RE/MAX Holdings, Inc. Class A

or 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. Our prepared remarks and answers to your questions on today's call may contain forward-looking statements. Forward-looking statements include those related to agent count, franchise sales and open offices, financial measures and outlook, brand expansion, competition, technology, housing and mortgage market conditions, capital allocation, credit facility, dividends, share repurchases, litigation settlement, strategic and operational plans, and business models. Forward-looking statements represent management's current estimates. RE-MAX Holdings assumes no obligation to update any forward-looking statements in the future. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those projected in forward-looking statements. These are discussed in our first quarter 2024 financial results press release and other SEC filings. Also, we will refer to certain non-GAAP measures on today's call. Please see the definitions and reconciliations of non-GAAP measures contained in our most recent quarterly financial results press release, which is available on our website. Joining me on our call today are Eric Carlson, our Chief Executive Officer, and Kerry 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.

Eric? Thank you, Andy, and thanks to everyone for joining us today. In the short time that's passed since our last call, several events of note have taken place. On the housing front, the industry appears to be in the early stages of recovery. Industry reports and feedback from our network tell us demand remains robust and the supply of for-sale homes continues to rise, providing some relief to frustrated buyers in this most unusual housing market. However, interest rates have moved up, muting the number of transactions and adding uncertainty to whether the Fed will cut interest rates later in the year as some had expected and hoped would be the case. While there are a lot of factors currently affecting the real estate market, one thing remains constant. REMAX agents leverage their skills, experience, and competitive advantages to serve as many customers as they can. Key difference between our business model and that of many of our peers, our model incentivizes agents to help buyers and sellers reach their housing goals, while some other models incent their agents to recruit other agents, many of whom aren't productive. In contrast, our agents' commitment and drive sustain the RE-MAX culture of productivity, and this was recently confirmed by a widely respected industry survey. The 2024 Real Trends Verified Best Brokerages rankings revealed that RE-MAX agents at large U.S. brokerages on average outfilled the competition two to one in residential transaction sides last year. In a survey of more than 1,300 participating large brokerages, REMAX agents average 11.8 transaction sides, more than double the average of other agents. Plus, when the brokerages are ranked by transaction sides per agent, 88 of the top 100 are REMAX firms. This marks the 16th straight year in which the RealTrends data confirms that REMAX leads in average per agent productivity. Known for being skilled, experienced, and very good at what they do, our agents have made REMAX the world's most productive real estate network, as measured by residential transaction size. In addition, REMAX agents in the U.S. and Canada have been voted as the most trusted for several years straight, and trust is a top consideration among consumers when they're selecting their real estate agents. Our industry-leading trust and productivity are key competitive advantages. Our iconic brand is the number one name in real estate. We have an unequaled global presence, a distinct value proposition of services, and most importantly, the best agents and brokers in the business. As I've said previously, RE-MAX agents are simply the gold standard. Our competitive advantages should serve us well, considering recent industry developments taking place amid a lot of noise and misinformation. To recap, on March 15th, the National Association of Realtors announced a proposed nationwide settlement agreement that would release NAR, association-owned MLSs, and most of its membership from liability in multiple seller-initiated commission lawsuits. The proposed settlement includes a payment by NAR, as well as several changes in business practices in our industry. Two proposed business changes that are most relevant to RE-MAX affiliates are expected to go into effect mid-July 2024. First, while offers of compensation to buyer's agents are still permitted by the agreement, they cannot take place in the MLS. And second, written agreements will be required for MLS participants. Notably, about 20 states already require written buyer agency agreements. Let me stress. that we continue to remain steadfast in our support of buyer agency and buyer broker compensation, emphasizing the significant advantages of having buyers and sellers represented by trustworthy, seasoned real estate professionals. These skilled agents ensure that consumers receive guidance and advocacy while navigating the complexities of the home buying and selling process. This representation generally drives better outcomes and experiences for the consumers involved. When the NAR news broke, we quickly moved to communicate with RE-MAX affiliates and help them understand the changes. Our RE-MAX brand president, Amy Lessinger, immediately held informational sessions for our brokers and our agents. With 51 years of history, we've had a front row seat to many sudden changes in our industry, and the wisdom that comes with experience continues to serve us well. Education and outreach, two other core strengths of RE-MAX, were our top priorities following the NAR announcement. Now, in preparation, we had developed and have now deployed materials and resources to help our affiliates navigate the post-settlement landscape. From education and consultation, to marketing and consumer messaging, RE-MAX will continue to support affiliates in every possible way. We advised our network that there were four primary things that they should be focused on. First, RE-MAX affiliates should continue to conduct their business with the security of being released and protected from liability related to these industry lawsuits, pending final court approval of the RE-MAX settlement slated for hearing next week on May 9th. Second, they should start preparing for the two proposed NAR rule changes expected to take effect in July. This includes updating their marketing materials, buyer presentation, and buyer representation agreements. Third, they should continue to speak to their clients in a clear, transparent way about the value they provide and how they are compensated. Fourth, they should stay updated on ongoing industry development. The terms in the proposed NAR settlement would change some aspects of the business, but REMAX agents are well positioned to navigate these changes, and we will help guide them as they evolve. Given the extensive experience within our network, our affiliates are able to lean on and learn from the RE-MAX community. That's the power of a network filled with full-time, productive professionals. Within our settlement announcement, many have asked us how the proposed NAR changes might impact the industry. Only time will really tell. All commissions are negotiable, as they always have been. Ultimately, the responsibility to set fees to clearly communicate value lies within the individual brokerages, teams, and agents. That has always been the case within our network. We're moving intentionally and methodically given these unusual times. We're in a period of transition and some uncertainty, and we'll have a better read on how these developments will impact the industry and RE-MAX as the year unfolds. In the meantime, we'll continue to operate our business as efficiently and effectively as possible, maintaining a growth mindset, and staying laser focused on delivering the absolute best customer experience. We're leaving no stone unturned. We're challenging each process and function to improve not only the velocity, but our outcomes. These efforts should yield measurable results in the aggregate, and we believe we have additional revenue opportunities and the potential for margin improvement driven by control over operating costs. Now, as we said last quarter, this will take time, but we are moving with the requisite sense of urgency. We've got a great foundation to build upon. Our team, our affiliates, they're passionate, passionate about our brands, about each other, and about innovating, growing, and simply getting better each and every day. We recently held our annual agent convention. called R4 in Las Vegas. With thousands of attendees from 60 countries, the event was both inspiring and reassuring. Personally, my first R4, I spent most of my time listening, trying to learn as much as possible from our network and other industry leaders. It was a fantastic experience. Our agents and brokers were not only confident and enthusiastic, but excited about the opportunities ahead and can't wait until next year's events. Regarding our growth initiatives, we continue to iterate, digging into details, gaining insight, and uncovering additional opportunities. To date, we've seen positive results, though not large enough yet to overcome the overall contraction currently being experienced throughout the real estate industry. We launched our expanded Teams initiative April 1st, and we're seeing the first brokerages unlock the benefits by adding the required six new team members. Notwithstanding the macro pressure, our conversions, mergers, and acquisitions, or CM&A program, continues to add brokerages and agents to the network. It also continues to evolve as we work through our pipeline of compelling prospects, identifying new targets, and developing new approaches. We are laying the groundwork, which should serve us well when the market resumes its growth cycle. Now, on the mortgage side, despite one of the most challenging and market conditions, the mortgage industry has faced in recent history, we continue to grow. Here, too, we're focused on what we can control. A recent franchise and loan origin era convention had good participation, despite the market conditions. Attendees were excited, excited about the future prospects of the mortgage industry. Motto is going through its first renewal process as the original cohort of franchises are completing their seven-year franchise terms, and we're off to an encouraging start. With that, thank you, and I'll turn it over to Carrie.

Thank you, Eric. Good morning, everyone. Effective cost management amidst a challenging housing market summed up our financial performance for the first quarter. Some of the notable quarterly financial highlights included total revenue of $78.3 million, adjusted EBITDA of $19 million with an adjusted EBITDA margin of 24.3%, and adjusted diluted EPS of 20 cents. Looking closer at revenue, excluding the marketing funds, revenue was 58.1 million, a decrease of 9.3% compared to the same period last year, driven by negative organic growth. Organic growth decreased principally due to a reduction in events-related revenue and lower U.S. agent count, partially offset by higher mortgage segment revenue. With respect to events, Recall that last year we celebrated our 50th anniversary at our annual agent convention, which led to exceptional attendance and revenue. This year's conference was smaller in comparison. Q4 selling, operating, and administrative expenses decreased 6.9% to $45.7 million, primarily due to lower expenses from our annual convention and reduced legal expenses, partially offset by higher equity-based compensation expenses. From a capital allocation perspective, we continue to be disciplined and patient, particularly in light of the fact that rate cuts appear less likely to occur in the second half of this year and are pending settlements that have not yet finalized. Though housing appears to be rebounding, it is a slow process. For all these reasons, we continue to be responsible stewards of capital and think it's best to focus on replenishing our cash in the near term. Simultaneously, we believe we still have the financial flexibility to pursue those growth opportunities where we see the greatest potential. Our second quarter and full year 2024 outlook assumes no further currency movements, acquisitions, or divestitures. For the second quarter of 2024, we expect agent count to change negative 1.5% to 0% over second quarter 2023, revenue in a range of $75 million to $80 million, including revenue from the marketing funds in a range of $19 million to $21 million, and adjusted EBITDA in a range of $24 million to $27 million. And for the full year 2024, we continue to expect age and count to change negative half a percent to positive one and a half percent over full year 2023, revenue in a range of $300 million to $320 million, including revenue from the marketing fund in a range of $78 million to $82 million, and adjusted EBITDA in a range of $90 million to $100 million. With that, operator, let's open it up for questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Our first question today comes from Soem Bonzel with BTIG. Please go ahead.

Hey, guys. Good morning. Hope you're all doing well. Maybe first one for Amy or Eric, it doesn't matter. Do you feel like the NAR settlements are enough to sort of satisfy the DOJ's concerns as you speak to folks around the industry? Or do you think they may look to include some other additional stipulations before we get final approval?

Yes, this is Eric, and then I'll pass it over to Amy for some additional color. You know, I think it's, you know, we don't know necessarily what the DOJ is thinking, and so it would be tough for us to speculate. I think that, you know, the settlement, although there's changes, it supports what we've been, you know, promoters of, which is transparency around the transaction and representation on both the buy and the sell side. And, you know, coming back from R4 recently and over the past month, and Amy might have some more color here, You know, definitely, you know, agents and brokers are, you know, they're chatting about obviously the changes, the potential impact, what Remax in the industry is doing to help support them. And they're hearing from customers. There are more questions about, you know, what does this mean from a compensation perspective? What does this mean from the values you offer? And, you know, from the Remax perspective, you know, we're comfortable with that because obviously we've got full-time agents and, you know, they're highly productive. They're in the business. They're good at negotiating. They provide great value. And so although we have to make changes to some business practices, the good thing is it's already happening in about 20 states. So we'll learn from that. Not to say that those are perfect representations, but they're helpful to guide kind of what the future path looks like. So as it relates to the DOJ, hard to tell. We'll leave that to them. I'm sure they'll make great decisions. But for us, we're trying to right now control what we can control. So Amy, maybe you have a bit more color. Obviously, you've been in the field a bit.

Sure. In talking to our brokers out there, they are highly focused on ensuring they're educating their agents, and we've provided a lot of support there. And I'll echo Eric's sentiments in the fact that our agents are already experienced, but they're probably getting a few more questions from buyers and sellers than they have in the past. And I think that we welcome the conversation and our agents welcome the conversation. We've always believed in transparency in the transaction. And I think that it's absolutely right and perfect that we're already prepared. We had already prepared education leading up to this. And so our brokers in the field, I think that's a point of differentiation as well. They are at the local level supporting their agents on a day-to-day basis, and we have provided them with education through our RE-MAX University platform, where they can hold classes and bring everyone up to speed on what they need to do to facilitate a conversation about what it means to be represented in a transaction and how compensation works.

And then, Amy, I guess, just curious, are you seeing any pushback from buyers on the commission rate early on, or are we still sort of status quo?

You know, it's interesting. So far, we are not widely hearing that be reported. 90% of buyers last year engaged in being represented. And so, you know, in the U.S. in particular, buyers are used to being represented and they understand the value of being represented. Their interests are protected. They value local market expertise, the ability for an agent to negotiate on their behalf. you know, really streamlines the process. And so, you know, really the questions that we're getting is what does it mean to be represented? And so, you know, we've always been able to negotiate on their behalf and commissions have always been negotiable, but I think it's really diving a little deeper into what does true buyer representation mean.

Okay. And then maybe one long-term one, you know, as we sort of think about the next three to five years, I think The consensus seems to be that there's going to be fewer agents in the industry, but those that maybe remain are going to be more professional in nature, which is, I guess, positive for the RE-MAX model. But it also means that competition for some of those best agents is going to probably intensify as well. So can you maybe just talk about what changes or potential refreshes you may have to do for the RE-MAX model as you try to adapt to just enhanced competition for the best agents in the industry?

Look, I appreciate the question. I think that we compete for the best agents in the industry today. So I think it's something that has been in our 51-year history and we're good at it. Not to say that we're not going to have to evolve, which is what I talked about in my opening comments. I do think it's a little bit early to understand some of the changes that will occur over the summer and the impact. However, Obviously, we focus on what we think we can control, and that is look at the power of our network with 140,000 agents worldwide means something. The number of brokers that we have in local communities means something. They have their finger on the pulse. They're able to serve the needs, the wants, help with questions, communication, education, not only the materials that we provide in RU, Remax University but at that local level and that's you know the importance of the broker in the relationship living and working in the in the community with agents and helping them understand the value that not only that brokerage provides but obviously the Remax brand tools and community provide and so I think we're well positioned to compete but I do agree that we will have to continue to compete in competition and we'll get more fierce. You know, will part-time agents leave? I think that is, I think I agree. I totally agree with that consensus. To what level? I don't know. But I do think that we're well positioned because we are full-time and productive and we've got the support of a great community. You know, we're in a better position than not. Not to say that we don't have work to do and that we're going to have to, you know, keep our eye on the competition and work hard every day. to help brokers and agents be successful in their market.

Well, I think I add to that too, Sohan, that everything we do here for decades has truly been designed to help an agent be more professional, more productive, and ultimately lead them to a path and an opportunity to sell more houses. And so we're not playing catch up there, but I also echo Eric's sentiments about the fact that you know, we can continue to evolve and make sure that we stay in the most competitive position possible.

Yeah. All right. Thanks for the thoughts.

Your next question comes from Ryan McKeveney with Zellman and Associates. Please go ahead. Ryan McKeveney, your line is now open.

Oh, I'm sorry. Hopefully you can hear me now. I was on mute. Sorry about that. Thank you guys for taking the question. On the capital allocation side of things, longer term, obviously near term, it's kind of a rebuild of cash mentality. Maybe for Carrie, is there a level at which you want to see the cash balance get to before rethinking about things like share repurchases or dividends? Just any framework on if there's any certain level you're targeting getting back to before reintroducing that or just general thoughts on that. Thank you.

Sure. Good morning, Ryan. Great question. As you said, right now there is just a fair amount of uncertainty from a macro perspective and we're obviously laser focused on getting the settlement behind us. In terms of the things that we're focused on, we're really focused on leveraging over the long term the strong economic and cash flow characteristics of the business. And we've got our eyes focused on a couple of different leverage levels that are stipulated in our credit agreement. The good news is the franchise model, the strong economics, the earnings to free cash flow characteristics, X the settlement, we're still looking at 45 to 50% conversion of our earnings to free cash flow for 2024. And so really focused on that, getting the leverage levels lower and back in accordance with the levels that are stipulated in our credit facility. And then we'll be definitely focused on those initiatives to help drive the company's growth in the future, because we do continue to believe that there are a lot of opportunities for us. across the network.

Thanks, Carrie. And one more for you, just kind of a modeling one. On the broker fee revenue, I think year-over-year down just slightly and kind of the best year-over-year performance in quite a bit. It was ahead of our estimate. I guess I'm just curious, is that just macro kind of EHS-related trends during the quarter, especially in February with the pickup we all saw? Or have there been any kind of structural adjustments at all within the way broker fee revenues are being structured? Thank you.

Yeah, I think it's a great question, Ryan. I think it really is macro related. But I do think, you know, some of that comes back to just the overall strength of the network, right, with the most productive agents. even in a challenging macro environment, we stand to perform there well. And I think from both a top line perspective as well as from a margin perspective this quarter, we're just really happy with the results. And I think it really highlights some of the differentiation in the financial model.

That's great. Thank you very much.

Your next question comes from Ronald Camden with Morgan Stanley. Please go ahead.

Great. Hey, just a couple quick ones for me. So on the U.S. agent count, you know, it's continuing to decline. I was just curious if you guys, when you guys sort of slice and dice the data, if there is any sort of, you know, high-level thematics of the agents that are leaving. So is it all part-time? Is it just the most unprofitable? And, you know, the reason I ask is because is there a sense of how much more of that is there to go before you can start seeing a bottom line?

Hi, Ronald. You know, foundationally, the industry has contracted, which, you know, we've seen this historically in the past. And, you know, so we are not immune to that. But I think that, you know, what we expect moving forward is that professionalism and the ability to navigate, given the industry changes, is going to become even more important. And so we feel like we're sitting in a great position to capture agents who truly need support during this time and who truly need to elevate their skill set because we're ready with everything that they need to succeed. So we would expect things, our ability to compete to be very, very high here.

Go ahead, Carrie.

Yeah, the only thing I was going to add just a little bit from a numbers perspective, especially as we look at kind of experience and tenure, From a tenure perspective, you know, the cohort of agents that we're seeing across our network continues to be pretty consistent with what we've seen historically. And from an experience perspective, I think the latest statistics I saw from a NARA perspective, you know, close to 20% of agents across the industry have zero to two years of experience, whereas on the REMAX side, you know, it's closer to, you know, 10%. And so I think we continue to differentiate ourselves there, both from an experience perspective and then our agents being more tenured than the industry. And that trend has continued and at least even strengthened a little bit over recent quarters.

And Ron, this is Eric. I mean, you know, your question is a good one. And obviously, you know, there is insight and there's actions that we can take. So, I mean, we're not necessarily satisfied with agent decline, either from a net or disconnect perspective. And so, you know, I think that it would be obvious if you think about it kind of what some of the reasons are. Employees leave managers versus companies usually, and agents do leave brokerages versus kind of the brand. And so that's one of the items there. And I do think that the industry, based on the volume last year on home sales and the volume this year, it's harder to be an agent. And so, you know, we are probably a little bit better protected and we feel mitigated because of the full-time nature of our agents. But that's not to say that we don't have work to increase agent satisfaction, broker satisfaction, and provide additional tools, support, and resources to help agents be more successful in a market, whether it's a tough market or an easy market. So, you know, I think Kerry's perspective is a good one. But just know that we continue to try to turn over every rock here to understand what we can do to better support agents and brokers. And I certainly hope and think that we'll be able to bend the trend.

Great. And then just my second one is just on the sort of the implication of the NAR ruling. It sounds like you guys have been sort of front footed on education. you know, staying in front of sort of agents and brokers and so forth. I guess my question is, when you think about sort of the 20 states that have already sort of, you know, had those policies in place versus the ones that haven't, is there anything sort of structurally, processes-wise, that needs to change on the broker and agent level as you sort of move forward?

So real quick, Ron, I mean, I'll pass it over to Amy for some commentary because she's obviously, she's closer to being an agent, a team leader, and running a brokerage than I am. And she's probably forgotten more than I'll ever know. But, you know, I think that obviously, you know, we need to still see some of the rules, right? So some of the specifics aren't necessarily outlined to the extent where you can make some changes. And you're starting to see some folks come out with, whether it's different, you know, buyer agreements, et cetera. And so, you know, first and foremost, what we wanted to do is obviously let our community know that we're there to support them, like we always have been throughout our history to help them through, you know, tough times or with updates that happen quickly. And so education is kind of first and foremost and kind of getting back to the basics of the value you provide, your negotiation skills, how you talk about compensation for that value. And then, you know, we'll be in a good situation in order to make changes to agreements, processes, things of that type of nature. And I'll turn it over to Amy because she's obviously had her feet on the street here more recently and is hearing kind of what's happening at the brokerage level.

Sure. Well, in just a little bit of history, you know, fire agency came into play in the mid-1990s. There was a big shift because fires, historically, they were not represented And, you know, they did a big study leading up to it where, you know, over almost two, three quarters of buyers out there thought that when an agent showed them a home, they were being represented. So and so they made a big shift and a big change. So even though these other states have not had mandatory buyer agency agreements, those agreements exist and have existed for a very long time and have been you know, definitely widely used. It's just that they weren't mandatory. So this change is not, you know, so colossal among agents out there. They are familiar with what it means to be represented or to be a buyer's agent. And so now, though, it becomes mandatory. And some of the fields, of course, are going to change that, you know, elaborate regarding compensation and specifying an amount, et cetera. So we will anticipate that those changes in the forms will come at the local level, and they will be disseminated. And that's one of our strengths, again, is that our brokers, boots on the ground, they will be able to navigate that with speed and efficiency.

Thanks so much.

Your next question comes from Tommy McJoynt with KBW. Please go ahead.

Hey, guys. Good morning. Thanks for taking our questions. Along, I guess, a similar line of questioning, with all the data that you see on your agents and perhaps even anecdotally based on your FaceTime with your agents at the annual convention, is there any evidence of REMAX agents or, frankly, their local competitors experimenting with compensation arrangements that are different than the typical call it, you know, 2.5% rate? I understand it depends on the local market.

um perhaps something like six dollar compensation amounts or slim down offerings anything of that sort that you're hearing or seeing in the data well first of all um hi tommy uh first of all i think you know it's important to say that you know rates have never been set they've always been uh negotiable and varying models have existed for a very long time whether it be flat fee-based, percentage-based, et cetera. So, no, at this moment, we're not seeing a large, you know, uptick and insurgence of variation there. I just haven't really heard the network talking too much about that.

Yeah, Tommy, I guess what I'd say is, like, from R4, there isn't, like, an old model that's now a new model. That is all of a sudden kind of a quick fix. I think from our perspective, brokers and agents, especially at R4, we're just talking about the idea that they've always spoken about the value that they provide either on the sell or the buy side. And this is going to be different, obviously, with maybe an agreement before they go to a showing, et cetera, et cetera. However, the idea that they're full-time professionals helps them because they've got tenure and they've got productivity. So like they have more swings of the bat. So they're actually probably a little bit more prepared than others from that perspective. And that's not, I mean, you know, we're obviously proud of the community at RE-MAX, but I do think full-time professionals and folks that are more productive, you know, in turbulent times, it helps them to get through the peaks and the valleys.

Thanks, that makes sense. And switching gears over to the international agent side, this may get asked every couple quarters, but I just want to hear the latest update. If I look at the sort of just take kind of the global fee revenues and kind of divide it by the number of non-U.S. and Canada agents, it looks like that number has been running around kind of $200. And logically, I think sort of I think of as a monetization opportunity. Would you see kind of a prospect for that to be increasing, decreasing? Kind of what initiatives do you have to potentially move that number?

Tommy, I'll start there. It's definitely something that's on the roadmap. I mean, you're right. The fees have been running around $200. You know, we have a great network in, you know, just about I think 110 countries. A lot of agents out there. There are definitely monetization opportunities. We're not going to talk about that strategy here on the call. I know you'd like to. However, you know, I don't see downside there. I only see nothing but upside.

Got it. Thank you.

Your next question comes from John Campbell with Stevens. Please go ahead.

Hey, guys. Good morning. Hey, on the exiting April agent count you guys provided in the press release, if you were to just keep that static or just kind of hold the line for the rest of the year, it looks like I'm just getting down, I think total agents down maybe 120 BIPs year over year exiting this year. The low end of the total agent guidance you guys provided was down 50 BIPs. Obviously, you're going to need some sequential growth from here. I want to check on your level of confidence with the guidance and then, you know, maybe secondly, just how impactful seasonality typically is. Do you feel like the past cadence of kind of seasonal growth that will hold this year?

Yeah, good morning, John. I think it's a great question. I think a couple things to note with respect to kind of the first quarter and then even through April from that guide perspective is, International agent count has been a little lumpy. We've had some puts and takes. Obviously, Eric just mentioned the 110 countries and territories. But we still, on a year-over-year basis, grown international agent count by 3,500 agents and have had some pockets of strength, especially in Central and South America. And so, you know, some of the reductions that we've seen there we expect to more than kind rebuild ourselves and get back to kind of that, you know, close to mid-single-digit organic year-over-year growth on the international basis. And that's the biggest kind of deviation. As we look at the U.S. and Canada, you know, hoping to get some trends, but obviously the macro conditions are a little bit tougher.

Okay, so it sounds like you're expecting continuation of U.S.-Canadian headcount reduction and then a little bit better international, that's fair.

No, so I just want to clarify there, from an international perspective, kind of getting back on a year-over-year basis to that kind of mid-single-digit level of growth. And then when we look at the U.S. and Canada, obviously what we've seen right now in terms of kind of the year-over-year performance, kind of more flat in Canada, kind of on a sequential basis. Obviously we've got tremendous market share in Canada, and so kind of looking at that from a Canadian perspective. And then in terms of the year-over-year perspective in the U.S., obviously the macro conditions are a little bit tighter, but expecting a little bit of sequential improvement in terms of what we've seen in the first quarter.

Okay, that's a good color. Appreciate that. And then on Motto, if I go back and just kind of tally the franchise signings over the last couple of years, I'm showing you guys maybe have, I don't know, two-thirds or so that are live now. I know there's probably an element of attrition in play there, so maybe if you could talk to how many franchises you have going through implementation or getting set up now, and then relative to that pipeline, once you get them live and paying full fees, what that level of revenue might represent.

Yeah, and then the to be open status right now, we have close to 20 that are to be open right now. We've already opened up eight this year, so we're on a great roll when it comes to opening offices. We obviously need to sell a few more, so that continues to be a spot that we are working on. There are definitely some green shoots when it comes to sales. It's been a tough market to sell into, but we were still growing last year. We sold close to 30 last year. We believe we can go higher than that this year. That's still the plan. So we still think there's opportunity. Obviously, it does take anywhere from 60 to 180 days to get somebody open. And then after open, they start paying us at the month seven. So it does take a little bit of time. But after that, it equates to approximately $5,000 a month between the ad fund and the royalty fee. So the opportunity for Motto to still be an organic growth engine is there. And we continue to sell really high-quality sales. There are fewer, but like yesterday, I just talked to an independent that has 80 agents, and they're ready and willing and excited to get into mortgage. And they actually were already sort of working with the company, but they wanted to own their own. So we're still seeing people in the real estate sector who are looking for opportunities to get into ancillary, and mortgage continues to be the best one for them.

Okay, that makes a lot of sense. And maybe a quick follow-up there. So about $60,000 a year per franchise when they're live and paying full fees, that's the right number to go with? Correct. Okay. Thank you.

Seeing no further questions at this time, this will conclude our question and answer session. I will now turn the call back to Andy Schultz for any closing remarks.

Thank you, Operator, and thanks to everyone for joining our call today. Have a great weekend.

This concludes today's conference. You may now disconnect.