RE/MAX Holdings, Inc. Class A

Good morning, and welcome to the RE-MAX Holdings Fourth Quarter 2025 Earnings Conference Call and Webcast. My name is Tracy, and I will be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Joe Schwartz, Senior Vice President of Finance and Investor Relations. Mr. Schwartz, please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to RE-MAX Holdings Fourth Quarter 2025 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 replay of the call today. Our prepared remarks and answers to your questions in 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 settlements, strategic and operational plans, and business models. Forward-looking statements represent management's current estimates. REMEC 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 forward-looking statements. These are discussed in our fourth quarter 2025 financial results press release and other SEC filings. Also, we will refer to certain non-GAAP measures in 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. With that, I'd like to turn the call over to them. Eric?

Thank you, Joe, and thanks to all of you who have joined us today. In 2025, we built a strong strategic foundation, and we're beginning to see the payoff. We've made great progress in enhancing our brand and our overall value proposition, and we view 2026 as a year of tremendous opportunity for our company, our franchisees, our agents, and our loan originators. We accomplished all of this despite 2025 being the third consecutive year of a historically slow housing market. We entered the new year with strong momentum across both of our networks, driven by growing the RE-MAX network to an all-time high, our best fourth quarter of U.S. agent count performance since 2021, and a renewed excitement for the RE-MAX brand. What's more, 2026 began with a major win, As in January, we had the largest brokerage conversion in RE-MAX history. An Ontario family of visionary entrepreneurs and their nearly 1,200 agents joined RE-MAX Canada, adding to the market-leading presence we enjoy from coast to coast. Engagement throughout the RE-MAX network reflects growing enthusiasm for our strategic investments in the brand, reaffirming the strength of our overall direction. At the same time, we continue to operate the business with discipline, as evidenced by our fourth quarter profit and margin performance, which came in at the high end of our expectations. Given the productivity and professionalism of our network and the resilience of our model, we believe we're well positioned to capitalize on a recovering market. We're continuing to support our affiliates in growing their business and increasing their profitability. In terms of housing data and consumer insights, despite a typically slow start of the year in January, we continue to see the housing market normalizing in various ways, and that is a healthy development. According to our latest RE-MAX National Housing Report, inventory and new listings remain higher than a year ago, and the overall fundamentals suggest we'll have a more balanced market this year. Across many markets, we're seeing early signs of a more even playing field. Seller concessions are becoming more common. Negotiations are more thoughtful. and interest rates are trending downward, which helps support buyer activity. We also believe some recent policy proposals could prove to be constructive to housing if effectively implemented, including those aimed at increasing the inventory of single-family homes available to individual homebuyers, as well as those that aim to lower the 30-year mortgage rate. Over time, we should also see the lock-in effect of low mortgage rates continue to ease, And the results of a recently published consumer survey show that despite delays caused by affordability and broader economic uncertainty, 88% of prospective buyers still say they're likely to purchase a home in 2026. Market conditions have slowed timelines, but not the underlying demand. Also, buyers said they're looking for more than a house. They want a sense of community too. That plays directly to our strengths. as the most trusted real estate brand in the United States and Canada. RE-MAX agents are local experts who skillfully help consumers navigate complexity, evaluate trade-offs, and make confident long-term decisions. Turning to our operational performance, as of December 31st, our overall worldwide agent count hit another all-time high at over 148,500 agents. The growth of RE-MAX agent base outside the U.S. and Canada continues to fuel new records, and it now tops 75,000 agents, a major milestone of its own. That growth says a lot about the appeal of our modernized value proposition that we're expanding around the globe. Now, in the U.S., we continue to make progress in stabilizing agent count, as evidenced by our best fourth quarter performance since 2021. In a difficult market, Canadian agent counts finished the year relatively flat to 2024, but we started the year with tremendous momentum. It's also worth noting that the reach of our global network enables us to serve an unparalleled number of consumers. In this decade alone, since January 1, 2020, REMAX agents have closed over 10 million transaction sides worldwide. It's an incredible achievement, and as we continue to evolve our strategies, We're exploring new ways to lean into the tremendous opportunity this global sales power presents. As I mentioned earlier, in mid-January, we announced the largest conversion in history of our company. A family of visionary entrepreneurial real estate leaders, Vivian Risi and her children, Michelle and Justin, chose RE-MAX for their 17-office Toronto-based operation, largely to deliver a wider range of tools and opportunities to their nearly 1,200 agents, both for now and and into the future. We're thrilled to welcome the Reese's and their talented agents to our network. The Reese's also chose RE-MAX for our global footprint, robust referral network, and powerful marketing and technology platforms. These advantages should reinforce their agents' productivity and growth potential in a dynamic real estate landscape. This conversion demonstrates that the enhancements to our overall value proposition are working. as brokers both in and beyond our network recognize the power of our current competitive advantages and the momentum that we're building. This landmark conversion is just the beginning. We're increasingly encouraged by our pipeline of conversion, merger, and acquisition candidates across the U.S. and Canada. We have a strong slate of sizable opportunities we plan to close and announce in the month ahead. We believe much of the excitement surrounding the RE-MAX brand is driven by the tremendous team effort that has reinvigorated our value proposition. Our innovations are centered on enhancing our competitive advantages and helping agents win more business, save time, and make more money, which in turn helps increase broker profitability. The new economic models we launched last year, Aspire, Ascend, and Appreciate, continue to provide brokers with greater flexibility and a wider framework for recruiting and retention. While Q4 is always seasonally challenging, our Q4 recruitment rate outpaced last year's, building on a positive trend from late Q2 and Q3. The benefits of developing and launching these new options last year should continue to emerge over time. Notably, adoption of Aspire is already over 2,000 agents, and the program's educational and technology elements position these newly recruited agents for sustained careers with the network. Announced several months later, Ascend and Appreciate continue to see increasing adoption as word grows about the value they offer. Less than a year after launch, both are still trending upward. We also continue to invest in our digital marketing assets. Our six-month-old marketing as a service platform continues to gain traction, and the results are very encouraging. For example, listings that are promoted through our platform are delivering three times more views, six times more active users, and five times more actions compared to similar listings that have not been promoted on Rematch.com. These are just some of the initial findings, but they underscore the product's ROI and value to Rematch agents. Overall, the platform is scaling in line with expectations, showing resilient demand, rising paid adoption, and strong effectiveness, all of which positions us for continued growth throughout the year ahead. And we've launched a newly designed Remax.com and are launching a redesigned Remax.ca in Canada. They both incorporate personalized content, AI capabilities that deliver better consumer engagement, making stronger connections to agents while also furthering our monetization strategies. For example, agents can now turn listings into AI-generated videos with the click of a button. Additionally, consumers can leverage AI to redesign home exteriors and interiors of property photos on our websites, improving engagement and extending the amount of time they spend on site. Our Remax Media Network continues to build meaningful momentum with a healthy mix of programmatic and direct sourcing. Revenue this year is pacing ahead of forecast, which is an encouraging sign. Brands are clearly interested in taking part, so there's an ample reason to expect advertising revenue from the RE-MAX media network to increase significantly this year. Additionally, our lead concierge curation program continues to deliver a better agent and consumer experience, as conversion rates and corresponding revenue contributions are exceeding our initial expectations. Also, from a lead source perspective, we're introducing a golf lifestyle designation. This program will enable RE-MAX agents to be certified as golf real estate professionals who understand club, course, and real estate dynamics unique to golf properties. Our new program will include training, certification, and real estate leads that position participating RE-MAX agents as trusted advisors for golfers looking to find new homes and new communities. Let me now spend a moment on important developments within our mortgage business. As we look across the broader housing and mortgage landscape, one of the consistent themes we see is the need for flexibility, particularly in how independent operators structure their business in these changing market conditions. With that in mind, we rolled out a new franchise realty fee model earlier this year across the model network. The goal here is simple, to better align our economic structure with the realities of today's market while supporting long-term growth with our franchisees and the model brand. This new model reduces fixed costs through a lower flat fee and introduces a transaction-based component that scales with performance. It's designed to provide more flexibility, encourage operational excellence, and support sustainable growth over time. This is not a forced transition. Existing offices can opt into the new model if they believe it benefits their business, while new franchisees will follow the updated structure moving forward. That optionality is intentional. Different operators are at different stages, and we want to meet them where they are. From a strategic standpoint, this approach mirrors the thinking behind our REMAX fee model options, Aspire, Ascend, and Appreciate, which were designed to give REMAX affiliates more choice, more control, and better alignment with how they choose to grow their business. As part of our continued focus on strengthening the long-term health and competitiveness of the Motto brand, we deliberately chose to terminate a number of franchisees during the fourth quarter. These decisions were rooted in our responsibility to maintain a high-quality system that reflects the standards and expectations required to deliver a consistent borrower experience. We continue to see significant opportunities within our mortgage business. These include leveraging the new fee model to grow the model base, drive greater adoption of WeMo processing, both from inside and beyond our model network, as well as exploring additional ways to capitalize on the hundreds of thousands of transactions Remax agents close annually in the United States and Canada. We're also exploring possibilities around the thousands of leads that flow through our digital platforms. Applying both to real estate and mortgage, our fourth quarter achievements and enhancements reflect a concerted focus on strategic growth, network strength, and a differentiated value for franchisees, agents, and loan originators alike. As we look across both industries, the pace of change requires brands to offer scale without sacrificing local expertise. All are providing that constant support and value to our customers. and we continue to lean into our RE-MAX and Mono networks, and the enthusiasm we see is very real. That enthusiasm has been fueled by the energy of new leaders who have recently joined the team. One of those inspirational leaders is Chris Lim, who we just promoted to President and Chief Growth Officer of RE-MAX. Over the past 13 months, Chris has helped to modernize operations, increase support services, expand our value proposition, and elevate the way consumers perceive this global brand, especially on our digital platforms. He brings a creative, upscale mindset to every project and played a direct role in several major brokerage conversions, most notably in Hawaii and Ontario. Chris, congratulations. As we look toward the rest of 2026, we remain focused on executing our comprehensive growth and revenue strategy. Last year, we brought in new leadership, launched new products and services, developed new economic models, and strengthened the foundation for our future. This year, we're focused on driving adoption, managing outcomes, and ensuring that our company and networks continue to win. With that, I'll hand it over to Carrie.