RE/MAX releases strong results


  • RE/MAX releases 3rd Q earnings.
  • First earnings report since IPO.
  • Net income down, but most results were positive.


Dave and Gail Liniger take center stage a they ring the opening bell at the New York Stock Exchange.

Dave and Gail Liniger take center stage a they ring the opening bell at the New York Stock Exchange on Tuesday.


Denver-based RE/MAX Holdings Inc., today announced what is described as “strong” operating results for the third quarter.

It was the first earning report since RE/MAX, founded in Denver 40 years ago by Dave and Gail Liniger, went public on Oct. 7.

Its stock closed at $28.26 at the end of the day, up 1.18 percent. The stock went public at $22 a share and has been as high as $33.54. It raised $224.9 million in the initial public offering and has a market cap of about $830 million, as the IPO represents the “float” available to investors, not the total value of the company, which is 61 percent owned by Dave and Gail Liniger. The company trades under the symbol RMAX on the New York Stock Exchange.

Net income, however, fell by $4.7 million in the third quarter from the third quarter of 2012, primarily because of the cost of the IPO and refinancing debt, as well as the purchase of a RE/MAX franchise in Texas.

Most of the news, however, was positive.

“We are extremely pleased with the continued positive momentum in our business during the third quarter,” according to Margaret Kelly, CEO of RE/MAX.

“We grew agent count, revenue and our adjusted EBITDA (earnings before the deduction of interest, tax and amortization expenses) margin from the prior year quarter. These results highlight our ability to attract and retain talented agents and generate revenue growth with consistently high margins through our franchise model.”

She said with the completion of the IPO and the acquisition of two regional franchises in October, “we remain well-positioned to capitalize on current real estate market conditions by leveraging our deep industry knowledge and our premier market presence to grow our agent count and franchise network in the coming years.”

Third Quarter 2013 Highlights include:

  • Increased total agent count to 92,731, up 4 percent compared to the prior year quarter;
  • Grew revenue to $40.3 million up $5 million compared to the prior year quarter;
  • Adjusted EBITDA1increased to $22.1 million, up 13 percent compared to the prior year quarter;
  • And adjusted EBITDA margin was 50 percent for the nine months ended September 30, 2013, compared to 45 percent in the prior year period;

Increased revenue was primarily attributable to growth in agent count, additional fee based revenue as a result of the acquisition of the RE/MAX of Texas region in December 2012 and higher broker fee revenue due to a rise in commissions resulting from increased home sale transactions.

Revenue was $118.6 million for the nine months ended September 30, 2013, up 9 percent from the same period in 2012.

Net income was $7.7 million in the third quarter, $4.7 million less than the third quarter of 2012 due primarily to increased interest expense and losses associated with the extinguishment and refinancing of debt, expenses related to the IPO and increased amortization associated with the acquisition of RE/MAX of Texas.

RE/MAX’s total agent count grew by 3,828 agents from the third quarter of 2012.

Agent count in the United States and Canada increased by 2,454 agents or 3 percent to 73,245 compared to the prior year quarter. Agent count outside the U.S. and Canada saw an increase of 1,374 agents or 8 percent, to 19,486 agents compared to the prior year quarter.

The company’s fixed recurring revenue streams, annual dues and continuing franchise fees, accounted for 58 percent of its quarterly revenues.

Annual dues, fixed fees paid by agents directly to RE/MAX, rose 3 percent to $7.5 million compared to the prior year quarter due to growth in agent count.

Continuing franchise fees, a fixed fee per agent paid by each regional franchise owner in independent regions or each franchisee in Company-owned regions, were $16.1 million, up 12 percent over the prior year quarter.

The increase was primarily driven by the acquisition and subsequent growth of RE/MAX of Texas, which allowed RE/MAX to earn additional fixed continuing franchise fees.

RE/MAX also realized incremental growth through additional broker fee revenue as the housing market continued to recover and home sale transactions increased.

Broker fees, the percentage fee paid on agent-generated transactions, grew 27 percent to $7.2 million compared to the prior year quarter reflecting incremental revenue that RE/MAX realizes as home sale transactions increase. Franchise sales and other franchise revenue decreased $1.7 million or 25 percent from the prior year quarter primarily due to the sale of master franchise rights in China for $2.1 million in the third quarter of 2012.

Brokerage revenue, which principally represents fees assessed by the Company’s owned brokerages for services provided to their affiliated real estate agents, was $4.5 million, an increase of $200,000 rom the prior year quarter.

Total operating expenses were $25.8 million for the third quarter, $2.4 million higher than the same period in 2012 mainly due to expenses incurred in association with the IPO and amortization related to the acquisition of RE/MAX of Texas.

Adjusted EBITDA was $22.1 million in the third quarter, up 13 percent from the prior year quarter.

The increase was driven by growth in total revenue of $1.9 million arising from agent growth, higher broker fee revenue and additional continuing franchise fees from the acquisition of RE/MAX of Texas, offset by a decrease in franchise sales and other franchise revenue.

The net proceeds of the IPO were used to acquire regional franchise rights in the Southwest and Central Atlantic regions of the U.S., redeem all the outstanding preferred equity interests in RMCO held by the private equity firm Weston Presidio and purchase common interests from Weston Presidio and RE/MAX’s founding shareholders. RMCO was the holding company that was the technical owner of the RE/MAX franchise operation before the company went public.

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for, covering commercial real estate for the Internet publication.

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