noodls browser compatibility check

The security settings of your browser are blocking the execution of scripts.

To use noodls, javascript support must be enabled. Please change your browser's security settings to enable javascript.

If you have changed your browser's security settings, you can click here.

related announcements

Finance

Company News

RE/MAX Holdings Inc.

07/29/2025 | Press release | Distributed by Public on 07/29/2025 14:25

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements ("financial statements") and accompanying notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and accompanying notes included in our most recent Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Annual Report on Form 10-K").

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements are often identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," "anticipate," "may," "will," "would" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to: agent count; franchise sales; Motto open offices; our business model; cost structure; balance sheet; revenue; operating expenses; financial outlook; return of capital, including dividends and our share repurchase program; non-GAAP financial measures; assets and liabilities held for sale; uncertain tax positions; fee waivers; housing and mortgage market conditions and trends; economic and demographic trends; competition; the anticipated benefits of our strategic initiatives; our anticipated sources and uses of liquidity including for potential acquisitions; capital expenditures; future litigation expenses, including antitrust litigations; our credit agreement including total leverage ratio and any future excess cash flow payments; our strategic and operating plans and business models including our efforts to accelerate the growth of our businesses; the long-term benefits of our strategic growth initiatives including mitigation of economic downturns; and strategic investments in the Mortgage business.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled "Risk Factors," set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of our 2024 Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not intend, and we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

The results of operations discussed in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" are those of RE/MAX Holdings, Inc. ("Holdings") and its consolidated subsidiaries, including RMCO, LLC and its consolidated subsidiaries ("RMCO"), collectively, the "Company," "we," "our" or "us."

Business Overview

We are one of the world's leading franchisors in the real estate industry. We franchise real estate brokerages globally under the REMAX brand ("REMAX") and mortgage brokerages in the U.S. under the Motto Mortgage brand ("Motto"). We also sell ancillary products and services, including loan processing services through our wemlo brand and advertisements on and lead generation services from our flagship websites www.remax.com and www.remax.ca. REMAX and Motto are 100% franchised-we do not own any of the brokerages that operate under these brands. We focus on enabling our networks' success by providing powerful technology, quality education, and valuable marketing to build the strength of the REMAX and Motto brands. We support our franchisees in growing their brokerages, although they fund the associated cost of development. As a result, we maintain a relatively low fixed-cost structure which, combined with our primarily recurring fee-based models, enables us to capitalize on the economic benefits of the franchising model, yielding high margins and significant cash flow.

Financial and Operational Highlights - Three Months Ended June 30, 2025

(Compared to the three months and the period ended June 30, 2024, unless otherwise noted)

●

Total revenue of $72.8 million, a decrease of 7.3% from the prior year.

●

Revenue excluding the Marketing Funds ^(a)decreased 6.8% to $54.5 million, driven by negative organic revenue growth^(b)of 5.7%and adverse foreign currency movements of 1.1%.

●

Net income (loss) attributable to RE/MAX Holdings, Inc. of $4.7 million, compared to $3.7 million in the prior year.

●

Adjusted EBITDA^(c)decreased 6.4% to $26.3 million and Adjusted EBITDA margin^(c) increased 30 basis points to 36.1% from the prior year.

●

Total agent count increased 2.5% to 147,073 agents.

●

U.S. and Canada combined agent count decreased 5.0% to 74,635 agents.

●

Total open Motto Mortgage offices decreased 9.1% to 219 offices.

(a)

Revenue excluding the Marketing Funds is a non-GAAP measure of financial performance that differs from the U.S. generally accepted accounting principles ("U.S. GAAP"). Revenue excluding the Marketing Funds is calculated directly from our condensed consolidated financial statements as Total revenue less Marketing Funds fees.

(b)

Wedefine organic revenue growth as revenue growth from continuing operations excluding Marketing Funds, revenue attributable to acquisitions, and foreign currency movements. We define revenue from acquisitions as the incremental revenue generated from the date of an acquisition to its first anniversary (excluding Marketing Funds revenue related to acquisitions where applicable).

(c)

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures of financial performance that differ from U.S. GAAP. See "-Non-GAAP Financial Measures" for further discussion of Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation of the differences between Adjusted EBITDA and net income (loss), which is the most comparable U.S. GAAP measure for operating performance. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenue.

During the second quarter of 2025, our global agent network grew to a record high with over 147,000 agents worldwide. We also saw signs of stabilization in our U.S. agent count for the first time since 2022 and relatively flat agent count activity in Canada. This performance occurred despite ongoing economic uncertainties and difficult housing and mortgage market conditions in the U.S. and Canada, including persistently high mortgage rates that are stretching affordability. In addition, proposed and enacted changes in legislation and regulation, including tariffs and other trade policies, have contributed to continued uncertainty in the global economy. These factors have led to declines in the number of U.S. REMAX agents, open Motto offices, and total revenue.

We continue to focus on growth initiatives to elevate and expand the value proposition for our affiliates that are designed to empower them to win more business, save time and build more profitable businesses. On April 2, 2025, we launched the Aspire^SMprogram, a performance-based financial model designed to help brokerages attract and develop new-to-REMAX agents and immediately connect them to resources that can help elevate their productivity and enable them to begin building a thriving REMAX career. Aspire was created leveraging feedback from our voice of customer program to enhance franchisee recruiting efforts by providing more assistance in onboarding and sharing more of the economic risk in recruiting newer agents. During an Aspire agent's first year with REMAX, a franchisee only pays REMAX 5% of their gross commission income (paid after each closing) up to an annual maximum of $5,000, a $25 per-transaction fee and the standard $410 annual dues. The Aspire program economic model differs from our existing model as it does not contain fixed monthly Continuing franchise fees and Marketing Funds fees and has a cap on the revenue tied to the agent's earned gross commission income. For offices who have agent's participating in Aspire (or any cap program), Broker fees are estimated and recognized ratably on a straight-line basis over a one year period.

Selected Operating and Financial Highlights

The following tables summarize several key performance indicators and our results of operations.



	As of June 30,		2025 vs. 2024
	2025	2024	#	%
Agent Count:
U.S.
Company-Owned Regions	43,363	46,780	(3,417)	(7.3)	%
Independent Regions	6,306	6,626	(320)	(4.8)	%
U.S. Total	49,669	53,406	(3,737)	(7.0)	%
Canada
Company-Owned Regions	20,060	20,347	(287)	(1.4)	%
Independent Regions	4,906	4,846	60	1.2	%
Canada Total	24,966	25,193	(227)	(0.9)	%
U.S. and Canada Total	74,635	78,599	(3,964)	(5.0)	%
Outside U.S. and Canada
Independent Regions	72,438	64,943	7,495	11.5	%
Outside U.S. and Canada Total	72,438	64,943	7,495	11.5	%
Total	147,073	143,542	3,531	2.5	%

REMAX open offices:
U.S.	3,030	3,229	(199)	(6.2)	%
Canada	933	938	(5)	(0.5)	%
U.S. and Canada Total	3,963	4,167	(204)	(4.9)	%
Outside U.S. and Canada	4,617	4,669	(52)	(1.1)	%
Total	8,580	8,836	(256)	(2.9)	%

Motto open offices ⁽¹⁾:	219	241	(22)	(9.1)	%

	Six Months Ended
	June 30,		2025 vs. 2024
	2025	2024	#	%
REMAX franchise sales:
U.S.	35	48	(13)	(27.1)	%
Canada	17	22	(5)	(22.7)	%
U.S. and Canada Total	52	70	(18)	(25.7)	%
Outside U.S. and Canada	253	267	(14)	(5.2)	%
Total	305	337	(32)	(9.5)	%

Motto franchise sales ⁽¹⁾:	5	9	(4)	(44.4)	%

(1)	As of June 30, 2025 and 2024, there were 59 and 65 offices, respectively, that we are offering short-term financial relief and are temporarily either not being billed and/or having associated revenue recognized.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2025			2024			2025			2024
Total revenue	$	72,750		$	78,453		$	147,217		$	156,740
Total selling, operating and administrative expenses	$	33,888		$	34,851		$	76,916		$	80,556
Operating income (loss)	$	14,045		$	16,175		$	19,412		$	20,699
Net income (loss)	$	6,698		$	6,190		$	3,462		$	583
Net income (loss) attributable to RE/MAX Holdings, Inc.	$	4,685		$	3,705		$	2,727		$	352
Adjusted EBITDA ⁽¹⁾	$	26,266		$	28,076		$	45,553		$	47,069
Adjusted EBITDA margin ⁽¹⁾		36.1	%		35.8	%		30.9	%		30.0	%

(1)	See "-Non-GAAP Financial Measures" for further discussion of Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation of the differences between Adjusted EBITDA and net income (loss), which is the most comparable

U.S. GAAP measure for operating performance. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenue.

Results of Operations

Comparison of the Three Months Ended June 30, 2025 and 2024

Revenue

A summary of the components of our revenue is as follows (in thousands except percentages):


	Three Months Ended				Change
	June 30,				Favorable/(Unfavorable)
	2025		2024		$		%
Revenue:
Continuing franchise fees	$	28,992	$	30,340	$	(1,348)	(4.4)	%
Annual dues		7,693		8,151		(458)	(5.6)	%
Broker fees		13,454		14,528		(1,074)	(7.4)	%
Marketing Funds fees		18,273		20,027		(1,754)	(8.8)	%
Franchise sales and other revenue		4,338		5,407		(1,069)	(19.8)	%
Total revenue	$	72,750	$	78,453	$	(5,703)	(7.3)	%

Continuing Franchise Fees

Revenue from Continuing franchise fees decreased primarily due to a reduction in U.S. agent count.

Broker Fees

Revenue from Broker fees decreased primarily due to a reduction in U.S. agent count, partially offset by an increase in average home sales prices in the U.S. as well as the impact of recognizing Broker fees ratably in the U.S. and Canada for capped programs like Aspire.

Marketing Funds Fees and Marketing Funds Expenses

Revenue from Marketing Funds fees decreased primarily due to a reduction in U.S. agent count. We recognize an equal and offsetting amount of expenses to revenue such that there is no impact to our overall profitability.

Franchise Sales and Other Revenue

Franchise sales and other revenue decreased primarily due to a reduction in revenue from previous acquisitions (excluding Independent Region acquisitions)and lower Franchise sales revenue, partially offset by higher advertising revenue on our flagship websites.


	Three Months Ended				Change
	June 30,				Favorable/(Unfavorable)
	2025		2024		$		%
Revenue excluding the Marketing Funds:
Total revenue	$	72,750	$	78,453	$	(5,703)	(7.3)	%
Less: Marketing Funds fees		18,273		20,027		(1,754)	(8.8)	%
Revenue excluding the Marketing Funds	$	54,477	$	58,426	$	(3,949)	(6.8)	%

Revenue excluding the Marketing Funds decreased due to a decline in organic revenue of 5.7% and adverse foreign currency movements of 1.1%. The decline in organic revenue was driven by a decrease in U.S. agent count, lowerrevenue from Broker fees, and a reduction in revenue from previous acquisitions (excluding Independent Region

acquisitions).

Operating Expenses

A summary of the components of our operating expenses is as follows (in thousands, except percentages):


	Three Months Ended						Change
	June 30,						Favorable/(Unfavorable)
	2025			2024			$		%
Operating expenses:
Selling, operating and administrative expenses	$	33,888		$	34,851		$	963	2.8	%
Marketing Funds expenses		18,273			20,027			1,754	8.8	%
Depreciation and amortization		6,601			7,400			799	10.8	%
Settlement and impairment charges		(57)			-			57	n/m
Total operating expenses	$	58,705		$	62,278		$	3,573	5.7	%
Percent of revenue		80.7	%		79.4	%

n/m - not meaningful

Selling, operating and administrative expenses consist of personnel costs, professional fee expenses, lease costs and other expenses. Other expenses within Selling, operating and administrative expenses include certain marketing and production costs that are not paid by the Marketing Funds, including travel and entertainment costs, and costs associated with our annual conventions in the U.S. and other events, and technology services.


	Three Months Ended						Change
	June 30,						Favorable/(Unfavorable)
	2025			2024			$		%
Selling, operating and administrative expenses:
Personnel	$	21,462		$	22,197		$	735	3.3	%
Professional fees		3,397			2,763			(634)	(22.9)	%
Lease costs		1,690			1,608			(82)	(5.1)	%
Other		7,339			8,283			944	11.4	%
Total selling, operating and administrative expenses	$	33,888		$	34,851		$	963	2.8	%
Percent of revenue		46.6	%		44.4	%

Total Selling, operating and administrative expenses decreased as follows:

●

Personnel expenses decreased primarily due to an increase in costs charged to the Marketing Funds, see Note 2, Summary of Significant Accounting Policiesfor additional information. Also contributing to the decrease was lower employee compensation and benefit related costs and equity-based compensation expense. The decrease in personnel expenses was partially offset by higher severance expenses from a restructuring in the current quarter, further disclosed in Note 2, Summary of Significant Accounting Policies.

●

Professional fees increased primarily due to investments in our flagship websites.

●

Other selling, operating and administrative expenses decreased due to a reduction in other events, commissions paid on REMAX franchise sales, and changes in the estimated fair value of the contingent consideration liability slightly offset by an increase in property taxes.

Depreciation and Amortization

Depreciation and amortization expense decreased primarily due to lower franchise agreements amortization expense from prior years Independent Region acquisitions and from previous acquisitions (excluding Independent Region acquisitions)becoming fully amortized.

Other Expenses, Net

A summary of the components of our Other expenses, net is as follows (in thousands, except percentages:


	Three Months Ended						Change
	June 30,						Favorable/(Unfavorable)
	2025			2024			$		%
Other expenses, net:
Interest expense	$	(7,982)		$	(9,191)		$	1,209	13.2	%
Interest income		841			949			(108)	(11.4)	%
Foreign currency transaction gains (losses)		(43)			(270)			227	n/m
Total other expenses, net	$	(7,184)		$	(8,512)		$	1,328	15.6	%
Percent of revenue		9.9	%		10.8	%

n/m - not meaningful

Other expenses, net decreased primarily due to a decrease in interest expense due to lower interest rates and a decrease in interest income due to lower interest rate yields and declines in investable balances. See Note 7, Debt for more information. Foreign currency transaction gains (losses) are primarily the result of transactions denominated in the Canadian Dollar and the Canadian dollar has weakened in comparison to the U.S dollar between the three months ended June 30, 2025, compared to December 31, 2024, and the three months ended June 30, 2024, compared to December 31, 2023.

Provision for Income Taxes

The comparison of effective income tax rates ("EITR") for the three months ended June 30, 2025, and June 30, 2024, is not meaningful. In the second quarter of both 2025 and 2024, the EITR was primarily impacted by foreign taxes on overseas income and valuation allowances related to U.S. foreign tax credits.

In addition, our EITR depends on many factors, including a rate benefit attributable to the fact that the portion of RMCO's earnings allocated to the non-controlling interests are not subject to corporate-level taxes because RMCO is classified as a partnership for U.S. federal income tax purposes and therefore is treated as a flow-through entity, as well as annual changes in state tax rates and foreign income tax expense. See Note 3, Non-controlling Interest to the accompanying unaudited condensed consolidated financial statements for further details on the allocation of income taxes between Holdings and the non-controlling interest and see Note 9, Income Taxes for additional information.

Adjusted EBITDA

See "-Non-GAAP Financial Measures" for our definition of Adjusted EBITDA and for further discussion of our presentation of Adjusted EBITDA as well as a reconciliation of Adjusted EBITDA to net income (loss), which is the most comparable GAAP measure for operating performance.

Adjusted EBITDA was $26.3 million for the three months ended June 30, 2025, a decrease of $1.8 million from the comparable prior year period. Adjusted EBITDA decreased primarily due to declines in U.S. agent count, Broker fees, revenue from previous acquisitions (excluding Independent Region acquisitions), and Franchise sales revenue, and an increase in property tax expense offset by certain lower personnel-related expenses.

Comparison of the Six Months Ended June 30, 2025 and 2024

Revenue

A summary of the components of our revenue is as follows (in thousands except percentages):


	Six Months Ended				Change
	June 30,				Favorable/(Unfavorable)
	2025		2024		$		%
Revenue:
Continuing franchise fees	$	58,343	$	61,425	$	(3,082)	(5.0)	%
Annual dues		15,482		16,376		(894)	(5.5)	%
Broker fees		24,885		25,244		(359)	(1.4)	%
Marketing Funds fees		37,137		40,233		(3,096)	(7.7)	%
Franchise sales and other revenue		11,370		13,462		(2,092)	(15.5)	%
Total revenue	$	147,217	$	156,740	$	(9,523)	(6.1)	%

Continuing Franchise Fees

Revenue from Continuing franchise fees decreased primarily due to a reduction in U.S. agent count.

Broker Fees

Revenue from Broker fees decreased primarily due to reduction in U.S. agent count, partially offset by an increase in average home sales prices primarily in the U.S.

Marketing Funds Fees and Marketing Funds Expenses

Franchise Sales and Other Revenue

Franchise sales and other revenue decreased primarily due to a reduction in revenue from previous acquisitions (excluding Independent Region acquisitions), Franchise sales revenue, revenue from our annual REMAX agent convention and other events, and revenue from preferred marketing arrangements. These decreases were partially offset by higher advertising revenue on our flagship websites.


	Six Months Ended				Change
	June 30,				Favorable/(Unfavorable)
	2025		2024		$		%
Revenue excluding the Marketing Funds:
Total revenue	$	147,217	$	156,740	$	(9,523)	(6.1)	%
Less: Marketing Funds fees		37,137		40,233		(3,096)	(7.7)	%
Revenue excluding the Marketing Funds	$	110,080	$	116,507	$	(6,427)	(5.5)	%

Revenue excluding the Marketing Funds decreased due to a decline in organic revenue of 5.0% and adverse foreign currency movements of 0.5%. The decline in organic revenue was driven by a decrease in U.S. agent count, a reduction in revenue from previous acquisitions (excluding Independent Region acquisitions), lower Mortgage segment revenue, and a reduction in revenue from our annual RE/MAX agent convention and other events; partially offset by higher

advertising revenue.

Operating Expenses

A summary of the components of our operating expenses is as follows (in thousands, except percentages):


	Six Months Ended						Change
	June 30,						Favorable/(Unfavorable)
	2025			2024			$		%
Operating expenses:
Selling, operating and administrative expenses	$	76,916		$	80,556		$	3,640	4.5	%
Marketing Funds expenses		37,137			40,233			3,096	7.7	%
Depreciation and amortization		13,190			15,252			2,062	13.5	%
Settlement and impairment charges		562			-			(562)	n/m
Total operating expenses	$	127,805		$	136,041		$	8,236	6.1	%
Percent of revenue		86.8	%		86.8	%

n/m - not meaningful


	Six Months Ended						Change
	June 30,						Favorable/(Unfavorable)
	2025			2024			$		%
Selling, operating and administrative expenses:
Personnel	$	46,540		$	48,029		$	1,489	3.1	%
Professional fees		5,972			5,690			(282)	(5.0)	%
Lease costs		3,330			3,506			176	5.0	%
Other		21,074			23,331			2,257	9.7	%
Total selling, operating and administrative expenses	$	76,916		$	80,556		$	3,640	4.5	%
Percent of revenue		52.2	%		51.4	%

Total Selling, operating and administrative expenses decreased as follows:

●

Personnel expenses decreased primarily due to an increase in costs charged to the Marketing Funds, see Note 2, Summary of Significant Accounting Policiesfor additional information. Also contributing to the decrease was lower employee compensation and benefit related costs and equity-based compensation expense. The decrease in personnel expenses was partially offset by higher severance expenses from a restructuring in the current year, further disclosed in Note 2, Summary of Significant Accounting Policies.

●

Professional fees increased primarily due to investments in our flagship websites, partially offset by lower legal fees.

●

Other selling, operating and administrative expenses decreased due to a reduction in expenses from our annual REMAX agent convention and other events, commissions paid on REMAX franchise sales and changes in the estimated fair value of the contingent consideration liability. The decrease was slightly offset by an increase in bad debt expense and property taxes.

Depreciation and Amortization

Settlement Charge

In the first quarter of 2025, we settled an immaterial legal matter, which is expected to be paid out over twelve months beginning in the second quarter of 2025. As a result, we recorded this to "Settlement and impairment charges" within the

Condensed Consolidated Statements of Income (Loss) with a corresponding liability recorded to "Accrued liabilities" within the Condensed Consolidated Balance Sheets.

Other Expenses, Net

A summary of the components of our Other expenses, net is as follows (in thousands, except percentages):


	Six Months Ended						Change
	June 30,						Favorable/(Unfavorable)
	2025			2024			$		%
Other expenses, net:
Interest expense	$	(15,906)		$	(18,447)		$	2,541	13.8	%
Interest income		1,749			1,950			(201)	(10.3)	%
Foreign currency transaction gains (losses)		240			(642)			882	n/m
Total other expenses, net	$	(13,917)		$	(17,139)		$	3,222	18.8	%
Percent of revenue		9.5	%		10.9	%

n/m - not meaningful

Other expenses, net decreased primarily due to a decrease in interest expense due to lower interest rates and a decrease in interest income due to lower interest rate yields and declines in investable balances. See Note 7, Debt for more information. Foreign currency transaction gains (losses) are primarily the result of transactions denominated in the Canadian Dollar and the Canadian dollar has weakened in comparison to the U.S dollar between the six months ended June 30, 2025, compared to December 31, 2024, and the six months ended June 30, 2024, compared to December 31, 2023.

Provision for Income Taxes

The comparison of effective income tax rates ("EITR") for the six months ended June 30, 2025, and June 30, 2024, is not meaningful. For the six months ended June 30, 2025 and 2024, the EITR was primarily impacted by foreign taxes on overseas income and valuation allowances related to U.S. foreign tax credits.

Adjusted EBITDA

Adjusted EBITDA was $45.6 million for the six months ended June 30, 2025, a decrease of $1.5 million from the comparable prior year period. Adjusted EBITDA decreased primarily due to declines in U.S. agent count, lower revenue from previous acquisitions (excluding Independent Region acquisitions), Franchise sales revenue, and an increase in bad debt expense partially offset by lower personnel and events-related expenses.

Non-GAAP Financial Measures

The Securities and Exchange Commission ("SEC") has adopted rules to regulate the use in filings with the SEC and in public disclosures of financial measures that are not in accordance with U.S. GAAP, such as Revenue excluding the Marketing Funds and Adjusted EBITDA and the ratios related thereto. These measures are derived on the basis of methodologies other than in accordance with U.S. GAAP.

Revenue excluding the Marketing Funds is a non-GAAP measure of financial performance that differs from U.S. GAAP, and we believe that exclusion of the Marketing Funds is a useful supplemental measure as we recognize an equal and offsetting amount of expenses to revenue such that there is no impact to our overall profitability. Revenue excluding the

Marketing Funds is calculated directly from our condensed consolidated financial statements as Total revenue less Marketing Funds fees.

We define Adjusted EBITDA as EBITDA (consolidated net income (loss) before depreciation and amortization, interest expense, interest income and the provision for income taxes, each of which is presented in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), adjusted for the impact of the following items that are either non-cash or that we do not consider representative of our ongoing operating performance: gain or loss on sale or disposition of assets and sublease, settlement and impairment charges, equity-based compensation expense, acquisition-related expense, gains or losses from changes in the tax receivable agreement liability, expense or income related to changes in the fair value measurement of contingent consideration, restructuring charges and other non-recurring items.

As Adjusted EBITDA omits certain non-cash items and other non-recurring cash charges or other items, we believe that it is less susceptible to variances that affect our operating performance resulting from depreciation, amortization and other non-cash and non-recurring cash charges or other items. We present Adjusted EBITDA, and the related Adjusted EBITDA margin, because we believe they are useful as supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. Our management uses Adjusted EBITDA and Adjusted EBITDA margin as factors in evaluating the performance of our business.

Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider these measures either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Some of these limitations are:

●

these measures do not reflect changes in, or cash requirements for, our working capital needs;

●

these measures do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

●

these measures do not reflect our income tax expense or the cash requirements to pay our taxes;

●

these measures do not reflect the cash requirements to pay dividends to stockholders of our Class A common stock and tax and other cash distributions to our non-controlling unitholders;

●

these measures do not reflect the cash requirements pursuant to the Tax Receivable Agreements ("TRAs");

●

these measures do not reflect the cash requirements for share repurchases;

●

these measures do not reflect the cash requirements for the settlements of certain industry class-action lawsuits and other legal settlements;

●

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often require replacement in the future, and these measures do not reflect any cash requirements for such replacements;

●

although equity-based compensation is a non-cash charge, the issuance of equity-based awards may have a dilutive impact on earnings per share; and

●

other companies may calculate these measures differently, so similarly named measures may not be comparable.

A reconciliation of Adjusted EBITDA to net income (loss) is set forth in the following table (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Net income (loss)	$	6,698	$	6,190	$	3,462	$	583
Depreciation and amortization		6,601		7,400		13,190		15,252
Interest expense		7,982		9,191		15,906		18,447
Interest income		(841)		(949)		(1,749)		(1,950)
Provision for income taxes		163		1,473		2,033		2,977
EBITDA		20,603		23,305		32,842		35,309
Settlement and impairment charges ⁽¹⁾		(57)		-		562		-
Equity-based compensation expense		2,968		3,902		9,314		9,825
Fair value adjustments to contingent consideration ⁽²⁾		(100)		103		16		137
Restructuring charges ⁽³⁾		2,840		(9)		2,737		(41)
Other adjustments ⁽⁴⁾		12		775		82		1,839
Adjusted EBITDA	$	26,266	$	28,076	$	45,553	$	47,069

(1)	Represents the settlement of an immaterial legal matter and an impairment recognized on an office lease in Canada in the first quarter of 2025. See Note 2, Summary of Significant Accounting Policiesfor additional information on our leases.

(2)	Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities. See Note 8, Fair Value Measurementsfor additional information.

(3)	During the second quarter of 2025, the Company restructured its support services intended to further enhance the overall customer experience. See Note 2, Summary of Significant Accounting Policies,for additional information.

(4)	Other adjustments are primarily made up of employee retention-related expenses from our CEO transition in the prior year.

Liquidity and Capital Resources

Overview of Factors Affecting Our Liquidity

Our liquidity position is primarily affected by the change in our agent and franchise base and conditions in the real estate and mortgage markets. In this regard, our short-term liquidity position from time to time has been, and will continue to be, affected by several factors including agents in the REMAX network, particularly in Company-Owned Regions. Our cash flows are primarily related to the timing of:

(i)

cash receipt of revenues;

(ii)

payment of selling, operating and administrative expenses;

(iii)

investments in our Real Estate and Mortgage segments;

(iv)

cash consideration for acquisitions and acquisition-related expenses;

(v)

principal payments, including any early principal payments, and related interest payments on our Senior Secured Credit Facility;

(vi)

corporate tax payments paid by the Company

(vii)

payments to the TRA parties pursuant to the TRAs;

(viii)

the settlements of certain industry class-action lawsuits and other legal settlements;

(ix)

distributions and other payments to non-controlling unitholders pursuant to the terms of RMCO's limited liability company operating agreement ("the RMCO, LLC Agreement");

(x)

dividend payments to stockholders of our Class A common stock; and

(xi)

share repurchases.

We have satisfied these needs primarily through our existing cash balances, cash generated by our operations and funds available under our Senior Secured Credit Facility. We may pursue other sources of capital that may include other forms of external financing, such as additional financing in the public capital markets, in order to increase our cash position and preserve financial flexibility as needs arise.

Financing Resources

RMCO and RE/MAX, LLC, a wholly owned subsidiary of RMCO, have a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various lenders party thereto (the "Senior Secured Credit Facility"), which was amended and restated on July 21, 2021 to refinance our existing facility. The revised facility provides for a seven-year $460.0 million term loan facility and a five-year $50.0 million revolving loan facility. The Senior Secured Credit Facility also provides for incremental facilities under which RE/MAX, LLC may request to add one or more tranches of term facilities or increase any then existing credit facility in the aggregate principal amount of up to $100 million (or a higher amount subject to the terms and conditions of the Senior Secured Credit Facility), subject to lender participation.

The Senior Secured Credit Facility is guaranteed by RMCO and is secured by a lien on substantially all of the assets of RE/MAX, LLC and other operating companies.

The Senior Secured Credit Facility requires us to repay term loans at approximately $1.2 million per quarter. We are also required to repay the term loans and reduce revolving commitments with (i) 100% of proceeds of any incurrence of additional debt not permitted by the Senior Secured Credit Facility, (ii) 100% of proceeds of asset sales and 100% of amounts recovered under insurance policies, subject to certain exceptions and a reinvestment right and (iii) 50% of Excess Cash Flow (or "ECF") as defined in the Senior Secured Credit Facility, at the end of the applicable fiscal year if RE/MAX, LLC's Total Leverage Ratio (or "TLR") as defined in the Senior Secured Credit Facility, is in excess of 4.25:1. If the TLR as of the last day of such fiscal year is equal to or less than 4.25:1 but above 3.75:1, the repayment percentage is 25% of ECF and if our TLR as of the last day of such fiscal year is less than 3.75:1, no repayment from ECF is required. As of December 31, 2024, no ECF payment was required because the TLR was below 3.75:1.

The Senior Secured Credit Facility provides for customary restrictions on, among other things, additional indebtedness, liens, dispositions of property, dividends, share repurchases, other distributions, transactions with affiliates and fundamental changes such as mergers, consolidations, and liquidations. In general, we can make unlimited restricted payments - including dividends and share repurchases - if the TLR does not exceed 3.50:1 (both before and after giving effect to such payments). If the TLR exceeds 3.50:1, we are generally limited in the amount of restricted payments we can make up to the greater of $50 million or 50% of RE/MAX LLC's consolidated EBITDA on a trailing twelve-month basis (unless we rely on other restricted payment baskets available under the Senior Secured Credit Facility).

We calculate the TLR quarterly and it is based on RE/MAX, LLC's consolidated indebtedness and consolidated EBITDA on a trailing twelve-month basis, both defined in the Senior Secured Credit Facility. For the twelve-month period ending June 30, 2025, RE/MAX, LLC's consolidated EBITDA, as defined in the Senior Secured Credit Facility, was $97.0 million and as of June 30, 2025, the TLR was 3.58:1.

With certain exceptions, any default under any of our other agreements evidencing indebtedness in the amount of $15.0 million or more constitutes an event of default under the Senior Secured Credit Facility.

Borrowings under the term loans and revolving loans accrue interest, at our option on (a) the adjusted forward-looking term rate based on the Term Secured Overnight Financing Rate ("Adjusted Term SOFR"), provided the Adjusted Term SOFR shall be no less than 0.50% plus an applicable margin of 2.50% or (b) the greatest of (i) the prime rate as quoted by the Wall Street Journal, (ii) the NYFRB Rate (as defined in the Senior Secured Credit Facility) plus 0.50% and (iii) the one-month Adjusted Term SOFR plus 1.00%, (such greatest rate, the "ABR"), provided the ABR shall be no less than 1.50%, plus in each case, an applicable margin of 1.50%. As of June 30, 2025, the interest rate on the term loan facility was 6.9%.

If any amounts are drawn on the $50 million revolving line of credit as of the last day of any fiscal quarter, the terms of the Senior Secured Credit Facility require the TLR to not exceed 4.50:1 as of the last day of four consecutive fiscal quarters. As a result, as long as the TLR remains below 4.50:1, access to borrowings under the revolving line of credit will not be restricted. A commitment fee of 0.5% per annum (subject to reductions) accrues on the amount of unutilized revolving line of credit regardless of our TLR. As of the date of this report, no amounts were drawn on the revolving line of credit.

As of June 30, 2025, we had $441.6 million of term loans outstanding and no revolving loans outstanding under our Senior Secured Credit Facility.

Sources and Uses of Cash

As of June 30, 2025 and December 31, 2024, we had $94.3 million and $96.6 million, respectively, of cash and cash equivalents, of which approximately $27.1 million and $19.7 million, respectively, were denominated in foreign currencies.

The following table summarizes our cash flows from operating, investing, and financing activities (in thousands):


	Six Months Ended
	June 30,
	2025		2024
Cash provided by (used in):
Operating activities	$	10,213	$	25,266
Investing activities		(3,307)		(4,093)
Financing activities		(7,794)		(5,387)
Effect of exchange rate changes on cash		1,393		(875)
Net change in cash, cash equivalents and restricted cash	$	505	$	14,911

Operating Activities

Cash provided by operating activities decreased primarily due to higher spend in the Marketing Funds, higher payments of certain employee-related liabilities, a decrease in Adjusted EBITDA, and timing differences on various operating assets and liabilities, partially offset by lower interest payments.

Investing Activities

During the six months ended June 30, 2025, the change in cash used in investing activities was primarily the result of lower spend on leased buildings other than our corporate headquarters compared to the prior year.

Financing Activities

During the six months ended June 30, 2025, the change in cash used in financing activities was primarily due to higher tax withholding payments for share-based compensationand an increase in contingent consideration payments.

Capital Allocation Priorities

Liquidity

Our objective is to maintain a strong liquidity position. We have existing cash balances, cash flows from operating activities, and incremental facilities under our Senior Secured Credit Facility available to support the needs of our business. As needs arise, we may seek additional financing in the public capital markets.

Acquisitions

As part of our growth strategy, we may pursue acquisitions of REMAX Independent Regions in the U.S. and Canada as well as additional acquisitions or investments in complementary businesses, services and technologies that would provide access to new markets, revenue streams, or otherwise complement our existing operations. We may fund any such growth with various sources of capital including existing cash balances and cash flow from operations, as well as proceeds from debt financings including under existing credit facilities or new arrangements.

Capital Expenditures

The total aggregate amount for purchases of property and equipment and capitalization of developed software was $3.3 million and $4.5 million for the six months ended June 30, 2025 and 2024, respectively. These amounts primarily relate to investments in technology and spend on leased buildings other than our corporate headquarters. We plan to continue to re-invest in our business in order to improve operational efficiencies and enhance the tools and services provided to the affiliates in our networks. Total capital expenditures for 2025 are expected to be between $6.5 million and $7.5 million. See Financial and Operational Highlights above for additional information.

Return of Capital

In the fourth quarter of 2023, our Board of Directors suspended our quarterly dividend. In light of the litigation settlement and ongoing challenging housing and mortgage market conditions (as further discussed in Note 11, Commitments and Contingencies), we continue to believe this action to preserve our capital is prudent. Our Board of Directors did not approve any quarterly cash dividends in the first two quarters of 2025 and 2024.

Our Board of Directors has authorized a common stock repurchase program of up to $100 million. The share repurchase program does not obligate the Company to purchase any amount of common stock and does not have an expiration date. During the six months ended June 30, 2025, and 2024, we did not repurchase any shares of our Class A common stock. As of June 30, 2025, $62.5 million remained available under the share repurchase authorization.

Future capital allocation decisions with respect to return of capital either in the form of additional future dividends, and if declared, the amount, payment and timing of any such future dividend, or in the form of share buybacks, will be at the sole discretion of our Board of Directors who will take into account general economic, housing and mortgage market conditions, the Company's financial condition, available cash, current and anticipated cash needs, any applicable restrictions pursuant to the terms of our Senior Secured Credit Facility and any other factors that the Board of Directors considers relevant.

Distributions and Other Payments to Non-controlling Unitholders by RMCO

Distributions and other payments paid to non-controlling unitholders pursuant to the RMCO, LLC Agreement were immaterial for the three and six months ended 2025 and 2024. Payments pursuant to the TRAs were $0.8 million and $0.5 million for the six months ended June 30, 2025 and 2024, respectively.

Commitments and Contingencies

See Note 11, Commitments and Contingencies to the accompanying unaudited condensed consolidated financial statements for additional information.

Off Balance Sheet Arrangements

We have no material off balance sheet arrangements as of June 30, 2025.

Critical Accounting Judgments and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures in the financial statements and accompanying notes. Actual results could differ from those estimates. Our Critical Accounting Judgments and Estimates disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Judgments and Estimates" in our 2024 Annual Report on Form 10-K for which there were no material changes, included:

●

Purchase Accounting for Acquisitions

●

Deferred Tax Assets and TRA Liability

New Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies to the accompanying unaudited condensed consolidated financial statements for additional information.

RE/MAX Holdings Inc. published this content on July 29, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on July 29, 2025 at 20:26 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]