.
Earnings to free cash flow characteristics extra settlement, we're still looking at 45% to 50% conversion of our cash earnings to free cash flow.
Speaker Change: For 2024, and so really focused on on that.
Getting the leverage levels lower and back in accordance with the levels that are stipulated in our credit facility and then we'll be definitely focused on those initiatives to help drive the companys growth in the future because we do continue to believe that there are a lot of opportunities for us.
Thanks, Carrie and one more for you.
So kind of a modeling one on the broker fee revenue.
I think year over year down and down just slightly in kind of the best year over year performance in quite a bit.
It was ahead of our estimate I guess I'm just curious.
Is that just macro tenant EHS related trends during the quarter, especially in February that the pick up we all saw or have there been any kind of structural adjustments at all within the way broker fee revenues are.
Are being structured thank you.
Yes, I think it's a great question Ryan I think it really is macro related but I do think some of that comes back to just the overall strength of the network with the most productive agents even in a challenging macro environment, we stand to.
Stand to perform their well and I think from both a top line perspective as well as from a margin perspective. This quarter. We're just really happy with the results and I think it really highlights some of the differentiation in the financial model.
Your next question comes from Ronald Camden with Morgan Stanley. Please go ahead.
Great Hey, just a couple quick ones for me.
So on the U S agent count.
<unk> continued to decline.
Just curious if you guys. When you guys sort of slice and dice. The data if there is any sort of high level semantics.
And thorough leaving so is it is it all part time is it just the most unprofitable.
And the reason I asked is because is there a sense of how much more of that is there to go before you could start seeing a bottom.
Hi Ronald.
Foundational Lee.
The industry has contracted which we've seen this historically in the past and.
So we are not in the.
<unk> to that but I think that what we expect moving forward is that professionalism and the ability to navigate given the industry changes is going to become even more important and so we feel like we're sitting in a great position to capture agents, who truly need support during this time.
And who truly need to elevate their skill set because we're ready with everything that they need to succeed. So so we would expect things our ability to compete to be very very high here.
<unk> go ahead, Eric Eric Yes, so the only thing I was going to add just a little bit from a numbers perspective, especially.
Especially as we look at kind of experience and tenure.
From a tenure perspective, the cohort of agents that we're seeing across our networks continues to be pretty consistent with what we've seen historically and from an experience perspective, I think the latest statistics I saw from a <unk> perspective.
Close to 20% of agents across the industry have zero to two years of experience, whereas on the <unk> side, it's closer to 10%.
So I think we continue to differentiate ourselves there both from an experienced <unk> perspective, and then our agents being more tenured than the industry.
Speaker Change: That trend.
<unk> has continued and at least and even strengthened a little bit over recent quarters Andrew.
Speaker Change: And Ron this is Eric.
Your questions are good one and obviously there is insight and there is actions that we can take so I mean, we're not necessarily satisfied with agent decline either from a net or a disconnect perspective and so.
Yes.
I think that it wouldn't be it would be obvious if you think about it kind of what some of the reasons our employees leave manager.
Managers.
This company is usually and <unk>.
Agents duly brokerages.
Versus kind of the brand and so.
Speaker Change: That's one of the items, there and I do think that the industry.
Based on the.
Speaker Change: The volume last year.
Speaker Change: On home sales.
Speaker Change: The volume this year, it's harder to be an agent.
So we are probably a little bit better protected and we feel mitigated because of the full time nature of our agents, but thats not to say that we don't have work to increased agent satisfaction broker satisfaction that provide additional tool support and resources to help agents be more successful in a market whether its a tough market.
Speaker Change: Using market so.
I think Carey's perspective is a good one but just know that we we continue to try to turnover every rock here to understand what we can do to better support agents and brokers and I certainly hope and.
I think that we'll be able to bend the trend.
Speaker Change: Alright.
And then just my second one is just on the.
Speaker Change: Sort of the implication of the NAR ruling.
Speaker Change: It sounds like you guys have been sort of front foot it.
Speaker Change: On education.
Speaker Change: Staying in front of us sort of agents and brokers and so forth I guess my question is when you think about sort of the 20 states that have already sort of.
Had those those policies in place versus the ones that have it.
Is there anything sort of structurally.
Processes wise that that needs to change on the broker and agent level as you sort of move forward.
So real quick Ron I mean, I'll pass over to Amy for some commentary because she is obviously.
She is closer to being an agent a team leader and running a brokerage.
That I am as he's probably forgotten more than I'll ever know, but I think that obviously, we need to still see some of the rules right.
Amy: Some of the specifics arent necessarily outlined to the extent, where you can make some changes and youre starting to see some folks come out with.
Amy: Whether it's different.
Higher agreements et cetera, and so.
First and foremost what we wanted to do is obviously, let our community know that we're there to support them.
Like we always have been throughout our history to help them through tough times or with updates that happened quickly and so education is kind of first and foremost and kind of getting back to the basics of the value provide your negotiation skills.
You talk about compensation for that value and then we will be we will be in a good situation in order to make changes to.
Agreements.
<unk> things of that type of nature, and I'll turn it over to Amy because she has obviously had her feet on the street here more recently is here and kind of what's happening at the brokerage level.
Just a little bit of history fire agency came into play in the mid 1990, there was a big shift because buyers historically they were not represented and.
You did a big study leading up to it where.
Over almost three quarters of buyers out there thought that when an agent showed them a home they were being represented.
And so they made a big shift and a big change so even though these other states have not had mandatory buyer agency agreements.
Those agreements exist and have existed for a very long time and have been.
<unk> widely used its just that they werent mandatory so this change is.
It is not.
Amy: So colossal among agents out there they are familiar with what it means to be represented to.
To be a buyer's agent and so now, though it becomes mandatory and some of the fields of course, we're going to change that elaborate regarding compensation and specifying an amount et cetera. So we will anticipate that those changes in the forms will come at the local level and they will be disseminated.
And that's one of our strengths again is that our brokers boots on the ground they will be able to navigate that with speed and efficiency.
Thanks, so much.
Your next question comes from Tommy Moll join with K BW. Please go ahead.
Hey, guys. Good morning, Thanks for taking our questions.
Along a similar line of questioning.
With all the data that you see on your agents and perhaps even anecdotally based on your face time with your agents at the annual convention.
Is there any evidence of Remax, Adrian or frankly, their local competitors experimenting with with compensation arrangements that are different than.
Typical call it two 5% rate I understand it depends on our local market.
Perhaps something like fixed dollar compensation amounts are slim down offerings and anything of that sort that youre hearing or seeing any data.
Well first of all.
Hi, Tommy.
First of all I think it's important to say that rates have never been set they've always been negotiable and varying models have existed for a very long time, whether it be flat fee based percentage based et cetera. So.
Amy: To note at this moment, we're not seeing a large.
<unk> Tic and insurgents.
Amy: Variation there.
Speaker Change: I, just havent I Havent really heard the network talking too much about that.
Yes, Jaime I guess, what I'd say is from our core there isn't like a.
Speaker Change: On old model.
That's now a new model that all of a sudden kind of a quick fix I think from.
From our perspective.
Our brokers and agents, especially at our fall four we're just talking about the idea that.
They are always.
Spoken about the value that they provide either on the cell or the buy side.
Speaker Change: And.
Speaker Change: This is going to be different obviously with maybe agreement before they go to a showing et cetera et cetera. However.
The idea that they are full time professionals helps them because they've got tenure and they've got productivity. So like they have more swings at the bat, so they're actually probably a little bit more prepared than others from that perspective, and thats not I mean, we're obviously proud of the community at Remax, but I do think full time professionals and folks that are more productive.
Speaker Change: In turbulent times it helps them to get through the.
Speaker Change: The peaks and valleys.
Speaker Change: Thanks that makes sense.
Speaker Change: And switching gears over to the international agent side that this may get asked every every couple of quarters, but just want to go to a latest update.
If I look at the sort of just take kind of that the global fee revenues.
Speaker Change: Kind of divided by the number of non U S and Canada agents. It looks like that number has been running around kind of $200.
Speaker Change: Annualized I think sort of I think of as the <unk>.
Consolidation opportunity.
Would you see kind of the prospects for that to be increasing decreasing and kind of what initiatives do you have to potentially move that number.
Tommy I'll start there.
It's definitely something that's on the roadmap I mean, you are right the fees have been running around $200.
We have a great network.
Speaker Change: No.
Just about I think a 110 countries.
A lot of agents out there there are definitely monetization opportunities we're.
We're not going to talk about that strategy here on the call I know you'd like to.
However.
Speaker Change: I don't I don't see downside, there I see nothing but upside.
Speaker Change: Got it thank you.
Your next question comes from John Campbell with Stephens. Please go ahead.
Hey, guys good morning.
On that.
Hi.
Exiting April agent counts you guys provided in the press release, if you would just keep that static I'm just kind of hold the line for the rest of the year. It looks like I'm, just getting down I think total agents down maybe 120 bps year over year exiting this year. The low end of the total agent guidance you guys provided was down 50 bps. So.
Obviously, you're going to need some sequential growth from here I wanted to check on your level of confidence with the guidance and then maybe secondly, just how impactful seasonality typically is do you feel like the past cadence of kind of seasonal growth that will hold this year.
Yes, good morning, John I think it's a great question I think a couple of things to note with respect to kind of the first quarter and then even through April from that from a guide perspective.
International agent Count has has been a little a little lumpy.
We've had some puts and takes obviously, Eric just mentioned the 110 countries and territories.
But we still on a year over year basis.
Grown internationally is account by 3500 agents and have had some pockets of strength, especially in central and South America and so some of the some of the reductions that we've seen there we expect to more than.
Rebuilds ourselves and get back to the kind of that.
Close to mid single digit organic year over year growth on the international basis, and that's the biggest kind of DD deviation as we look at the U S and Canada.
I was hoping to get some trends, but obviously the macro conditions are a little bit tougher.
Okay. So it sounds like Youre expecting continuation of U S. Canadian head count reduction and then a little bit better International Thats fair.
Speaker Change: I want to clarify there from an international perspective kind of getting back on a year over year basis to that to that kind of mid single digit level of growth.
Speaker Change: And then when we look at the U S and Canada.
Obviously, what we've seen right now.
In terms of kind of the year over year performance I'm kind of more flat in Canada kind of on a sequential basis, obviously, we've got tremendous market share in Canada.
And so kind of looking at looking at that from a from a Canadian perspective, and then in terms of in terms of year over year perspective in the U S.
Speaker Change: Obviously, the macro conditions are a little bit tighter.
Expecting a little bit of a sequential improvement in terms of what we've seen in the first quarter.
Okay.
Speaker Change: Good color I appreciate that and then on motto I mean, if I can.
Speaker Change: Go back and just kind of tally the franchise signings over the last couple of years I'm showing you guys maybe have two thirds or so that that are live now.
I know, there's probably an element of attrition in play there. So maybe if you could talk to how many how many franchise that you have going through implementation.
Getting set up now and then relative to that pipeline once you get them live and painful fees what that level of revenue might represent.
Speaker Change: Yes, and the need to be open status right now we have close to.
<unk> that are to be open right now we've already opened up eight this year. So we're on a great role when it comes to opening offices.
They need to sell a few more so that continues to be a spot that we are working on there are definitely some green shoots when it comes to sales.
It's been a tough market to sell into but we're still growing last year. We still so close to 30 last year. We believe we can go higher than that this year, that's still the plan.
So we still think theres opportunity obviously, it does take anywhere from 60 to 180 days to get somebody open and then after open.
They start paying us at the months seven.
So it does take a little bit of time, but after that equates to approximately $5000 a month between the AD fund and the royalty fee.
So the opportunity for moderate is still be in order to obtain that growth engine is there.
Speaker Change: We continue to sell really high quality sales there are fewer but like yesterday I just talked to an independent that adds 80 agents and they are ready and willing and excited to get into mortgage.
And they actually were already sort of working with the company, but they wanted to own their own. So we're still seeing people in the real estate sector, who are looking for opportunities to get into ancillary and mortgage continues to be the best one for us.
Okay that makes a lot of sense and maybe a quick follow up there so about $60000 a year per franchise when their lives and painful fees. That's the right number to go with.
Speaker Change: Okay.
Thank you.
Speaker Change: Okay.
Seeing no further questions at this time this will conclude our question and answer session. I will now turn the call back to Andy sells for any closing remarks.
Thank you operator, and thanks to everyone for joining our call today have a great weekend.
Speaker Change: This concludes today's conference you may now disconnect.
Please wait the conference will begin shortly.
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