Q2 2024 RE/MAX Holdings Inc Earnings Call

Speaker Change: Good morning and welcome to the Re-Max Holdings second quarter 2024 earnings conference call and webcast.

Operator: earnings conference call and webcast. My name is Sarah, and I'll be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Andy Schultz, Senior Vice President of Investor Relations. Mr. Schultz,

Andy Schultz: Thank you, operator, and good morning, everyone, and welcome to Re-Max Holding's second quarter 2024 earnings conference call. Please visit the investor relations section of www.remaxholdings.com for all earnings-related materials, including our standard earnings presentation and to access the live webcast and the replay of the call today.

Andy Schultz: Forward-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 facilities, dividends, share repurchases, litigation settlement, strategic and operational plans, and business models. Forward-looking statements represent management's current estimates, and Re-Max Holdings assumes no obligation to update any forward-looking statements in the future. Forward-looking statements stress matters that are subject to risks and uncertainties that may cause actual results to differ materially from those projected in forward-looking statements.

Speaker Change: 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 facilities dividends share repurchases litigation settlement strategic and operational plan.

Speaker Change: <unk> and business models.

Speaker Change: Forward looking statements represent managements current estimates Remax holdings assumes no obligation to update any forward looking statements in the future.

Speaker Change: 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.

Andy Schultz: These are discussed in our second quarter 2024 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.

Speaker Change: These are discussed in our second quarter 2024 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.

Andy Schultz: Joining me on our call today are Eric Carlson, our Chief Executive Officer, and Karri Callahan, our Chief Financial Officer. Our brand leaders, Ward Morrison and Amy Lessinger, are also here and will join us for Q&A. With that, I'd like to turn the call over to Re-Max Holdings CEO, Eric Carlson.

Joining me on our call today are Eric Carlson, our Chief Executive Officer, and Karri Callahan, Our Chief Financial Officer, Our brand leaders Ward Morrison and EMEA less injure 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.

Eric Carlson: Thank you, Andy, and thanks to everyone for joining us today. We had a good quarter with stronger than expected financial performance and several noteworthy conversions of real estate brokerages and teams. It's increasingly clear that our decisions over the past year to right-size our operations, file a Federal Industry Class Action Lawsuit, strengthen our leadership team, replenish our cash, and prepare for the days ahead have been prudent and impactful. With the notable industry business practice changes set to take place on August 17th, we continue to prepare our affiliates for the future.

Eric Carlson: Thank you Andy and thanks to everyone for joining us today.

Speaker Change: We had a good quarter with stronger than expected financial performance in several noteworthy conversions of real estate brokerages and teams.

Speaker Change: It is increasingly clear that our decisions over the past year to rightsize our operations.

Speaker Change: Total industry class action lawsuits.

Speaker Change: Strengthen our leadership team replenish our cash and prepare for the days ahead, and then prudent and impactful.

Speaker Change: The notable industry business practice changes that took place on August 17, we continue to prepare our affiliates for the future.

Eric Carlson: With 51 years of history, we've had plenty of experience with many shifts that have occurred in our industry, and the associated wisdom that we've gained continues to serve us well. Education and Outreach, two core strengths of Re-Max, have been our top priorities following the NARA announcement. More broadly, we're focused on our playbook, operating our business as efficiently as possible, maintaining a growth mindset, and delivering the absolute best customer experience. In what continues to be an uncertain time for housing and our industry, we remain focused on what we can control.

With 51 years of history, we've had plenty of experience with many shifts that have occurred in our industry and the associated wisdom that we've gained continues to serve us well <unk>.

Speaker Change: <unk> reached two core strength to Remax com.

Speaker Change: Our top priority following the <unk> announcement.

Speaker Change: More broadly we are focused on our playbook operating our business as efficiently as possible and maintaining a growth mindset and delivering the absolute best customer experience.

Speaker Change: In what continues to be an uncertain time for housing in our industry. We remain focused on what we can control and we believe our second quarter financial results are proof that our efforts are making a difference.

Eric Carlson: We believe our second quarter financial results are proof that our efforts are making a difference. Karri will get into the details shortly, but to preview some of her comments, collections are timely, and they continue to improve.

Speaker Change: Kerry will get into the details shortly but to preview some of our comments collections are timely and they continue to improve our cost management efforts have also been effective but we continue to see positive results from our growth initiatives, although not yet at a level to offset adverse industry wide and macro economic.

Eric Carlson: Our cost management efforts have also been effective, and we continue to see positive results from our growth initiatives, although not yet at a level to offset adverse industry-wide and macroeconomic forces. Our Conversions, Mergers, and Acquisitions, or CM&A, program continues to add brokerages and agents to the Re-Max network. In late June, we added a 60-agent independent office in Utah.

Speaker Change: And it forces.

Speaker Change: Our conversions mergers and acquisitions or M&A program continues to add brokerages and agents to the Remax network in late June we added a 60 agent independent office in Utah about the same time. We're also excited to announce that a prominent affiliated brokerage in Ontario converted to Remax, bringing nearly 130 agents.

Eric Carlson: About the same time, we're also excited to announce that a prominent, unaffiliated brokerage in Ontario converted to Re-Max, bringing nearly 130 agents. Just a week later, another Canadian brokerage, formerly associated with a competitor, also converted, adding over 200 agents. That gain of 400 agents is a testament to the strength of our brand, what it represents, and our value proposition. It also reinforces the value of our CMNA program. From the start, we viewed the program as a long-term initiative.

Speaker Change: Just a week later another Canadian brokerage, formerly associated with a competitor also converted adding over 200 agents.

Speaker Change: That gain of 400 agents is a testament to the strength of our brand what it represents and our value proposition. It also reinforces the value of our key M&A program.

Speaker Change: From the start we viewed the program is a long term initiative, it's taken time to educate brokerage owners on the opportunities we have available to them, but our strategic marketing approach is paying off and gaining momentum.

Eric Carlson: It's taken time to educate brokerage owners on the opportunities we have available to them, but our strategic marketing approach is paying off and gaining momentum. And if more conversions occur, even more brokerage owners who are considering a change should see Re-Max as a viable, attractive option. Combine that exposure with the impending business practice changes, and we believe the coming months and years will offer a unique window of opportunity, both for those brokers looking to make a change and for us. With our half-century track record of success, Re-Max is a desirable option, particularly in a time of uncertainty.

And as more conversions occur even more brokerage owners, who are considering a change should see remax as a viable attractive option.

Speaker Change: Combine that exposure with the impending business practice changes and we believe the coming months and years will offer a unique window of opportunity both for those brokers looking to make a change and for us.

Speaker Change: With our half century track record of success Remax has a desirable option, particularly at a time of uncertainty chain.

Eric Carlson: Change brings opportunity, and we've positioned ourselves to capitalize on that. Both in the U.S. and Canada, our CM&A pipelines have many attractive prospects, and we aim to keep that momentum going. Our Teams initiative has also been successful.

Speaker Change: Change brings opportunity so we positioned ourselves to capitalize on that both in the U S and Canada, our M&A pipelines of many attractive prospects and we aim to keep that momentum up.

Speaker Change: Our team's initiative has also had success we added several teams during the quarter and we're seeing more of our broker owners take advantage of the program at.

Eric Carlson: We added several teams during the quarter, and we're seeing more of our broker owners take advantage of the program. It's good to see larger opportunities convert. Year to date, our results are in line with expectations, which is positive in the current environment.

Speaker Change: It's good to see larger opportunities converting year to date. Our results are in line with expectations, which is positive in the current environment.

Eric Carlson: We have a growth mindset, and we're working to get our top line moving in the right direction. While better results from our growth initiatives will help, we're also exploring other ways to innovate. To that end, we've identified additional opportunities that can drive revenue while also enhancing the customer experience. A powerful combination.

Speaker Change: We have a growth mindset and we're working to get our top line moving in the right direction, while better results from our growth initiatives will help. We're also exploring other ways to innovate to that end we've identified additional opportunities that can drive revenue, while also enhancing the customer experience a powerful combination.

Eric Carlson: For example, we recently launched MaxTech Lead Concierge, an optional program that delivers vetted, conversion-ready leads from remax.com to our agents. We know that quality leads will mean more opportunities and more potential closings for our affiliates. Max Tech Lead Concierge solves two main issues with online leads. First, our agents will receive high-quality pre-screened leads that are worth their time and attention. Second, consumers will enjoy a better customer experience by getting an immediate response from a live person. It's truly a win-win solution.

Speaker Change: For example, we recently launched Mac stack lead healthier and optional program, which delivers vetted conversion ready leads from <unk> dot com to our agents.

Speaker Change: We know the quality leads will mean more opportunities and more potential closings for our affiliates <unk> touchy ourselves two main issues with online leads first our agents will receive high quality pre screened leads that are worth their time and attention second consumers will enjoy a better customer experience by getting an immediate response.

Speaker Change: From a live person it's truly a win win solution. The initial reception has been good and we are optimistic about the possibilities, but we know we need to execute.

Eric Carlson: The initial reception has been good, and we're optimistic about the possibilities, but we know we need to execute. Improving agent count is critical to a better top line, so network stabilization and growth remain a major goal, even as we face challenging cross-currents in the macro, environment, and industry. Now on the positive side, we saw our international aging count rebound in Q2, after a bit of a sluggish start to the year. Having a presence in over 110 countries and territories means there are many puts and takes in age and count during any given quarter of a year. So far in 2024, global growth has come largely from India, Central, and South America.

Speaker Change: Improving agent count is critical to a better top line, so network stabilization and growth remain a major goal, even as we faced challenging cross currents in the macro environment and industry.

Speaker Change: Now on the positive side, we saw our international agent Count rebound in Q2 after a bit of a sluggish start to the year.

Speaker Change: Having a presence in over 110 countries and territories means there are many puts and takes in agent count during any given quarter or year.

Speaker Change: So far in 2024 global growth has come largely from India Central and South America.

Eric Carlson: Successful Recruiting and Training Programs, Positive Changes in Country Ownership, and Conversion Activity of Health create noteworthy moments. In Canada, the aging count was flat through Q2, but Q3 started strong in July. The Canadian housing market, like the U.S., is currently challenged, and that's reflected in our results. Fortunately for Re-Max, we have outstanding leadership in Canada on both the corporate side and within our broker owner base, alongside number-one market share and brand awareness.

Speaker Change: Successful recruiting and training programs positive changes in country ownership and conversion activity has helped create noteworthy momentum.

Speaker Change: Canada agent Count was flat through Q2 Q3 started strong in July the Canadian housing market like the U S is currently challenged and.

Speaker Change: And thats reflected in our results, but Fortunately for Remax, we have outstanding leadership in Canada are both the corporate side and within our broker owner base alongside number one market share and brand awareness.

Eric Carlson: We believe the composition of our candidate network continues to strengthen as lower producers leave the brand and are replaced by more productive agents. In the U.S., our agent count has not yet stabilized, given the big picture at a time when some have forecasted significant industry-wide attrition in the agent ranks, perhaps 10% or even more this year alone. Our results are more measured, but still below where we'd like them to be.

Speaker Change: We believe the composition of our Cannery network continues to strengthen as lower producers leave the brand and are replaced by more productive agents.

In the U S. Our agent count is not yet stabilized given the big picture at a time when summit forecasted significant industrywide attrition and the agent rates, perhaps 10% or even more of this year alone. Our results are more measured but still below where we'd like them to be.

Eric Carlson: With the implementation of business practice changes later this month, we expect part-time agents to have a tougher time than full-time agents. That dynamic plays into multiple Re-Max advantages. Our powerful brand, combined with the most trusted, experienced, and productive network, creates an advantage for franchisees, agents, and teams. Our iconic brand is the number one name in real estate. We have an unequal global presence, a distinct value proposition of services, and, most importantly, the best agents and brokers in the business. And, as I said before, Re-Max agents are the gold standard. There is a lot of confusion and uncertainty in the marketplace right now. That happens when things change, and when things change, people get uncomfortable.

Speaker Change: With the implementation of business practice changes later this month, we expect part time agents to have a tougher time and full time agents that dynamic plays into multiple remax advantages.

Speaker Change: Our powerful brand combined with the most trusted experience a productive network create an advantage for franchisees agents and teams our iconic brand is the number one name in real estate.

Speaker Change: Have an unequal global presence a distinct value proposition of services and most importantly, the best agents and brokers in the business.

Speaker Change: And as I've said before Remax agents are the gold standard.

There is a lot of confusion and uncertainty in the marketplace right now that happens when things change and when things change people get uncomfortable.

Eric Carlson: When you think about an agent's work, almost every customer, or every house they deal with, is slightly different. So we should be able to thrive in a little bit of uncertainty. And I think that's a great thing about remapped agents. They're full-time, experienced professionals. They're productive.

Speaker Change: When you think about an agents work almost every customer or every house they deal with is slightly different.

Speaker Change: So we should be able to thrive in a little bit of uncertainty.

Eric Carlson: And they're the most trusted agents in the business. They know how to adapt to the marketplace, and we're pushing the envelope with our education, leaning in, and speaking loudly about what agents should be doing in order to thrive. Plus, here's where an unmatched geographic footprint can really make a difference. We have more offices in more parts of the U.S. and Canada than anyone else. Not only are we providing industry-leading education from HQ, but we also have education and in-person collaboration taking place at over 3,200 Re-Max offices in the U.S. and more than 900 offices in Canada. Local presence and a well-established culture of professionalism and productivity are true competitive advantages.

Speaker Change: And I think thats, the great thing about remax agents or full time experienced professionals, they're productive and they're the most trusted agents in the business they.

Speaker Change: They know how to adapt to the marketplace and we're pushing the envelope with our education leaning in and speaking loud about what agents should be doing in order to thrive.

Speaker Change: Here's where our unmatched geographic footprint can really make a difference we have more offices and more parts of the U S and Canada than anyone else.

Speaker Change: Not only are we providing industry, leading education from HQ, but we also have education and in person collaboration taking place at over 3200, Remax offices in the U S and more than 900 offices in Canada.

Speaker Change: Local presence and a well established culture of professionalism and productivity are true competitive advantages.

Eric Carlson: Skill is essential in this market, and Re-Max is the place for skilled agents. On the mortgage side, Motto continues to sell and open franchises. We're nearing our 400th sale lifetime to date and recently opened a franchise in our 45th state, New Hampshire. We continue to grow year over year despite some of the most challenging market conditions the mortgage industry has ever faced. Here too, we've zeroed in on what we can control.

Speaker Change: Scale is essential in this market and <unk> is the place for skilled agents.

Speaker Change: On the mortgage side motto continues to sell and open franchises. We're nearing our 400 sale lifetime to date and recently opened a franchise and our 40 <unk> State New Hampshire.

Speaker Change: We continue to grow year over year. Despite some of the most challenging end market conditions. The mortgage industry has ever faced here too we've zeroed in on what we can control to date franchise sales are approximately 50% to remax affiliates, 20% to independent or other competitor real estate brokerages when teams 20% to investors.

Eric Carlson: To date, franchise sales are approximately 50% to Re-Max Affiliates and 20% to independent or other competing real estate brokerages and teams. 20% to investors and 10% to loan originators. Also, while some of our franchises are understandably struggling currently, many other offices are doing quite well. These franchises are grinding, marketing their business, staying active in their communities, and, in many cases, taking market share. Even in this market, slightly more than 4 million existing homes will be purchased this year, and that's a lot of associated loans being originated in addition to any refi activity. We want more than our fair share of them at Motto. Now, similarly, Wheelo continues to get bigger and better.

Speaker Change: And 10% to loan originators.

Speaker Change: So while some of our franchises are understandably struggling currently many other offices are doing quite well.

Speaker Change: These franchises are driving.

Speaker Change: Marketing their business staying active in their communities and in many cases, taking market share even in this market slightly more than 4 million existing homes will be purchased this year and thats a lot of associated loans being originated in addition to any refi activity.

Speaker Change: We want more than our fair share of them Ad model.

Eric Carlson: In fact, it recently processed its 6,000th loan to clear to close, or C2C status. Reaching this milestone is exciting for the Wemo brand because growth like this validates the benefits for mortgage brokers providing our third-party processing services. It's also proof of Wemlo's team of processors who serve as a seamless extension of their broker's teams while providing an enhanced customer experience from submission to closing. WeMo provides highly qualified, customer-centric processing talent, easy-to-use technology, and access to an extensive list of supported lenders and loan products to help our enterprise customers get fast, effective results.

Speaker Change: Now Similarly, we love continues to get bigger and better in fact, a recently processed at 6000th loan declared a close or CDC status.

Speaker Change: Reaching this milestone is exciting because we love brand because growth like this validates the benefits to mortgage brokers, providing our third party processing services.

Speaker Change: It's also proof that we must chemo processors, who serve as a seamless extension of their brokers teams will providing an enhanced customer experience from submission to closing.

Speaker Change: We will provide highly qualified customer centric processing talent.

Speaker Change: Usually to use technology and access to an extensive list of supported lenders and loan products to help our enterprise customers get fast effective results.

Eric Carlson: In closing, it's an unprecedented time for our industry, given the pending changes. Additionally, market conditions remain mixed at best, with inventory and listings rising, while higher interest rates and resulting affordability challenges linger. But, opportunity abounds. With our leading brands and the most productive and trustworthy professionals in the business, we like our position in the market and are very optimistic about our future. With that, I'll turn it over to Karri.

Speaker Change: In closing, it's an unprecedented time for our industry given the pending changes. Additionally market conditions remain mixed at best with inventory listings rising or higher interest rates and resulting affordability challenges linger.

Speaker Change: Opportunity balanced.

Speaker Change: With our leading brands in the most productive and trustworthy professionals in the business, we like our position in the market and are very optimistic about our future.

That I will turn it over to Gary.

Karri Callahan: Thank you, Eric. Good morning, everyone.

Gary: Thank you Eric Good morning, everyone continued cost management Ahmed Hassan housing market highlighted our second quarter financial performance.

Karri Callahan: Continued cost management amid a soft housing market highlighted our second quarter financial performance. Some of the notable quarterly financial metrics included total revenue of 78.5 million, adjusted EBITDA of 28.1 million, up 5.4% over Q2 of last year, adjusted EBITDA margin of 35.8%, an increase of 350 basis points over the second quarter of 2023, and adjusted diluted EPS of 41 cents. Looking closer at revenue, excluding marketing funds, revenue was $58.4 million, a decrease of 4.8% compared to the same period last year, driven by negative organic growth of 4.5% and adverse foreign currency movement of 0.3%.

Gary: One of the notable quarterly financial metrics included total revenue of $75 million adjusted EBITDA of $28 1 million up five 4% over Q2 of last year.

Gary: Adjusted EBITDA margin of 35, 8% an increase of 350 basis points over the second quarter of 2023.

Gary: And adjusted diluted EPS of <unk> 41.

Gary: Looking closer at revenue, excluding the marketing funds revenue was $58 4 million a decrease of four 8% compared to the same period last year, driven by negative organic growth of four 5% and adverse foreign currency movement of 3% negative organic growth was principally driven.

Karri Callahan: Negative organic growth was principally driven due to the U.S. agent count and reduced revenue from previous acquisitions, partially offset by higher broker fee revenue. Recall that previous acquisitions like Booz and Gadbury have either wound down or are in the process of winding down. The increase in broker fee revenue was primarily driven by higher sales prices, more than offsetting the impact from the reduced agent count.

Speaker Change: Key U S agent count and reduced revenue from previous acquisition, partially offset by higher broker fee revenue recall that previous acquisitions like version Gadberry heavy there wound down or in the process of winding down the increase in broker fee revenue was primarily driven by higher sales prices more than offsetting the impact from reduced agent count.

Karri Callahan: Importantly, second quarter selling, operating, and administrative expenses decreased 13.3% to $34.9 million due to several factors, including lower personnel expenses, improved collections, favorable property tax expense, and reduced legal and IT-related expenses. Lower personnel expenses were largely a function of a difficult but necessary decision we made one year ago to streamline our operations, which also contributed to the reduction in IT-related costs. Re-Max collections continue to improve this quarter and have been comparatively robust despite the challenges of the current housing market. This is an encouraging sign when assessing the overall health of our franchisees. Favorable property tax expense of about half a million dollars was a one-time event.

Speaker Change: Importantly, second quarter, selling operating and administrative expenses decreased 13, 3% to $34 9 million due to several factors, including lower personnel expenses interest collection favorable property tax expense and reduced legal and it related expenses.

Speaker Change: Personnel expenses were largely a function of a difficult but necessary decision. We made one year ago to streamline our operation, which also contributed to the reduction in it related costs.

Speaker Change: <unk> collections continue to improve this quarter and have been comparatively robot. Despite the challenges of the current housing market.

Speaker Change: This is an encouraging sign when assessing the overall half of our franchisees.

Speaker Change: Favorable property tax expense of about a half a million dollar was a one time event lower legal expenses and miscellaneous reduction eliminations and efficiencies elsewhere across the enterprise all contributed to this quarter strong results.

Karri Callahan: Lower legal expenses and miscellaneous reductions, eliminations, and efficiencies elsewhere across the enterprise all contributed to this quarter's strong results. From a capital allocation perspective, we remain pragmatic. We believe this is the prudent approach, given that a second half of the year real estate rally has not yet materialized. Additionally, while we remain optimistic, our Industry Class Action Settlement is currently being approved.

Speaker Change: From a capital allocation perspective, we remain pragmatic.

Speaker Change: We believe this is the prudent approach given the second half of the year real estate rally has not yet materialized.

Speaker Change: Additionally, while we remain optimistic our industry class action settlement is currently being account.

Karri Callahan: We continue to focus on replenishing our cash reserve in the near term. We believe we are trending to get our total leverage ratio, or TLR, under four and a half to one by the end of the third quarter, which will importantly enable us to regain access to our revolving credit facilities. Further reducing our PLR by the end of this year remains a focal point for our entire company. Once our TLR returns to a desired level and we have sufficiently replenished our cash reserves,

We continue to focus on replenishing our cash are there in the near term. We believe we are trending to get our total leverage ratio our CLR under four five to one by the end of the third quarter, which importantly will enable us to regain access to our revolving credit facility.

Speaker Change: Further reducing our CLR by the end of this year remains a focal point for our entire company once our CLR returns to a desired level and we have sufficiently replenished our cash reserves.

Karri Callahan: We expect to have many appealing capital allocation opportunities, including debt repayment, stock buyback, further cash replenishment, and strategically reinvesting in our business, among others. The cash-generative nature of our 100% franchise business is perhaps our most attractive financial characteristic.

Speaker Change: We expect to have many appealing capital allocation opportunities.

Speaker Change: <unk> debt repayment stock buyback further cash replenishment and strategically reinvesting in our business among others.

Speaker Change: The cash generative nature of our 100% franchise business is perhaps our most attractive financial characteristics.

Karri Callahan: Our third quarter and full year 2024 outlook assumes no further currency movements, acquisitions, or divestitures. For the third quarter of 2024, we expect agent count to change negative one and a half to zero percent over the third quarter of 2023, revenue in a range of 75 to 80 million, including revenue from the marketing funds in a range of 19 to 21 million, and adjusted EBITDA in a range of 24 and a half to 27 and a half.

Speaker Change: Our third quarter and full year 2020 for outlook assumes no further currency movements acquisitions or divestitures for.

Speaker Change: For the third quarter of 2024, we expect agent count to change negative 150% over third 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 and <unk>.

Speaker Change: <unk> of 24 and a half.

Speaker Change: The $27 5 million.

Karri Callahan: For the full year 2024, we're slightly reducing our aging count guidance and narrowing our revenue and adjusted EBITDA guidance. We now expect agent count to change from negative 1% to positive 1% over the full year 2023, revenue in a range of $305 to $315 million, including revenue from the marketing funds in a range of $78 to $82 million, and adjusted EBITDA in a range of $93 to $98. With that, Operator, let's open it up for questions.

Speaker Change: For the full year 2024 were slightly reducing our agent count guidance and narrowing our revenue and adjusted EBITDA guidance ranges.

Speaker Change: We now expect agent count to change negative one to positive 1% over full year 2023 revenue in a range of $305 million to $315 million, including revenue from the marketing funds in a range of $78 million to $82 million and adjusted EBITDA in a range.

Speaker Change: <unk> of 93 to 98 months.

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

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Please ensure that your phone is not on mute when called upon. Thank you. Your first question comes from the line of Soham Bhonsle with BTIG. Your line is open.

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star one again.

Speaker Change: These ensure that your phone is not on mute when called upon thank you.

Selim Bunzel: Your first question comes from the line of sell him a bunzl with BTG. Your line is open.

Soham Bhonsle: Hey, good morning, everyone. Eric, I think, you know, as you noted, there's some consensus out there that there will be fewer agents in the industry long term, as we see this sort of professionalization after these settlements. So, let's just assume that sort of plays out. I'm curious if you guys have given any thought to evolving your pricing model to one where, you know, that takes more of the economics of the actual transaction, rather than just the number of agents.

Selim Benzl: Hey, good morning, everyone.

Eric: Eric I think.

Speaker Change: As you know there is some consensus out there that there'll be fewer agents in the industry long term rate as we see this sort of professionalization. After these settlements. So so let's just assume that sort of plays out I am curious if you guys have given any thought on evolving your pricing model to one where you know that.

Speaker Change: Takes more of the economics on the actual transaction rather than just a number of agents right. Because if you are in fact, providing all this value to your agent and making them more productive <unk> why not participate in some of that upside instead of just agent count where you are in the macro trend could be somewhat negative long term any thoughts there would be great. Thanks.

Soham Bhonsle: Right, because if you're, in fact, providing all this value to your agents and making them more productive, then the thought is, you know, why not participate in some of that upside, instead of just agent counts, where, you know, the macro trend could be somewhat negative long term. Any thoughts there, Reed?

Eric Carlson: Yeah, I appreciate it, Soham. And I'll start off, and then maybe Amy has a few comments around that, obviously. She's been pretty close to the network as of late, especially kind of with the changes that are coming up, but it's a great question. I think, you know, as I've been talking about for my, you know, eight, nine months that I've been here.

I appreciate it and I'll start off and then maybe Amy has a few comments around that obviously.

She has been pretty close to the network as of late especially kind of with the changes that are coming out, but it's a great question I think.

Amy: As I've been talking about.

Speaker Change: Eight nine months that I've been here now is.

Eric Carlson: Now I look at there's a, you know, we have a great brand. We have a really strong community of broker owners, and we have outstanding agents who are really passionate about what they do. And as we've talked about, we are in a position where we have a bit more full-time, professional, more productive agents than others. So, from that perspective, and, you know, with agent counts declining, very, very likely in the future. We think that we're a little bit more mitigated than others. But that doesn't mean, you know, that we're completely isolated or protected.

Look at theirs.

Amy: We have a great brand we have.

Amy: A really strong community of broker owners and we have outstanding agents, who are really passionate about what they do and as we've talked about I mean, we do we are in a position where we have a bit more full time professional more productive agents than others. So from that perspective.

Speaker Change: With the agent count decline.

Speaker Change: Very very likely in the future, we think that we're a little bit more mitigated that others that doesn't mean that that were completely isolated and protected and we have work to do and you'll be happy to talk about some of that work that we're doing to prepare folks, but we do feel like we're in a bit better position.

Eric Carlson: And we have work to do, and Amy will be happy to talk about some of that work that we're doing to prepare the folks. But we do feel like we're in a bit better position than maybe some others relative to the industry. With that being said, you know, our model has been a strong model for us over many, many decades. But we're not, you know, we're not naive enough to think that, you know, we might not have to change. And so the way I'd phrase it, Soham, is look, we're not, we're trying not to leave any stone unturned.

Speaker Change: And then maybe some others relative to the to the industry with that being said.

Speaker Change: Our model has been a strong model for us over.

Speaker Change: Many many decades.

Speaker Change: But we're not we're not naive enough to think that that.

Speaker Change: That we might not have to change and so the way I would phrase it so hard to look at it we're not we're trying not to leave any stone unturned.

Speaker Change: We're looking at all aspects of the business.

Eric Carlson: We're looking at all aspects of the business, and whether that's like a wholesale change to the model or whether that's, you know, a hybrid in the future, I do think there are opportunities. Because look, the fact of the matter is that, you know, agents are changing, and it's a dynamic workforce. And so, you know, even as you get newer agents in the business, they want different things. And that, you know, can drive them towards a different economic model for them.

Speaker Change: And whether that's like a wholesale change to the model or whether thats.

Speaker Change: Our hybrid in the future I do think there's opportunities because look at the facts of the matter is that agents.

Speaker Change: Are changing.

Speaker Change: Dynamic workforce.

So.

Even as you get new newer agents in the business they want different things and that can drive towards a different economic model for them.

Eric Carlson: I think what's important to think about, really, is how we're supporting agents and that can be in terms of economic terms, that can be how our brokers show up in the market, it can be, you know, how we have tools in tech to help them be more productive and engage with more consumers to gain more listings and to show more transparency through the selling process because look at home buying and such. An unbelievable experience, especially for the American consumer and a dream, So we will continue to lean in to help our broker owners be more profitable and more productive in addition to aging.

Speaker Change: I think what's important to think about really is how we're supporting agents and that can be from economic terms that can be from how our brokers show up in the market it can be how.

Speaker Change: We have tools to help them be more productive and.

Speaker Change: Engage with more consumers to gain more listings.

Speaker Change: And to show its more transparency through the selling process because look at home buying as such.

Speaker Change: An unbelievable experience, especially for the American consumer and a dream, it's largest purchase they have so we will continue to lean in.

Speaker Change: To help our broker owners to be more profitable and more productive.

Speaker Change: In addition to agents.

Eric Carlson: So, I'm not going to announce any new models today, but know that we're looking at, you know, everything that happens throughout the transaction, not only with a buyer or seller or with an agent's life cycle, and things that we think can add value or materially change the outcome of improving the customer experience or making them more productive. We'll definitely focus on that. So, I do think that, you know, we're laser focused on monetizing not only the agent itself, by providing services and other tools and tech, things like that, but also the transaction. So, I guess there will be more to come on that; nothing today.

Speaker Change: So.

Speaker Change: I'm not going to announce any new models today, but know that we're looking at everything that happens throughout the transaction not only with a buyer or seller or with an agent's lifecycle and things that we think can add value or materially change the outcome of improving the customer experience or making them more.

Speaker Change: Doctors.

Speaker Change: We will definitely focus on so I do think that you know.

Speaker Change: We're laser focused on monetizing not only.

Speaker Change: <unk>.

Speaker Change: The agent the agent itself.

Speaker Change: By providing services and other tools and tax things like that but also the transaction. So I guess more to come on that nothing today and I think really so we have to.

Eric Carlson: And I think really, Soham, we have to... You know, look at 817. It's going to cause some disruption, right? I mean, I think, you know, we've done a lot of work. I think we're in a really good position, but the fact of the matter is, there's going to be a lot of noise in the system. And so today is a good time to continue, like, you know, overturning those rocks, building a foundation. We're going to get through this period of transition and put ourselves in a position where we think interest rates will be better. Inventory will be better, and, you know, we'll be more effective at scaling the business in 2025.

Speaker Change: When I look at 2000.

17 is going to cause some disruption right I mean, I think we've done a lot of work I think we're in a really good position, but the fact of the matter is theres going to be a lot of noise in the system.

Speaker Change: Today is a good time to continue to overturn those rocks build the foundation.

Speaker Change: We're going to get through this period of transition and put ourselves in a position, where we think interest rates will be better inventory will be better and we will be more effective at scaling the business in 2025.

Amy Lessinger: Yeah, I think I'd add to that because you just mentioned, you know, kind of pure agency. Buyer agency has been a part of the industry since the 1990s, and, you know, interestingly enough, 90% of buyers used an agent last year. And so I think, you know, we're really happy about the spotlight coming into buyer agency because I think it's good for experienced agents, which is a large portion of our population.

Speaker Change: Yes, I think I'd add to that can you just kind of pure agency.

Speaker Change: Fire agencies, and a part of the industry since the nineties.

Speaker Change: And.

Speaker Change: Interestingly enough, 90% of buyers used an agent last year and so I think we're really happy about the spotlight coming into by our agency because I think it's good for experienced agents, which is a large portion of our population.

Amy Lessinger: And, you know, as we've mentioned previously, you know, our settlement came back in October, we were preparing, you know, all the way leading up to the announcement of the NARS settlement with, you know, education, tools support on this front to make sure that even though our agents are experienced that they are absolutely ready and able to clearly articulate their value, clearly, you know, have a transparent conversation about how they're paid, and really outline to a buyer the benefits of being represented.

Speaker Change: As we've mentioned previously.

Speaker Change: Our settlement came back in October we were preparing.

Speaker Change: All the way leading up to the announcement of the <unk> settlement with education.

Speaker Change: Hi tool support on this front to make sure that even though our agents our experience that they are absolutely ready.

Speaker Change: And able to clearly articulate our value clearly.

Speaker Change: Habit transparent conversation about how they are paid and really outlines a buyer the benefits of being represented.

Eric Carlson: Yep, great. Thanks for that. And then the second one, Karri, on the EBITDA guide for the third quarter, it looks like you're forecasting a similar level of revenue quarter over quarter, but the EBITDA is stepping down a little. Is there some investment coming through or something else going on there?

Speaker Change: Yes, great. Thanks with US there and then just second one carry on the EBITDA guide for the third quarter. It looks like you're forecasting a similar level of revenue quarter over quarter, but EBITDA is stepping down and what is there is there some investment coming through or something else going on there.

Karri Callahan: Hey, Soham, it's a great question. You know, as we said in the scripted remarks, we had a really strong quarter in the second quarter. We did benefit from a couple of different things. One, just kind of ongoing efficiency and really working at managing the business as efficiently and effectively as possible. But we also did have some one-time items that benefited the second quarter that we don't anticipate kind of flowing through into Q3. I mentioned property taxes specifically in the scripted remarks.

Speaker Change: Okay. So thats a great question as we said in his scripted remarks, we had a really strong quarter in the second quarter. We did benefit from a couple of different things, one just kind of ongoing efficiencies and really looking at managing the business as efficiently and effectively as possible, but we also did have some one time items that benefited the second quarter.

Speaker Change: <unk>.

Speaker Change: But we don't anticipate kind of flowing through into Q3, I mentioned property taxes, specifically in <unk>.

Speaker Change: The scripted remarks, and then as I noted despite the macro our bad debt expense and collection.

Speaker Change: It has been very very favorable and so while we've taken down.

Speaker Change: Assumed in that third quarter.

Speaker Change: Some good progress there not quite as strong as Q2, so there could be some some upside.

Speaker Change: Q2, the back half of the year if collections really continue on a similar pace as Q2.

Karri Callahan: Okay, and then just the decision to sort of lower the age and count guide for the year. Can you just talk about the biggest drivers there? Thank you.

Speaker Change: Okay, and then just a decision to sort of lower the agent Count guide for the year can you just talk about the biggest drivers there. Thank you.

Karri Callahan: Sure. So I think we continue to remain optimistic about some of the things that we're doing here from an Asian perspective. Obviously, Erdner talked about the momentum on CM&A both in the US and especially some activity that we've had in Canada. And so from, you know, an adjustment to the guy's perspective, I think it's really just been informed by the actual performance, you know, through July of the kind of similar trends that Erdner touched on in terms of the headwinds in the US, given the macro environment kind of flatish performance in Canada.

Eric: Sure. So I think we continue to remain optimistic about some of the things that we're doing here from an agent count perspective, obviously, Eric talked about the momentum on the M&A both in the U S and especially some activity that we've had in Canada and so from an adjustment to the guide perspective, I think it's really just been informed by the actual.

Eric: Performance through July kind of similar trends that Eric touched on in terms of the headwinds in the U S. Given the macro environment.

Speaker Change: Flattish performance in Canada, but importantly outside of the U S and Canada, we're seeing some good growth regime has been large conversion activity actually in central and South America.

Speaker Change: Continuing to see some pockets of agent count growth outside of the U S and Canada.

Soham Bhonsle: Okay, great. Thanks a lot for that. That's-

Okay, great. Thanks, a lot for the thoughts.

Operator: Your next question comes from the line of Anthony Paolone with JP Morgan. Your line is open.

Speaker Change: Okay.

Anthony: Your next question comes from the line of Anthony Anthony <unk> with Jpmorgan. Your line is open.

Anthony Paolone: Great, thank you. Good morning. The first question is, do you have a sense or view as to maybe how much of the, you know, pressure on aging count thus far has been as a result of the pending changes that are going to go into effect versus, say, just the housing market more broadly, and just trying to understand, like, if you think, you know, perhaps in the next three to six months we'll actually start to see some fallout, or do you think that these changes have been pretty well digested by folks?

Anthony: Alright, great. Thank you good morning.

Anthony Anthony: The first question is do you have a sense or a view as to maybe how much of the pressure on agent count. Thus far has been as a result of the pending changes that are going to go into effect versus say just that the housing market more broadly and just trying to understand like if you think.

Anthony Anthony: Perhaps in the next three to six months will actually start to see some fallout or do you think that.

Speaker Change: These changes have been pretty well digested by folks.

Eric Carlson: Yeah, Tony, this is Eric. Thanks for the question. You know, I don't. I think like, you know, the macro environment is obviously impacting agent count. I think that new buyer representation is impacting agent count. I do think that, you know, the changes associated with 817 will continue to put pressure on us. I think the macro environment is definitely playing a big role right now. As I said, you know, in my opening comments, but then in the last question, I do feel like, you know, we're a little bit more protected because

Speaker Change: Yes, Tony this is Eric.

Speaker Change: Thanks for the question.

Speaker Change: I think like the.

Speaker Change: The macro environment is obviously impacting agent count I think that new buyer representation.

Speaker Change: It is impacting our agent count I do think that.

Speaker Change: The changes associated <unk> 17, we will continue to put pressure I think the macro environment is definitely playing.

Speaker Change: Playing playing a big role right now as I said.

Speaker Change: In my opening comments, but then and the last question I feel like we're a little bit more protected because.

Eric Carlson: You know, the fact of the matter is, like, we have more productive agents. So, like, when I think about that, it's just more, it's more swings of that, right? And so, you know, over a period of time with 10-year experience, productivity, you know, our team, you know, overgeneralizing is, you know, they're just more experienced at negotiating and dealing with customers and explaining their value. And I think. You know what I've been doing?

Speaker Change: The fact of the matter is like we have more productive agents. So like when I think about that it's just more it's more swings of that right and so.

Speaker Change: Over a period of time with with 10 year experience productivity.

Speaker Change: Our team.

Speaker Change: Over generalizing is they're just they're more experienced that negotiating and dealing with customers and explaining their value and I think.

Speaker Change: What I've been.

Eric Carlson: I'm not surprised anymore, but when I came in, what I really, you know, loved about this team and this business was just the passion of our agents around the brand and what they do for buyers and sellers, and the strength of our broker owners. So, you know, we're not just reliant on Amy and her team and HQ for some training on, you know, changes that are going to occur within the market or how to deal with, you know, macro effects or, you know, how to go and get additional listings or how to talk about your value.

Speaker Change: But I am not surprised anymore, but when I came in and what I really.

Speaker Change: Loved about this team and this business is just the passion of our agents around the brand and what they do for buyers and sellers and the strength of our broker owners. So.

Speaker Change: We're not just rely on really kind of Amy and her team and HQ.

Speaker Change: Deploying some training.

Speaker Change: Changes that are going to occur within the market or how to deal with macro effects or how to go to get additional listings or how to talk about your value. We've got this outstanding network of broker owners that are providing.

Eric Carlson: I mean, we've got this outstanding network of broker owners that are providing, you know, training on a day in and day out basis, and, you know, reviewing whether or not they have somebody who's struggling with a particular part of the customer journey and providing those resources at a local level. So, not only with more intel on what's actually happening, boots on the ground, but they're there to have a face-to-face contact point, which I think is one of the strengths of our network.

Speaker Change: Trading.

Speaker Change: Day in and day out basis.

Speaker Change: And reviewing whether or not they had somebody who struggled with it.

Speaker Change: Particular part of the customer journey and providing those those resources.

Speaker Change: At a local level, so not only with more Intel on what's actually happening boots on the ground, but they are there. So there to have a face to face touch point, which I think is one of the strengths of our network. So do.

Eric Carlson: So, you know, do I think that, you know, that aging count will continue to be under pressure from an industry perspective? Absolutely. Do I think it'll hit part-time harder than full-time? Absolutely. Are we subject to, you know, continued decline in the aging population? Yes, but I think we are starting to bend the trend a little bit and understand, you know, who's leaving, why they're leaving, and what we can do to course correct there. So, we're actually kind of excited that, you know, there might be more of that for more productive full-time agents here in the future, and we're excited that Re-Max can pick up some of that market share.

Speaker Change: Do I think that.

Speaker Change: That agent count will continue to be under pressure from an industry perspective, absolutely. So I think it will hit part time harder than full time, 100%.

Speaker Change: Are we subject to continued agent count declined.

Speaker Change: Yes, but I think we are starting to bend the trend a little bit and understand.

Speaker Change: Who's, leaving why they're leaving and what we can do to course correct. There. So we're actually kind of excited that.

Speaker Change: There might be more of that or more productive full time agents here in the future and we're excited that remax can pick up some of that market share hopefully that helps.

Anthony Paolone: Yeah, thank you. And I don't know if this is maybe for Amy, but can you give us some specifics or any anecdotes or data on kind of what you're messaging to the agents in terms of, you know, side commission rates, how to, you know, suggesting negotiating this, or just what the field practices are right now or what you expect them to be in the next few months or so?

Amy: Yes, Thank you and I don't know if this is maybe for Amy but can you give us some specifics or any anecdotes or data on on kind of what.

Amy: Your your messaging to the agents in terms of.

Amy: Buy side commission rates how to.

Amy: Suggest.

Speaker Change: <unk> this or just what the what the field practices are right now or what you expect them to be in the next month or so.

Amy Lessinger: For sure. You know, we always emphasize the value of the service that an experienced agent provides in the transaction, and, you know, we've been preparing our agents and bolstering their already extensive experience and education on this front since, honestly, before the announcement of the NAR settlement. So, you know, we continue to closely monitor buyer-broker commission trends. You know, I'm out in the network all the time, and our brokers are not noting any notable changes, and that's very consistent with our internal analysis. So, you know, we're definitely optimistic that Re-Max agents are going to be less affected due to their experience and their productivity.

Amy: Sure.

Speaker Change: We always.

Speaker Change: Always emphasize the value of the service that an experienced agents provide in the transaction.

Speaker Change: And we've been preparing our agents and bolstering our already extensive experience and education on this front.

Speaker Change: Honestly before the announcement of the <unk> settlement. So we continue to close monitoring by our broker Commission trends mountain the network all the time and our brokers have not noting any notable changes.

Speaker Change: And those that's very consistent with our internal analysis. So we do we're definitely optimistic that remarks agents are going to be less impacted due to their experience and their productivity.

Amy Lessinger: Okay, so there's no, but has there been any sort of, you know, recommendations on, you know, rate or way to, you know, approach, you know, how to set a by-side commission at this point? But commissions are always

Speaker Change: Okay. So theres no but has there been any.

Speaker Change: Sort of recommendations on rate or way too.

Speaker Change: Approach.

Speaker Change: How to set up a buy side commission at this point or.

Amy Lessinger: But commissions are always negotiable, and so we don't provide guidance on that front. And I think I'd like to add, too, that, you know, these changes, although new to some markets, they have already, you know, been established in 20 markets across the country, and, you know, buyer agency has been around since the 1990s, and buyer agency and representation agreements have always been available in the majority of markets. They just weren't mandatory. So our agents, given their experience level and the amount of times that they transact, you know, they're just more seasoned in navigating these discussions.

Speaker Change: The commissions are always negotiable and so we don't provide guidance on that front and I think I'd like to add to that these changes.

Speaker Change: Although needed to some market they have already been established in 20 markets across the country and by our agency has been around since the nineties.

Speaker Change: Buyer agency and.

Speaker Change: And representation agreements have always been available in the majority of market. They just simply werent mandatory so our agents given their experience level.

Speaker Change: <unk> of times that they transact.

Speaker Change: What day, they are just more seasoned and navigating it.

Speaker Change: <unk>.

Speaker Change: Great. Thank you.

Operator: Your next question comes from the line of Tommy McJoynt with KBW. Your line is open.

Okay.

Speaker Change: Your next question comes from the line of Tommy Mick join with <unk>. Your line is open.

Tommy McJoynt: Hey, good morning, guys. Thanks for taking our questions here. Um, any early learnings, perhaps, through trial and error, just of the implementation of buyer agent agreements without adding too much friction into the process that might otherwise lead to a higher fallout of the fall through, I guess, of clients choosing not to engage with an agent?

Speaker Change: Hey, good morning, guys. Thanks for taking our questions here.

Speaker Change: Any early learnings, perhaps through trial and error.

Speaker Change: Implementation of buyer agent agreements without adding too much friction into the process that might otherwise lead to higher fallout in the fall through I guess of clients choosing not to engage with with an agent.

Amy Lessinger: Yeah, for sure. Thanks for the question.

Speaker Change: Yeah for sure. Thanks for the question.

Amy Lessinger: You know, fire agencies have been around since the 90s. These agreements have been around, you know, for decades in the majority of states out there. And 20 of the 50 states have been a requirement already prior to the settlement. So the remaining 30 it's not that they haven't had these agreements in place, it's simply that they weren't mandatory. And so you know, I think that, you know, when it comes to the spotlight on buyer agency, I think it's healthy for, you know, consumers to really now fully understand what it means to be represented by a professional agent.

Speaker Change: By our agency has been around since the nineties.

Speaker Change: These agreements have been around for decades and the majority.

Speaker Change: Rates out there and 20 to 50 states, it's been a requirement already prior to the settlement. So the remaining 30 its not that they haven't had these agreements in place, it's simply that they werent mandatory and so.

Speaker Change: I think that.

Speaker Change: When it comes to the spotlight on by our agency I think it's healthy.

Speaker Change: Consumers to really know fully fully understand what it means to be represented by a professional agent and so given the tenure and the amount of times that our agents transact and just more productive.

Amy Lessinger: And so given the tenure and the amount of times that our agents transact, they're just more productive, you know. It seems that, you know, buyers out there now really have an appreciation, a need, and a drive for an experienced professional that they can trust. And Tommy, this is-

Speaker Change: It seems that buyers out there now really have an appreciation and a need and a drive for an experienced professional.

Eric Carlson: And so, look at us. We've been really continuing to push education and adding our broker's push education about being as transparent as possible. I'm helping the customer kind of, you know; we drew up a complex transaction which is very emotional and very important to a family. And so I think it's been good for us to continue to remind our broker owners and agents what we've kind of stood for for, you know, 50 years.

Eric Carlson: And Tommy, this is Eric. Let me, let me say, let me add a little context. I mean, because I think that, look at this, there are changes that are going to happen in the market. Right?

It can trap.

Speaker Change: Tommy This is Eric let me, let me say, let me just add a little context, I mean, because I think that look at the.

Speaker Change: There are changes that are going to happen in the market right and so we've been really.

Speaker Change: Okay.

Speaker Change: We are continuing to push education.

Speaker Change: Adding our brokers push education about.

Speaker Change: Being as transparent as possible.

Speaker Change: Helping the customer kind of.

Speaker Change: We threw a complex transaction, which is very emotional and very important to her family and so I think it's been good for us.

Speaker Change: To continue to remind our broker owners and the agents what we've kind of stood four for 50 years.

Eric Carlson: With all that being said, whenever there's a change in process, there is going to be, you know, some noise, and there will be a bit of a learning curve. I think that because of our experience and our at-bats, we're a bit better off, but we're also talking to our folks about rising above the noise and making sure that, you know, they are creating a higher standard for the customer transaction. Because with any change, you know, there are good and bad. And I think that this gives the opportunity for some folks that either have intent or don't have intent. So, there was no intent.

Speaker Change: With all that being said whenever there is change in process.

Speaker Change: There is going to be some noise in mobile a bit of a learning curve.

Speaker Change: I think that because of our experience and our at bats.

Speaker Change: A bit better off but we're also talking to our folks about rising above the noise and making sure that.

Speaker Change: They are creating a higher standard.

Speaker Change: For the customer transaction, because with any change.

Speaker Change: There are good and bad actors and I think that this gives the opportunity for some folks that either have intent or don't have intent so no intent.

Speaker Change: Our time not enough experience don't understand the changes.

Speaker Change: And there'll be friction with our customer experience and hopefully we can pick up those referrals after customers R. R.

Speaker Change: Our dissatisfied.

Speaker Change: And then there'll be some that will be tried to complete workarounds et cetera. So.

Remax: From an overall industry perspective, there will be some noise in the system and here at Remax, we're going to try to try to rise above and create a standard where look at one of the most trusted brand customers want trust when they engage with their real estate agents and we are really pushing that.

Remax: For our agents and brokers to continue to provide a transparent trustworthy experience.

Tommy McJoynt: Got it. Does Re-Max provide templates for buyer agent agreements to the franchises? And are there different types of templates out there that have different levels of services embedded in them?

Speaker Change: Got it does remax provide templates for buyer agent agreements to the franchises and are there different types of <unk> out there that have different levels of services embedded in them.

Amy Lessinger: Yeah, good question. So, as a franchisor, we do not provide forms. They are derived from the local governing bodies. And we've been closely, you know, listening to our network and monitoring that, and largely, we are finding that the governing bodies are producing, you know, what they need in terms of compliant forms that they can use to implement the changes on the 17th.

Speaker Change: Yes, good question, so as a franchise or.

Speaker Change: We do not provide forms they are derived from the local governing body.

And we've been closely listening to our network and monitoring that and largely we are finding that the governing bodies are producing what they need in terms of compliance forms.

Speaker Change: They can use to implement the changes on the 17th.

Amy Lessinger: Okay, thank you. And then just last one real quick. Trust to try to track your prep to market share in real time, or at least on a quarter to quarter basis. Is it a fair exercise to look at your variable broker fee revenues and look at the trends, you know, relative to what industry transaction volumes are doing? Hey, good morning.

Speaker Change: Okay. Thank you and then just last one real quick.

Speaker Change: To try to track here, perhaps market share in real time or at least on a quarter over quarter basis.

Speaker Change: Is it a fair exercise to look at your variable broker fee revenues and look at the trends.

Speaker Change: Relative to what industry transaction volumes are doing.

Tommy McJoynt: Hey, good morning, Tommy. It's Karri.

Karri Callahan: So I think that's going to be difficult. There are a lot of different components in terms of puts and takes that impact broker fees, you know, that we disclose more, more fully in our SEC filing. But obviously, there are some differences in the US and Canada. And then there are also just some differences just in terms of the tenure of our agents. So I think that's a little bit, a little bit difficult.

Speaker Change: Hey, good morning, Tammi its Gary So I think that's going to be difficult. There's a lot of different components in terms of puts and takes that impact broker fee that we disclose more and more fully in our SEC filings, but obviously there are some differences in the U S and Canada and then there's also just some differences just in terms of the tenure of.

Speaker Change: Our agents, so I think thats, a little bit a little bit difficult, obviously in the quarter, where we are.

Speaker Change: We're very happy to see the broker fee performance that we did have.

Karri Callahan: Obviously, in the quarter, we were, you know, we were very happy to see the broker fee performance that we did have. You know, despite some contraction in agent count in the US, broker fees were still up. So we did see some productivity gains, and we did see some benefit from home price appreciation. And when we look at it on a sequential basis, in the US, we did have some modest market share gains between Q1 and Q2.

Speaker Change: Despite some contraction in agent count in the U S broker fee would still up so we did see some productivity gains we did see some benefit from home home price depreciation appreciation and when we look at it on a sequential basis in the U S. We did have some modest market share gains between Q1 and Q2.

Dan: Thanks, Dan.

Operator: Your next question comes from the line of Stephen Sheldon with William Blair. Your line is open.

Speaker Change: Your next question comes from the line of Stephen Sheldon with William Blair. Your line is open.

Stephen Sheldon: Hey, good morning. Thanks for taking my questions. Wanted to go back to international agent growth. And can you just unpack the puts and takes there, Soham?

Speaker Change: Yeah.

Stephen Sheldon: Hey, good morning, Thanks for taking my questions wanted to.

Stephen Sheldon: Go back to the international agent growth and can you just unpack unpack the puts and takes there some it slowed a little bit more in the second quarter, but it seems like you're off to a great start in July it looks like it's up almost 1300 sequentially outside of the U S and Canada. Thanks Karen.

Stephen Sheldon: It's glowed a little bit more in the second quarter, but seems like you're off to a great start in July. It looks like it's up almost 1300 sequentially outside of the US and Canada. I think, Karri, you may have called out agent growth in regions like Central America, but can you just give some overall detail on where you're seeing growth versus contraction or deceleration in some of your key markets outside of the US and Canada?

Speaker Change: You may have called out Asia growth in regions like Central America, but can you just give some overall detail on.

Speaker Change: Where youre seeing growth versus contraction or deceleration in some of your key markets outside of the U S and Canada.

Amy Lessinger: Sure, I can take that one. This is Amy.

Speaker Change: Okay.

Speaker Change: Sure I can take that one this is Amy.

Speaker Change: Got it.

Amy: Solid hotspots that include Asia Pacific, China, and Australia, and then in Europe, foundational and Germany, and Portugal, and Sweden South America.

In Colombia, and Chile, and then that includes Africa, and the Middle East in Kenya, and Nigeria, and Dubai, and I think that we're seeing.

Amy: Merging trends.

Amy: Lots of technological integration, including prop Tech AI.

Amy: <unk> changed and I think too.

Amy: There is a high influence on commercial real estate with respect to remote work.

Amy Lessinger: So, you know, we've got some solid, you know, hot spots that include Asia Pacific, China, and Australia, and then in Europe, foundationally in Germany, and Portugal, and Sweden, South America, Colombia, and Chile, and then that includes Africa and the Middle East, including Kenya, and Nigeria, and Dubai. And I think that we're seeing some, you know, emerging trends, you know, lots of technological integration, you know, including prop tech, AI, you know, and blockchain.

Amy: So.

Speaker Change: We've got strong leadership.

Speaker Change: I'll go to Canada announced strong leadership and market presence there and there is an anticipation of a rebound in housing activity later in the year and I think our solid pipeline of M&A opportunities.

Amy Lessinger: And I think, too, you know, there's a high influence on commercial real estate with respect to remote work. So, you know, we've got strong leadership, also in Canada now, strong leadership and market presence there. And, you know, there is an expectation of a rebound in housing activity later in the year. And I think, you know, our solid pipeline of M&A opportunities is really exciting to us. So, coupled with our expectation that interest rates are going to decline, I think that

Speaker Change: Our really exciting to us.

Couple that with our expectation that interest rates are going to decline there I think that.

Speaker Change: We've got opportunity that is still to come for the remainder of the year.

Amy Lessinger: Got it. That's very helpful. I appreciate that. And then, just as a follow-up, it looked like the loss from Motto was a little higher this quarter sequentially, even with a slight uptick in revenue. Is there anything to call out there on what would drive the bigger sequential loss?

Speaker Change: Got it that's very helpful. I appreciate that.

Speaker Change: And then just as a follow up it looked like the loss from motto with a little higher this quarter sequentially, even with a slight uptick in revenue.

Stephen Sheldon: And I'm just curious if

Speaker Change: Anything to call out there and what would drive the bigger sequential loss and I'm just curious.

Speaker Change #100: Any incremental investing going on there ahead of a potentially more favorable mortgage market.

Karri Callahan: That's a great question. Obviously, with this market, changing the macro economy is a little tough in the mortgage sector for the last year. So we had some increase in terms. We do pick up some money when they do terminate. So that does sort of have a put and take. But it continues to be the fact that sales are down a little bit, but we see some trends changing that in a positive light. So we hope we can change some of that in the year ahead.

Speaker Change #101: Yeah, Great question, obviously, if this market changing in the macro economy is a little tough in the mortgage segment for the last year. So.

Speaker Change #102: So we had some increase in terms of.

Speaker Change #102: We do pick up some money when they do terminate so that does sort of have a puts and takes.

Speaker Change #102: But it continues to be the fact that sales are down a little bit, but we see some trends changing that in a positive light so.

Speaker Change #102: So we hope we can change some of that in the near future.

Speaker Change #103: Alright, thank you.

Operator: Your next question comes from the line of Matthew Erdner with Jones Trading. Your line is open.

Matthew <unk>: Your next question comes from the line of Matthew <unk> with Jones trading your line is open.

Matthew Erdner: Hey, good morning, guys. Thanks for taking the question. I kind of have a follow-up to that last one with regard to Motto. Franchise sales have continued to increase, but the number of offices open continues to kind of remain around that 240 number. Do you think this is more market dynamics or, you know, can I get a little more insight as to what you're seeing there?

Matthew <unk>: Hey, good morning, guys. Thanks for taking the question I kind of have a follow up to that last one with regard to motto franchise sales have continued to increase but the number of offices opened continues to kind of remain around that $2 40 number do you think this is more market dynamics or can I get a little more insight as to what you.

Speaker Change #105: Are you seeing there.

Karri Callahan: Yes, I would totally concur on market dynamics. Obviously, as the volume of loans decreased within the market due to the macroeconomy, it's tougher for offices to get some of those. They have to go out there and scrap on a daily basis to try and get replies in the market, trying to get purchases in the market. We felt even though we've sold some and continue to sell and increase that count, we do have terminations.

Yes.

Speaker Change #106: We concur on market dynamics, obviously as the volume of loans decreased within the market due to the macro economy.

Speaker Change #107: Tougher for offices to get some of those they have to go out there and scrap on a daily basis to try and get revised in the market trying to purchase in the market we felt.

Speaker Change #107: Even though we sold some and continue to sell and increased head count we do have terminations and those terminations are for many different factors one is wherewithal the broker owner.

Karri Callahan: And those terminations are for many different reasons. One is where all the broker owners, financial positions, lack of deals, maybe not connected to real estate. So there are a lot of factors that may close somebody. So we've seen some of those terminations increase during this past year, but feel like when the macro economy changes, we'll be able to start regrowing that open office count and continue on the trend that we had prior to the macro.

Speaker Change #107: Actual position lack of deals maybe not connected to real estate. So there are a lot of factors that may close somebody so we've seen some of those terminations increased.

Speaker Change #107: During this past year, but feel like when the macro economy changes, we'll be able to start re growing that open office count.

Speaker Change #107: And continue on the trend that we had prior to the macro.

Matthew Erdner: Right, yeah, that's helpful. Thank you for that. And then, you know, kind of as that macro picture, have you seen the pipeline expand kind of ahead of the rate cuts? Are you guys, you know, ramping up a little more marketing wise there to try and get in front of it, given the, you know, 12, estimated 12 months to get that office open?

Speaker Change #108: Right. Yeah. That's helpful. Thank you for that and then kind of as that macro picture have you seen the pipeline expand kind of ahead of the rate cuts are you guys ramping up a little more marketing wise, there to try and get in front of it given the 12 estimated 12 months to get that office open.

Speaker Change #109: Yeah, obviously, we've seen some refinance activity increase across our franchisees.

Speaker Change #110: Nice thing is most of them are connected 75% are connected to real estate. So we'll see that trend long before sometimes even a traditional mortgage broker we'd see it because they're seeing that the homeowners.

Speaker Change #111: Homeowners come in and buy more homes.

Speaker Change #111: So we're continuing to try and stay ahead of that curve.

Speaker Change #112: Whether it's remote trying to do the processing, whether it's our motto is trying to get the deal, but we firmly know that refinances are increasing as rates go down and feel like the rest of the year, we've had a good opportunity at the fed cooperate.

Matthew Erdner: That's helpful, thank you guys. Your next question comes from the line of Ryan McKeveny with Selman and Associates. Your line is open. Hey, guys. Thank you very much. Karri on the...

Speaker Change #113: That's helpful. Thank you guys.

Speaker Change #114: Your next question comes from the line of Ryan Mckechnie with Zelman and Associates. Your line is open.

Operator: Your next question comes from the line of Ryan McKeveny with Salmon and Associates. Your line is open. Hey guys, thanks.

Ryan Mckechnie: Hey, guys. Thank you very much Kerry on the on the cost management side.

Speaker Change #116: It's a pretty nice step.

Speaker Change #117: Down I think across the kind of categories within.

<unk> expenses, maybe you can unpack that a little bit in terms of.

Speaker Change #118: The drivers this quarter and then just thinking about whether any of that was more temporary in nature or more permanent in nature would be would be helpful. Thank you.

Ryan McKeveny: Yeah, great question, Ryan. So I think, you know, as we said in the scripted remarks, we've really been focused holistically around, you know, managing the business really as efficiently and effectively as we can. From a personnel perspective, we're really starting to see now, about a year after the difficult decision we made last year to right-size the business from a personnel perspective, you know, kind of the full impact of that.

Speaker Change #119: Yeah, Great question, Ryan So I think as we found in the scripted remarks.

Speaker Change #119: We've really been focused holistically around managing the business really as efficiently and effectively as we can from a personnel perspective, we're really starting to see now about a year. After the difficult decision. We made last year to right size the business from a personnel perspective kind of before the full impact of that and so when we look at.

Speaker Change #119: Our personnel expense for this quarter and kind of what the run rate looks like for the rest of the year, it's probably a pretty good run rate.

Ryan McKeveny: And so when we look at our personnel expense for this quarter and kind of what the run rate looks like for the rest of the year, it's probably a pretty good run rate. I did mention that from our, you know, kind of facilities and our rent costs, we did have a one-time benefit in the quarter that hit that line item. So that was definitely favorable for this quarter and also pointed out that, you know, when we look at our professional fees on a year over year basis, we've had some benefit due to the prudent decision that we made last year with respect to the litigation.

Speaker Change #119: I did mention that from our kind of facilities and our rent costs. We did have a onetime benefit in the quarter that hit that line item.

Speaker Change #119: So that was definitely favorable for the quarter.

Speaker Change #119: Also called out that when we looked at our professional fees on a year over year basis, we've had some benefit due to the prudent decision that we made last year with respect to the litigation and so that's probably.

Ryan McKeveny: And so that's probably, you know, a pretty decent run rate. And then in our other bucket, that's where we really had some favorability this quarter. So again, I mentioned the really strong collections that we had and the tremendous focus by the team there as it relates to collections, you know, so that definitely is probably a little bit low. But, you know, like I said, we could have some upside in the back half of the year.

Speaker Change #119: Pretty a pretty decent run rate and then in our other bucket, that's where we really had some favorability. This quarter. So again I mentioned that really strong collections that we had there tremendous focus by the team there as it relates to collection.

Speaker Change #119: So thats definitely a probably a little bit low, but like I said, we could have some upside in the back half of the year from that perspective, we also in that line item.

Speaker Change #120: A few things.

Ryan McKeveny: From that perspective, we also, in that line item, had a few things, you know, from just a normal investment perspective, that we kind of initially planned for Q2, that we expect to push out into the back half of the year. And so kind of if you're looking at SONA run rate for the back half of the year, kind of looking in that high $30 million range for the run rate, just given the focus that we've had on, you know, optimizing the cost structure for the best of our ability.

Speaker Change #120: From just a normal investment perspective that we kind of it initially planned for Q2 and we expect.

Speaker Change #120: Push out into the back half of the year and is there kind of if youre looking at <unk> on a run rate for the back half of the year kind of looking at that high $30 million range.

Speaker Change #120: Further run rate just given the focus that we've had on optimizing the cost structure for the rest of our ability.

Speaker Change #121: Perfect. Thank you very much.

Operator: Your next question comes from the line of Ronald Kamden with Morgan Stanley. Your line is open.

Speaker Change #122: Your next question comes from.

Speaker Change #122: Comes from the line of Ronald Camden with Morgan Stanley. Your line is open.

Ronald Kamden: Hey, good morning. Just two quick ones for me. So one, just starting with the sort of the litigation updates. I know the settlement is in the appeals process, and there was sort of other stuff in the 10K that we were going through. But just in terms of timing, do you have a sense of when the next time we'll get updates or hear anything? Do you have a certain time in your mind? Or is it sort of just waiting to see?

Ronald Camden: Hey, Good morning, just two quick ones for me. So one just starting with the sort of the litigation updates.

Ronald Camden: I know the settlement is in the appeals process.

Ronald Camden: They were sort of other stuff in the 10-K that we were going through but just in terms of timing do you have a sense of when the next time.

Speaker Change #124: We will get updates or hear anything is it do you have a certain timing in your mind.

Speaker Change #124: Or is this sort of just wait and see.

Speaker Change #125: Yes, it's a great question, Ron I think a couple of things. The first is we continue to be very happy that we made the decision that we did some subtleties in the interest of all of our stakeholders. We're happy that the district Court granted final approval of the settlement and I think importantly to note. It is just going through the standard Appeals process right now I wish.

Speaker Change #125: That we can say exactly what that timeline looks like whether it is kind of towards the latter part of this year or international it is on that standard timeline.

Speaker Change #125: We continue to we're going to continue to vigorously defend ourselves in the settlement during that appeals process.

Speaker Change #125: And can see it continue.

Speaker Change #125: We continue to believe that the settlement is fair and reasonable.

Speaker Change #126: And but the district court's order should be upheld.

Speaker Change #127: Great and then my quick follow up is just and how does the dividend bringing back the dividend.

Speaker Change #128: Sort of factor into that is that is it something that's concurrent or are you sort of wait to see everything cleared through.

Karri Callahan: Yeah, it's a great question. Ron, I think about a couple of things.

Karri Callahan: You know, the first thing is, we continue to be very happy that we made the decision that we did to settle this in the interest of all of our stakeholders. You know, we're happy to record the granted final approval of the settlement. And I think it is important to note that they are going through the standard appeals process right now. I wish that we could say exactly what that timeline looked like. You know, whether it is kind of towards the latter part of this year or into next, but it is on that standard.

Karri Callahan: We continue to, you know, we're going to vigorously defend ourselves and the settlement during that appeals process and continue to believe that the settlement is fair and reasonable and that the district court's order should be upheld.

Speaker Change #129: Yes, that's it's a great question and I think as we think about just the overall performance. This quarter I think one of the things that highlighted highlighted is just the strength of the franchise brand and the <unk>.

Speaker Change #130: Franchise model that we have and the cash generation capabilities as I sat in the scripted remarks, our biggest focus right now is continuing to replenish the cash balance until we get through some limit litigation focusing on getting our leverage ratios down we haven't made any decisions as it relates to capital allocation.

Speaker Change #130: Beyond that point, but I think we're looking forward to getting to a place where we have a lot of optionality and focusing on.

Speaker Change #130: Capital allocation opportunities, including those that I mentioned in our scripted remarks.

Ronald Kamden: Great, and then my quick follow-up was just, and how does the dividend bring it back to dividend? A sort of factor into that, is it something that's concurrent? Are you sort of a way to see everything clear through?

Speaker Change #130: Great and then my last one is just you guys did a nice job looks like on expenses, but just going back to the agent count change, maybe just double clicking on that a little bit can you talk about just what's changed and what's different in terms of what's happening on the ground with the agents is that maybe some of the rulings is it just the macro just.

Speaker Change #131: Maybe some color on what what sort of changed what drove the guidance change and what's happening on the ground.

For sure I think.

Speaker Change #132: No doubt I think are covered it earlier that there is.

Speaker Change #133: Definite pressure.

Industry wide.

Speaker Change #133: And.

Speaker Change #133: We feel optimistic.

Speaker Change #134: We may have a little more installation from that given the tenure and experience of our agents, but we obviously understand that driving that top line through agent count growth is important and we focus mainly on our initiatives.

And providing the support.

Speaker Change #134: Two.

Speaker Change #134: And then that trend without a doubt and that includes our strategic initiatives.

Speaker Change #134: That we've talked about our C. M&A program. The team's program and then of course, working really closely with our brokers to enhance their recruiting scale and then obviously once we add an agent. The big goal is to make that agents more productive once they are added and I think that really evident in our numbers.

Speaker Change #134: Our agents have extremely high productivity. So we will continue to provide that support that education and offer tools to help them win no matter what the market conditions are but obviously, our deep focus is finding other opportunities to grow.

Speaker Change #134: <unk> and drive that top line.

Speaker Change #135: Great. Thanks, so much that's it for me.

Karri Callahan: Yeah, it's a great question. And I think as we think about just the overall performance this quarter, I think one of the things that it highlighted is just the strength of the franchise brand and the franchise model that we have and the cash generation capabilities. As I said in the scripted remarks, our biggest focus right now is continuing to replenish the cash balance until we, you know, get through some of the litigation, and focus on getting our leverage ratios down.

Ronald Kamden: Great. And then my last one is just, you guys did a nice job, looks like one expenses, but just going back to the agent count change, maybe just double-clicking on that a little bit, can you talk about just what's changed and what's different in terms of what's happening on the ground with the agents, is it maybe some of the rulings, is it just the macro, just maybe some color on, you know, what sort of change, what drove the guidance change and what's happening on the ground thing.

Karri Callahan: We haven't made any decisions, you know, as it relates to capital allocation beyond that point. But I think we're looking forward to getting to a place where we have a lot of optionality and focusing on all capital allocation opportunities, including those that I mentioned in the scripted remarks.

Speaker Change #135: Your next question comes from the line of John Campbell with Stephens, Inc. Your line is open.

John Campbell: Hey, guys good morning.

John Campbell: Good morning.

Hey.

John Campbell: Great job on the quarter I mean, it looks like you brought profits up year over year for first time in I think seven quarters. That's one.

Speaker Change #137: <unk> revenue declined so congrats on getting the cost order in place.

Speaker Change #138: Wanted to check on.

Speaker Change #139: On the franchise renewals it sounds like sales it sounds like you're seeing some success of late but on the renewals. Just curious if you can give an update on how that's held up so far.

Speaker Change #140: Lots of changing in the market. So just curious about cancellation rates and then on the successful renewals you've seen if you just kind of able to hold the past times and such.

Amy Lessinger: For sure, I think, you know, No doubt Eric covered it earlier, that there is, you know, definite pressure just industry-wide. And, you know, we feel optimistic that we may have, you know, a little more insulation from that, given the tenure and experience of our agents. But, you know, we obviously understand that driving that top line through agent count growth is important, and we focus, you know, mainly on our initiative and providing deep support to, you know, bend that trend, without a doubt.

Speaker Change #141: Yes for sure actually.

Speaker Change #142: Our renewals have been strong and it reflects I think the confidence in the business model and the support that we provide and obviously, we will continue to evaluate market conditions, but so far we are.

Speaker Change #142: Seeing consistency on that front.

Amy Lessinger: And, you know, that includes our strategic initiative, which we've talked about, our CMA program, the team's program, and then, of course, working really closely with our brokers to enhance their recruiting skills. And then, obviously, once we, you know, add an agent, the big goal is to make that agent more productive once they're added. And I think that's, you know, really evident in our numbers, that our agents have extremely high productivity.

Speaker Change #143: Okay, and then I think I will queue up to kind of the product.

Speaker Change #144: Productivity of your agents, but I mean, if you look at the U S housing market at least it looks like it was anywhere from down modestly maybe up modestly so.

Speaker Change #145: Your broker fee revenue it looks like that rose about 1% year over year, So probably in line with the market, but if you look at the U S and Canada total agent count declined 4% year over year, So youre playing from behind a little bit.

Speaker Change #146: That was a good result, I'm just curious about kind of what drove that.

Speaker Change #147: Outpacing of the market at least on a per agent basis.

Speaker Change #147: Yeah, It's a great question, John and you're right and I alluded to this a little bit earlier, so we did benefit a little bit from price depreciation.

Speaker Change #147: In both the U S and Canada from a productivity perspective.

Speaker Change #147: We benefited a little bit both in both.

Speaker Change #147: Geographies as well.

Speaker Change #147: And so that was probably two things were the biggest were the biggest drivers.

Speaker Change #147: From a from a broker fee perspective.

Speaker Change #147: Okay, and then last one for me.

Speaker Change #147: From a strategic standpoint, obviously again a lot changed in the industries.

Speaker Change #148: As far as the MLS ability to.

Speaker Change #148: To communicate.

Speaker Change #148: To put the broker fee into the MLS obviously, there's going.

Speaker Change #149: Going to be a little bit of avoid of information in the markets I'm curious, how you're viewing the importance of the Remax website do you feel like that's going to give you an advantage in any way.

Speaker Change #149: Just curious about your thoughts there.

Speaker Change #149: Yes.

Speaker Change #150: Testing me enough.

Speaker Change #151: Offers a compensation are still allowed to allow us to be displayed on the broker website that being said, we will not be deploying them on <unk> dot com given.

Speaker Change #152: Our data fees is largely derived from the MLS which that would be a violation of the settlement terms and so.

Speaker Change #152: We continue to monitor channels and we continue to hear about how our brokers are navigating this given their freedom to you.

Speaker Change #152: Display offers a compensation on their own website and found.

Speaker Change #153: A foundational.

Speaker Change #154: They are communicating with one another.

Speaker Change #154: In their markets and <unk>.

Speaker Change #154: Making sure that they understand if a seller is willing to offer compensation.

Speaker Change #154: Kind of a funny thing the telephone, it's working really well right now.

Speaker Change #154: But obviously that will evolve.

Eric: Okay. John This is Eric I mean, maybe I'll talk productivity.

John Campbell: Productivity here.

Speaker Change #155: Thing is is that I do think because of the experience of the tenure of the professionalism and the more of that.

Speaker Change #156: A large population of our agents are just they are better at negotiating and talking and so I.

Speaker Change #155: I do.

Speaker Change #155: We're really pushing for transparency.

Speaker Change #155: We're pushing that through education, and I think our local broker broker owners are going to be a.

Significant asset in this transition.

Speaker Change #157: And by the way just real estate the real estate industry in general because I do think theres going to be noise and those folks that just depended.

Speaker Change #157: <unk> items in the MLS or on our website in order to get through their day.

John Campbell: Changing a bit so I like our position from that perspective, and the only thing else I would add there John with respect to Remax Dot com and I think as we look across just the assets that we have in terms of that trusted professionals all the productivity of our agents the strength of our network from a footprint and a geography perspective.

Karri Callahan: Yeah, obviously we've seen some refinance activity increase across our franchisees. The nice thing is, most of them are connected, 75% are connected to real estate, so they see the trend long before, sometimes even a traditional mortgage broker would see it, because they're seeing that the homeowners come in, buy more homes, so we're continuing to try and stay ahead of that curve, whether it's we know trying to do the processing, whether it's our motto is trying to get the deal, but we firmly know that refinances are increasing as rates go down, and feel like the rest of the year we're going to have a good opportunity if the Fed cooperates.

John Campbell: Digital assets are assets that we think we can really leverage into the future and we'd be.

John Campbell: Under Eric leadership, and he brought them insights here from his prior experience some opportunities to really leverage that in the future.

Okay, that's great color thanks, guys.

Operator: Your next ques-

This concludes the questions.

Andy shelf: The question and answer session I'll turn the call to Andy shelf for closing remarks.

Andy shelf: Thanks, operator, and thank you to everyone for joining our call today and have a great weekend.

Operator: This concludes today's conference call. We thank you for joining us. You may now disconnect.

Speaker Change #159: This concludes today's conference call. We thank you for joining you may now disconnect.

Andy shelf: Okay.

Andy shelf:

Andy shelf:

Andy shelf: Yeah.

Operator: Your next question comes from the line of John Campbell with Stephens Inc. Your line is open.

John Campbell: Hey, great job in the quarter. I mean, it looks like you brought profits up year over year for the first time in, I think, seven quarters. That's on a continued revenue decline. So congrats on getting the cost order in place. I wanted to check on the franchise renewals. It sounds like sales. It sounds like you're seeing some success of late, but on the renewals, just curious if you can give an update on how that's held up so far. Obviously, a lot's changing in the market. I'm curious about cancellation rates and then on the successful renewals you've seen, if you're just kind of able to hold on to the past terms and such.

Amy Lessinger: Yeah, for sure. Actually, our renewals have been strong, and that reflects, I think, the confidence in the business model and the support that we provide. And obviously, we will continue to evaluate market conditions, but so far, we're seeing consistency on that front.

John Campbell: Okay. And then I think I'm going to cue you up to kind of tell you the productivity of your agents. But if you look at the U.S. housing market, at least, it looks like it was anywhere from down modestly to maybe up modestly. So your broker fee revenue, it looks like that rose about 1% year over year. So, probably in line-ish with the market. But if you look at the U.S. and Canada total agent count, that declined 4% year over year. So you're playing from behind a little bit, but that was a good result. I'm just curious about kind of what drove the outpacing of the market, at least on a per-agent basis.

Karri Callahan: Yeah, it's a great question, John, and you're right. And I alluded to this a little bit earlier. So we did benefit a little bit from price appreciation in both the US and Canada from a productivity perspective. We benefited a little bit in both geographies as well. And so that was probably two things. We're the biggest drivers from a broker fee perspective.

John Campbell: Okay, and then last one for me. From a strategic standpoint, obviously, again, a lot is changing in the industry as far as the MLS's ability to, you know, communicate and put the broker fee into the MLS. Obviously, there's going to be a little bit of a void of information in the market. So I'm curious how you view the importance of the Re-Max website. Do you feel like that's going to give you an advantage in any way? I was just curious about that.

Amy Lessinger: Yeah, you know, interestingly enough, offers of compensation are still allowed and allowed to be displayed on broker websites. That being said, we will not be displaying them on remax.com given that our data feed is largely derived from the MLS, which would be a violation of the settlement term.

Amy Lessinger: And so, you know, we continue to monitor channels, and we continue to hear about how our brokers, you know, are navigating this given their freedom to do so. You know, display offers of compensation on their own websites, and, foundationally, they're communicating with one another in their markets and, you know, making sure that they understand if the seller is willing to offer compensation. It's kind of a funny thing, the telephone. It's working really well right now, but obviously, that will evolve. Looking, John, this is Eric.

Eric Carlson: I mean, maybe I'll talk about, you know, productivity here. But the thing is, I do think because of the experience of tenure, the professionalism, the more advanced, a large population of our agents are just, you know, they're better at negotiating and talking, right? And so, you know, I do, we're really pushing for transparency. We've been pushing that through education. I think our local broker owners are going to be a, you know, significant asset in this transition for us.

Eric Carlson: And by the way, just real estate, the real estate industry in general. So I do think there's going to be noise. And those folks that just add, you know, items in the MLS or on a website in order to get through their day, you know, that's changing a bit. So, you know, I like our position from that perspective. And the only thing else that I would add there, too, John, with respect to ReMax.com, is that I think as we look across just the innate assets that we have in terms of the trusted professional, the productivity of our agents, the strength of our network from a footprint and a geography perspective, our digital assets are assets that we think we can really leverage into the future. And we see, you know, under Eric's leadership, and he brought some unique insights here from his prior experience, some opportunities to really leverage that in the future.

John Campbell: Okay, that's a great color. Thanks, guys.

Operator: This concludes the question and answer session. I'll turn the call over to Andy Sheldon for closing remarks.

Andy Schultz: Thanks, operator, and thank you to everyone for joining our call today. Have a great weekend.

Amy Lessinger: So, you know, we will continue to provide that extensive support, that education, and offer tools to help them win, no matter what the market conditions are. But obviously, you know, our deep focus is, you know, finding other opportunities to grow and drive that top line.

Eric Carlson: Part-time, not enough experience, don't understand the changes, and there will be friction with that customer experience, and hopefully, we can pick up those referrals after customers are, you know, dissatisfied. And then there will be some that will be, you know, trying to complete work around, etc. And so, you know, I think, from an overall industry perspective, there will be some noise in the system, and here at Re-Max, we're going to try and try to rise above and create a standard where we are the most trusted brand. Customers won't trust when they engage with a real estate agent, and we're really pushing that for our agents and brokers to continue to provide a transparent, trustworthy experience.

Soham Bhonsle: And then, you know, as I noted, despite the macro, our bad debt expense and collection have been very, very favorable. And so while we've taken down, you know, we've assumed in the third quarter some good progress there, not quite as strong as Q2. So there could be some upside, you know, to the back half of the year if collections really continue on a similar pace as Q2.

Karri Callahan: But importantly, outside of the US and Canada, we're seeing some good growth resume, and we had some large conversion activity actually in Central and South America. And I continue to see some pockets of Asian growth outside of the US and Canada.