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What changed in RE/MAX Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RE/MAX Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+371 added−449 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in RE/MAX Holdings, Inc.'s 2024 10-K

371 paragraphs added · 449 removed · 288 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

99 edited+29 added−105 removed24 unchanged
Biggest changeAs a leading franchisor in the residential real estate industry in the U.S., Canada and globally, as well as a leading franchisor in the residential mortgage industry in the U.S., we create shareholder value by: a) growing organically primarily by growing and monetizing our RE/MAX network of over 9,000 offices and over 140,000 agents and our Motto network of over 225 open offices; b) catalyzing growth by reacquiring regional RE/MAX franchise rights and acquiring other businesses complementary to our RE/MAX and Motto franchises; and c) returning capital to shareholders.
Biggest changeAs a leading franchisor in the residential real estate industry in the U.S., Canada and globally, as well as a leading franchisor in the residential mortgage industry in the U.S., we create shareholder value by: a) strengthening and enhancing our existing business and value proposition primarily by growing and monetizing our RE/MAX network of nearly 9,000 offices and over 145,000 agents, our Motto network of over 220 open offices and our digital assets; 8 Table of Contents b) developing new products and services leveraging existing assets, which may include, but not be limited to, monetizing transactions, franchisees, agents and loan originators and providing ancillary services; and c) exploring and executing on large scale opportunities to pursue enhancements to our value proposition via additional business models, additional market segments and additional real estate verticals as well as re-acquiring regional RE/MAX franchise rights in Independent Regions in the U.S. and Canada.
However, in 2022, a new mortgage brokerage franchise brand began operations. The mortgage origination business is characterized by a variety of business models. While real estate brokerage owners are our core market for the purchase of Motto franchises, such owners may form independent, non-franchised mortgage brokerages, mortgage bankers or correspondent lenders.
However, in 2022, a new regional mortgage brokerage franchise brand began operations. The mortgage origination business is characterized by a variety of business models. While real estate brokerage owners are our core market for the purchase of Motto franchises, such owners may form independent, non-franchised mortgage brokerages, mortgage bankers or correspondent lenders.
As a member of a family of brands with 50 years of franchising experience, we provide best practices to franchisees. Our Motto brokerage franchisor, Motto Franchising, LLC, offers seven-year agreements with franchisees. Motto sells franchises directly throughout the U.S. as there are no regional franchise rights in the Motto system.
As a member of a family of brands with over 50 years of franchising experience, we provide best practices to franchisees. Our Motto brokerage franchisor, Motto Franchising, LLC, offers seven-year agreements with franchisees. Motto sells franchises directly throughout the U.S. as there are no regional franchise rights in the Motto system.
They may enter into joint ventures with mortgage lenders, brokers or bankers for mortgage originations, and they may elect not to enter the mortgage origination business themselves, but instead earn revenue from providing marketing and other services to mortgage lenders, brokers or bankers.
They may enter joint ventures with mortgage lenders, brokers or bankers for mortgage originations, and they may elect not to enter the mortgage origination business themselves but instead earn revenue from providing marketing and other services to mortgage lenders, brokers or bankers.
We believe the traditional agent-assisted business model, especially those supported by professional and highly productive agents, compares favorably to alternative models in the residential real estate industry.
We believe the traditional agent-assisted business model, especially those supported by trusted, professional, and highly productive agents, compares favorably to alternative models in the residential real estate industry.
In general, franchisees do not receive an exclusive territory in the U.S. except under certain limited circumstances. In the early years of our expansion in the U.S. and Canada, we sold regional franchise rights to independent owners for certain geographic regions (“Independent Regions”), pursuant to which those Independent Regions have the exclusive right to sell franchises in those regions.
In general, franchisees do not receive an exclusive territory in the U.S. except under certain limited circumstances. In the early years of our expansion in the U.S. and Canada, we sold regional franchise rights to independent owners for certain geographic regions, in what we call “Independent Regions”, pursuant to which those Independent Regions have the exclusive right to sell franchises.
We offer Motto franchisees, as well as mortgage brokers across the brokerage industry, a customer-centric team of processors who are diligently recruited, accompanied by experienced managers who help facilitate a seamless clear-to-close experience. We provide ongoing training and educational opportunities for our processors to ensure that they stay current on recent industry trends. ● Franchising Expertise.
Through our wemlo brand, we offer Motto franchisees, as well as mortgage brokers across the brokerage industry, a customer-centric team of processors who are diligently recruited, accompanied by experienced managers who help facilitate a seamless clear-to-close experience. We provide ongoing training and educational opportunities for our processors to ensure that they stay current on recent industry trends. ● Franchising Expertise.
The states with relationship or other statutes governing the termination of franchises include Arkansas, California, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, Virginia, Washington and Wisconsin.
The states with relationship or other statutes governing the termination of franchises include Arkansas, California, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, Rhode Island, Virginia, Washington and Wisconsin.
We provide agent-facing technology via the kvCORE platform, which integrates a suite of digital products that empower high-producing agents, teams and brokers to proactively establish, manage and grow client relationships.
We provide agent-facing technology via the BoldTrail platform, which integrates a suite of digital products that empower high-producing agents, teams and brokers to proactively establish, manage and grow client relationships.
We guide owners through every step of the setup process. ● Compliance, Education, and Support. We provide robust compliance support, including examination assistance and a system built with transparency in mind. To help each franchise owner, we provide support structures that allow them to spend their time getting more business. ● Access to multiple lenders.
We guide owners through every step of the setup process. 7 Table of Contents ● Compliance, Education, and Support. We provide robust compliance support, including examination assistance and a system built with transparency in mind. To help each franchise owner, we provide support structures that allow them to spend their time getting more business. ● Access to Multiple Lenders.
Motto franchisees work with a pre-vetted group of wholesale lenders to streamline the shopping process and to provide customers with competitive choices. ● Technology. We have seamlessly integrated industry leading systems into one time-saving technological ecosystem including intuitive mortgage origination, CRM and marketing platforms.
Motto franchisees work with a pre-vetted group of wholesale lenders to streamline the shopping process and to provide customers with competitive choices. ● Technology. We have seamlessly integrated industry leading systems into one time-saving technological ecosystem including intuitive mortgage origination, LBS, CRM and marketing platforms. ● Loan Processing.
The Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the “Investor Relations” portion of the Company’s website, www.remaxholdings.com, as soon as reasonably practical after they are filed with the Securities and Exchange Commission (“SEC”).
The Company’s Annual Report on Form 10-K, quarterly 13 Table of Contents reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the “Investor Relations” portion of the Company’s website, www.remaxholdings.com, as soon as reasonably practical after they are filed with the Securities and Exchange Commission (“SEC”).
In some instances, wholesale lenders may also provide similar services that Motto offers to our franchisees. The mortgage brokerage business in which Motto franchisees participate is highly competitive and competition for talented loan originators and loan processors is often fierce. There are no other national mortgage brokerage franchises in the United States.
The mortgage brokerage business in which Motto franchisees participate is highly competitive and competition for talented loan originators and loan processors is often fierce. Additionally, wholesale lenders may also provide similar services that Motto offers to our franchisees. There are no other national mortgage brokerage franchises in the United States.
RE/MAX Four-Tier Franchise Structure . RE/MAX is a 100% franchised business, with all RE/MAX branded brokerage office locations being operated by franchisees. We franchise directly in the U.S. and Canada, in what we call “Company-Owned Regions.” Franchisees (or broker-owners), in turn, enter into independent contractor relationships with real estate sales agents who represent real estate buyers and sellers.
RE/MAX is a 100% franchised business, with all RE/MAX branded brokerage office locations being operated by franchisees. We franchise directly in the U.S. and Canada, in what we call “Company-Owned Regions.” Franchisees (or broker-owners), in turn, enter into independent contractor relationships with real estate agents who represent real estate buyers and sellers.
Leading brand awareness. The RE/MAX brand has the highest level of unaided brand awareness in residential real estate in the U.S. and Canada according to a consumer study conducted by MMR Strategy Group. Our iconic red, white and blue RE/MAX hot air balloon is one of the most recognized real estate logos in the world. Leading global presence.
The RE/MAX brand has the highest level of unaided brand awareness in residential real estate in the U.S. and Canada according to a consumer study conducted by MMR Strategy Group. Our iconic red, white and blue RE/MAX hot air balloon is one of the most recognized real estate logos in the world. ​ ● Leading agent productivity .
The Motto franchise model offers U.S. real estate brokers, real estate professionals, mortgage professionals and other investors access to the mortgage brokerage business. Motto is highly complementary to our RE/MAX real estate business and is designed to improve the profitability of real estate brokerages and professionals by providing dual RE/MAX and Motto franchise owners with diversified revenue and income streams.
The Motto franchise model offers U.S. real estate brokers, real estate professionals, mortgage professionals and other investors access to the mortgage brokerage industry. Motto is highly complementary to our RE/MAX real estate business and is designed to improve the profitability of real estate brokerages and professionals by providing diversified revenue and income streams.
See Note 16, Segment Information, included in “Part II, Item 8.—Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosures about segments and descriptions of Adjusted EBITDA.
See Note 15, Segment Information, included in “Part II, Item 8.—Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosures about segments and descriptions of Adjusted EBITDA. Real Estate.
The wemlo platform is an innovative fintech solution, and the first cloud service for mortgage brokers, which combines third-party loan processing with an all-in-one digital platform to add to our mortgage value proposition. wemlo was created to solve one of the biggest challenges of being in the mortgage brokerage space – inefficient loan processing.
The wemlo platform is an innovative fintech solution, and the first cloud service for mortgage brokers, which combines third-party loan processing with the all-in-one digital LBS platform to add to our mortgage value proposition and growth opportunity. wemlo was created to solve one of the biggest challenges in the mortgage brokerage channel – inefficient loan processing.
Our brand and the economics of our model generally attract driven, professional, entrepreneurially minded franchisees, and we allow them autonomy to run their businesses independently, including the freedom to negotiate commission rates and splits and oversee local advertising aligned with RE/MAX brand standards. ● Technology and Marketing Tools. We believe we offer competitive technology.
Our brand and the economics of our model generally attract driven, professional, entrepreneurially minded franchisees, and we allow them autonomy to run their businesses independently, including the freedom to negotiate commission rates and splits and oversee local advertising aligned with RE/MAX brand standards.
Our franchisees and their agents fund nearly all the advertising, marketing and promotion supporting the RE/MAX brand, which, in the U.S. and Canada, occurs primarily on two levels: ● Marketing Fund Regional, Pan-Regional and Local Marketing Campaigns .
Our franchisees and their agents fund nearly all the advertising, marketing and promotion supporting the RE/MAX brand, which, in the U.S. and Canada, occurs primarily on two levels: ● Marketing Funds .
In September 2020, we acquired wemlo, an innovative fintech company that provides third-party mortgage loan processing services.
In September 2020, we acquired wemlo, an innovative fintech company that provides third-party mortgage loan processing services. Our Brands RE/MAX.
Toward these ends, we seek to provide a competitive level of compensation that balances rewards for both short-term performance and longer-term value creation, promotes accountability, incentivizes and rewards both corporate and individual performance without encouraging imprudent risk taking. This philosophy drives all aspects of officer compensation, including our base pay guidelines, annual incentives, and grants of long-term equity-based compensation awards.
Toward these ends, we seek to provide a competitive level of compensation that rewards for both short-term performance and longer-term value creation, promotes accountability, incentivizes individual performance aligned with long-term strategy. This philosophy drives all aspects of officer compensation, including our base pay guidelines, annual incentives, and grants of long-term equity-based compensation awards.
We also sell ancillary products and services to our franchise networks, including loan processing services to our Motto network through our wemlo® brand. We organize our business based on the services we provide in Real Estate, Mortgage and our collective franchise marketing operations, known as the Marketing Funds.
We also sell ancillary products and services to our franchise networks, including loan processing services to our Motto network and other third parties through our wemlo ® brand. We organize our business based on the services we provide in Real Estate, Mortgage and our collective franchise marketing operations, known as the Marketing Funds. RE/MAX and Motto are 100% franchised.
The mortgage brokerage industry is usually adversely impacted in periods of decreasing home sales activity, as this results in fewer purchase-money mortgage originations, and periods of rising interest rates, making homeowners less likely to refinance. The RE/MAX “Agent-Centric” Franchise Offering .
The mortgage brokerage industry is usually adversely impacted in periods of decreasing home sales activity, as this results in fewer purchase-money mortgage originations, and periods of high interest rates, making homeowners less likely to refinance. Our Franchising Model and Offerings The RE/MAX Franchise Offering .
We recommend to our franchisees an agent-favorable commission split of 95%/5%, in exchange for the agent paying fixed fees to share the overhead and other costs of the brokerage.
We recommend to our franchisees an agent-favorable commission split of 95%/5%, in exchange for the agent paying fixed fees to share the overhead and other costs of the brokerage. ● Technology and Marketing Tools. We believe we offer competitive technology.
Through its ownership of the Class B common stock, RIHI holds 40.7% of the voting power of the Company’s stock as of December 31, 2023. Mr. Liniger also owns Class A common stock with an additional 1.1% of the voting power of the Company’s stock as of December 31, 2023.
Through its ownership of the Class B common stock, RIHI holds 39.8% of the voting power of the Company’s stock as of December 31, 2024. Mr. Liniger also owns Class A common stock with an additional 1.1% of the voting power of the Company’s stock as of December 31, 2024.
TRA liabilities were established for the future cash obligations expected to be paid under the TRAs and are not discounted. Similar to the deferred tax assets, the TRA liabilities would increase if Holdings acquires additional common units of RMCO from RIHI.
As of December 31, 2024, TRA holders are RIHI and Parallaxes Rain Co-Investment, LLC. TRA liabilities were established for the future cash obligations expected to be paid under the TRAs and are not discounted. Similar to the deferred tax assets, the TRA liabilities would increase if Holdings acquires additional Common Units of RMCO from RIHI.
Our philosophy is that compensation should aim to align the goals of management with the interests of the Company and its stockholders and attract and retain talented people with the skills to help the Company achieve its goals.
Our philosophy is that compensation should aim to align the goals of management with the long-term strategy of the Company and the interests of its stockholders and to attract, retain and develop talented people.
In our early days, one of the keys to our initial success was an intentional decision to target women to join our RE/MAX network as real estate agents, which helped create professional opportunities for women in a traditionally male-dominated industry at the time. Through the years, we have made leadership opportunities for women a priority within our organization.
In our early days, one of the keys to our initial success was an intentional decision to target women to join our RE/MAX network as real estate agents, which helped create professional opportunities for women in a traditionally male- 12 Table of Contents dominated industry at the time.
Through the Miracle Home ® program, participating RE/MAX agents donate to Children's Miracle Network Hospitals once a home sale transaction is complete. The RE/MAX network has donated approximately $200 million to the Children’s Miracle Network Hospitals in the U.S. and Canada since 1992.
The RE/MAX network has supported, since 1992, Children's Miracle Network Hospitals ® in the U.S. and Children's Miracle Network ® in Canada, to help sick and injured children. Through the Miracle Home ® program, participating RE/MAX agents donate to Children's Miracle Network Hospitals once a home sale transaction is complete.
With Customer Relationship Management (“CRM”) at the core of this ecosystem, the technology platform also utilizes lead cultivation tools and incorporates digital marketing products and competitive market analyses to streamline an agent’s business. The kvCORE platform also integrates key partnerships that are widely adopted across the industry.
With the Customer Relationship Management (“CRM”) at the core of this ecosystem, the technology platform also utilizes lead cultivation tools and incorporates digital marketing products and competitive market analyses to streamline an agent’s business.
Real Estate The amount of revenue recognized varies significantly depending on whether RE/MAX affiliates are located in Company-Owned Regions in the U.S. and Canada, Independent Regions in the U.S. and Canada, or Global Regions outside of the U.S. and Canada, with the greatest amounts in Company-Owned Regions. Revenue per Agent in Owned versus Independent RE/MAX Regions .
The amount of revenue recognized varies significantly depending on whether RE/MAX affiliates are in Company-Owned Regions in the U.S. and Canada, Independent Regions in the U.S. and Canada, or Global Regions outside of the U.S. and Canada.
Dual RE/MAX and Motto franchisees offer potential homebuyers an opportunity to find both real estate agents and independent Motto loan originators at offices near each other. Motto loan originators provide homebuyers with financing choices by providing access to a variety of quality loan options from multiple leading wholesale lenders.
Residential real estate brokerage owners and teams who own and operate a Motto franchise offer potential homebuyers an opportunity to find both real estate agents and independent Motto loan originators at offices near each other. Motto loan originators offer homebuyers with competitive financing choices by providing access to a variety of quality loan options from multiple leading wholesale lenders.
We regard our RE/MAX trademark, balloon logo and property sign design trademarks as having significant value. We protect the RE/MAX, Motto and wemlo brands through a combination of trademarks and copyrights. We strategically pursue registration of important trademarks and actively protect our brands in the U.S. and internationally against third-party infringement.
We protect the RE/MAX, Motto and wemlo brands through a combination of trademarks and copyrights. We strategically pursue registration of important trademarks and actively protect our brands in the U.S. and internationally against third-party infringement.
Broker fees are a variable revenue stream and represent a percentage, generally 1%, of the real estate commissions paid by customers when a RE/MAX agent buys or sells a home. For the years ended December 31, 2023, 2022 and 2021, Broker fees accounted for 21.1%, 23.9% and 26.5% of our revenue excluding the Marketing Funds, respectively.
For the years ended December 31, 2024, 2023 and 2022, these recurring revenue streams accounted for 67.4%, 66.7% and 64.3% of our revenue excluding the Marketing Funds, respectively. Broker fees are a variable revenue stream and represent a percentage, generally 1%, of the real estate commissions paid by customers when a RE/MAX agent buys or sells a home.
Funds are collected from franchisees by our Marketing Funds entities in Company-Owned Regions to support both regional and pan-regional marketing campaigns to build brand awareness and to support the Company’s agent and broker technology, such as kvCORE. The use of the fund balances is restricted by the terms of our franchise agreements.
Funds are collected from franchisees by our Marketing Funds entities primarily in Company-Owned Regions to support marketing campaigns to build brand awareness and to support the Company’s consumer facing technology, such as BoldTrail. The use of the dollars in the Marketing Funds is restricted by the terms of our franchise agreements.
We generally receive 15% or 30% of the amount of such fees in Independent Regions, which is a fixed rate in each particular Independent Region established by the terms of the applicable regional franchise agreement.
We receive the entire amount of the continuing franchise fee, broker fee and initial franchise and renewal fee in Company-Owned Regions, whereas we generally receive only 15% or 30% of the amount of such fees in Independent Regions, which is a fixed rate in each Independent Region established by the terms of the applicable regional franchise agreement.
In that capacity, Holdings operates and controls all of the business and affairs of RMCO. RMCO is a holding company that is the direct or indirect parent of all of our operating businesses, including RE/MAX, LLC and Motto Franchising, LLC. As of December 31, 2023, Holdings owns 59.3% of the common units in RMCO, while RIHI, Inc.
RMCO is a holding company that is the direct or indirect parent of all of our operating businesses, including RE/MAX, LLC and Motto Franchising, LLC. As of December 31, 2024, Holdings owns 60.2% of the common units in RMCO, while RIHI, Inc. (“RIHI”) owns the remaining 39.8% of common units in RMCO.
For our wemlo mortgage loan processing revenue, we charged a fixed processing fee of $725 for each loan closed through a Motto franchise and a fixed processing fee of $995 for most loans closed through external customers in 2023.
For our wemlo mortgage loan processing revenue, we charged a fixed processing fee of $725 for each loan closed through a Motto franchise and a fixed processing fee of $995 for most loans closed through external customers in 2023. The fixed processing fee for the Motto network increased to $825 per loan starting January 1, 2024. Marketing Funds.
Other Revenue contains all other operations which are quantitatively insignificant. The majority of our revenue is recurring in nature and driven by the number of agents in the RE/MAX network and the number of open offices in the Motto network.
Historically the majority of our revenue is recurring in nature and driven by the number of agents in the RE/MAX network and the number of open offices in the Motto network.
The remainder of our revenue is derived from franchise sales and renewals, preferred marketing arrangements, event-based revenue and mortgage loan processing revenue. We evaluate the operating results of our segments based on revenue and adjusted earnings before interest, the provision for income taxes, depreciation and amortization and other non-cash and non-recurring cash charges or other items (“Adjusted EBITDA”).
We evaluate the operating results of our segments based on revenue and adjusted earnings before interest, the provision for income taxes, depreciation and amortization and other non-cash and non-recurring cash charges or other items (“Adjusted EBITDA”).
Built on intuitive technology that leverages artificial intelligence, RE/MAX University offers affiliates a modern, simplified experience as they access relevant educational resources via desktop or mobile devices. RE/MAX University offers on-demand access to thousands of educational videos, downloadable resources, webinars and more.
Built on intuitive technology that leverages AI, RE/MAX University offers affiliates a modern, simplified experience as they access relevant educational resources via desktop or mobile devices.
We also continue to invest in our consumer-facing app and remax.com website. ● RE/MAX University ® Educational Programs . We partner with several industry leaders to provide tools aimed at increasing the success of our RE/MAX teams. Additionally, our RE/MAX University platform is an exclusive-to-RE/MAX learning hub designed to help each agent increase their professional expertise.
We partner with several industry leaders to provide tools aimed at increasing the success of new and existing agents as well as teams of RE/MAX professionals. Additionally, our RE/MAX University platform is an exclusive-to-RE/MAX learning hub designed to help each agent increase their professional expertise.
Value Creation and Growth Strategy As a franchisor, we generate favorable margins and healthy amounts of cash flow, which facilitate our value creation and growth strategy.
Our Value Creation and Growth Strategy As primarily a franchisor, we generate favorable margins and healthy amounts of cash flow that facilitate our value creation and growth strategy, and when appropriate and feasible, returning capital to our shareholders.
As a result of our unique agent-centric approach, we have established a 50-year track record of helping millions of homebuyers and sellers achieve their goals, creating several competitive advantages in the process: Leading agent productivity . RE/MAX agents are, on average, substantially more productive than the industry average.
As a result of our unique agent-centric approach, we have established a 50-year track record of helping millions of homebuyers and sellers achieve their goals, creating several competitive advantages in the process: ● Most trusted agents. According to consumers, RE/MAX agents continue to be voted the most trusted choice.
As a franchisor, we help our Motto franchisees establish independent mortgage brokerage companies, with a model designed to comply with complex regulations, essentially providing a "mortgage brokerage in a box".
Our franchisees are brokers, not lenders or bankers, and so neither we nor our franchisees fund or service any loans. As a franchisor, we help our Motto franchisees establish independent mortgage brokerage companies, with a model designed to comply with complex regulations, essentially providing a "mortgage brokerage in a box".
A substantial portion of each of our executive officer’s compensation is at risk. Annual succession planning for senior leadership is overseen by our Board of Directors, including development plans for the next level of our senior leaders. Annual talent reviews focus on both high performers as well as those with high potential to keep our pipeline of tomorrow’s leaders full.
A substantial portion of each of our executive officer’s compensation is at risk. Annual succession planning for senior leadership is overseen by our Board of Directors, including development plans for the next level of our senior leaders.
The majority of brokerages are independent, with the best-known independent brokerages being regional players. At the individual office level, oftentimes our most formidable competition is that of a local, independent brokerage. Brokerages affiliated with franchises tend to be larger, on average, than independents and are part of a national network.
At the individual office level, oftentimes our most formidable competition is that of a local, independent brokerage. Brokerages affiliated with franchises tend to be larger, on average, than independents and are part of a national network. Our largest national competitors in the U.S. and Canada include the brands operated by Anywhere Real Estate Inc.
Our franchisees and their agents engage in extensive promotional efforts within their local markets to attract customers and drive agent and brand awareness locally. 12 Table of Contents These programs are subject to our brand standards for use of the RE/MAX brand, but we allow our franchisees and their agents substantial flexibility to create advertising, marketing and promotion programs that are tailored to local market conditions.
These programs are subject to our brand standards for use of the RE/MAX brand, but we allow our franchisees and their agents substantial flexibility to create advertising, marketing and promotion programs that are tailored to local market conditions. The Motto Franchise Offering .
Motto Open Offices and Average Fee Revenue Per Office Marketing Funds Our Marketing Funds revenue is derived primarily from RE/MAX franchisees in Company-Owned Regions based on the number of RE/MAX agents in the respective franchise, with smaller contributions by Independent Region owners and the 18 Table of Contents number of Motto open offices.
Our Marketing Funds revenue is derived primarily from RE/MAX franchisees in Company-Owned Regions based on the number of RE/MAX agents in the respective franchise, with smaller contributions by Independent Region owners and Motto franchisees. Marketing Funds revenues are fixed contractual fees paid monthly by RE/MAX and Motto franchisees based on the terms outlined in the franchise agreement.
Intellectual Property We believe that our intellectual property rights contribute significantly to the success of our business and our competitive position. Our RE/MAX ® trademark has been in use for over fifty years, and we believe consumers have come to recognize the RE/MAX brand as being synonymous with high-quality real estate service.
Our RE/MAX ® trademark has been in use for over fifty years, and we believe consumers have come to recognize the RE/MAX brand as being synonymous with high-quality real estate service. We regard our RE/MAX trademark, balloon logo and property sign design trademarks as having significant value.
We also are the registered holder of a remax.com, remax.ca, mottomortgage.com and a number of other domain names that include “remax,” “motto” or “wemlo,” including domains that we offer to our Global Regions to use as their primary internet address. 23 Table of Contents Corporate Structure and Ownership Holdings is a holding company incorporated in Delaware and its only business is to act as the sole manager of RMCO, LLC (“RMCO”).
We also are the registered holder of remax.com, remax.ca, mottomortgage.com and a number of other domain names that include “remax,” “motto” or “wemlo,” including domains that we offer to our Global Regions to use as their primary internet address.
For the year ended December 31, 2023, our average annual revenue per agent (excluding the Marketing Funds fees) was as follows: (1) In Company-Owned Regions we receive approximately $765 less per agent in Canada than we do for agents in the U.S. primarily due to different Broker Fees structures and as a result of foreign exchange differences between the U.S. dollar and the Canadian dollar.
Our average revenue (excluding the Marketing Funds fees) per agent in Company-Owned Regions in the U.S. and Canada was approximately $2,570, $2,550, and $2,750, with approximately $820, $765 and $850 less per agent in Canada than in the U.S. primarily due to different broker fee structures and because of foreign exchange differences between the U.S. dollar and the Canadian dollar, for the three years ended December 31, 2024, 2023 and 2022, respectively.
Industry Overview and Trends With approximately 94% of our revenue coming from our real estate franchising operations in the U.S. and Canada, and 100% of our Mortgage revenues being in the U.S., macro developments in the U.S. and Canadian real estate markets significantly influence our business. The U.S. and Canadian Real Estate Industries are Large Markets .
Furthermore, as approximately 92% of our Real Estate segment revenue comes from our real estate franchising operations in the U.S. and Canada, and 100% of our Mortgage segment revenues are generated in the U.S., macro-economic developments in the U.S. and Canadian real estate and mortgage markets significantly influence our business.
Their employees, including Motto loan originators and independent contractor RE/MAX agents are therefore not included in our employee count. None of our employees are represented by a union.
As a franchisor, we refer to ourselves as “a business that builds businesses,” and our franchisees are all independently operated. Their employees, including Motto loan originators and independent contractor RE/MAX agents are therefore not included in our employee count. None of our employees are represented by a union.
The mortgage brokerage industry generally benefits from periods of increasing home sales activity and rising home prices, as this generally results in increased purchase-money mortgage originations and periods when homeowners refinance to take advantage of lower interest rates.
New entrants with varying business models have continued to grow, drive consolidation, and take market share. The mortgage brokerage industry also generally benefits from periods of increasing home sales activity and rising home prices, as this can result in increased purchase-money mortgage originations and from periods when homeowners 5 Table of Contents refinance to take advantage of lower interest rates.
The residential real estate markets in the U.S. and Canada are approximately $1.9 trillion and $0.3 trillion, respectively, based on 2023 sales volume data from NAR, the U.S. Census Bureau and the Canadian Real Estate Association (“CREA”). The Residential Real Estate Industry is Cyclical in Nature . The residential real estate industry is cyclical in nature.
The nature of the residential real estate market in the U.S. and Canada is cyclical. The residential real estate markets in the U.S. and Canada are also large markets with approximately $1.9 trillion and $0.3 trillion, respectively, based on 2024 sales volume data and median price data from the National Association of Realtors (“NAR”), the U.S.
Tier Time Period Fixed Fee Per Month Tier 1 Months 1 – 6 $0 Tier 2 Months 7 – 9 $2,650 Tier 3 Months 10 – 12 $3,650 Tier 4 Months 13 - remaining term $4,650 We believe the growth and success of our mortgage segment is dependent on providing real estate and other entrepreneurs with opportunities for revenue and earnings diversification – a strategy we believe is increasingly important in the face of shifting housing market conditions.
We believe the growth and success of our mortgage segment is dependent on providing real estate brokers and other entrepreneurs with opportunities for revenue and earnings diversification – a strategy we believe is increasingly important in the face of shifting housing market conditions.
Our mission is to be the worldwide leader in real estate, achieving our goals by helping others achieve theirs. To achieve this, we hire individuals who reflect our M.O.R.E. core values: ● M ax Effort. You stay hungry and are never satisfied, pushing yourself to maximum heights.
Our mission is to deliver the best experience in everything real estate. To achieve this, we hire individuals who reflect our M.O.R.E. core values: ● M ax Effort. You stay hungry and are never satisfied, pushing yourself to maximum heights. You bring maximum energy and enthusiasm to everything you do, moving the ball forward as far as you can.
These figures have climbed over the last two decades—a period of time during which technology has materially changed the typical home-buying or selling transaction: Percentage of Home Buyers and Sellers Using an Agent ​ ​ ​ ​ ​ ​ ​ ​ ​ Source: NAR Profile of Home Buyers and Sellers ​ ● Competition for agents and listings remains fierce – Competition for agents and listings has always been fierce, and today is no different—especially for highly productive agents.
These figures have climbed over the last two decades—a period during which technology has materially changed the typical home-buying or selling transaction. We expect that advancements in technology, including with respect to artificial intelligence (“AI”) will continue. Competition for agents and listings has always been fierce and today is no different-especially for highly productive agents.
The RE/MAX strategy is to sell franchises and help those franchisees recruit and retain the best agents. The RE/MAX brand is built on the strength of our global franchise network and our unique economic model that helps to attract and retain the best-performing and most experienced agents by maximizing their opportunity to retain a larger portion of their commissions.
The RE/MAX brand is built on the strength of our global, entrepreneurial franchise network and our agent-centric model that helps to attract, develop and retain the trusted, productive and professional agents by maximizing their opportunity to retain a larger portion of their commissions.
The diagram below depicts our organizational structure: The holders of Holdings Class A common stock collectively own 100% of the economic interests in Holdings, while RIHI owns 100% of the outstanding shares of Holdings Class B common stock.
RIHI is majority owned and controlled by David Liniger, our Chairman and Co-Founder, and by Gail Liniger, our Vice Chair Emerita and Co-Founder. 10 Table of Contents The diagram below depicts our organizational structure: The holders of Holdings Class A common stock collectively own 100% of the economic interests in Holdings, while RIHI owns 100% of the outstanding shares of Holdings Class B common stock.
We support our franchisees in growing their brokerages, although they fund the cost of developing their brokerages. As a result, we maintain a low fixed-cost structure which, combined with our recurring fee-based models, enables us to capitalize on the economic benefits of the franchising model, yielding high margins and significant cash flow.
As a result, we maintain a low fixed-cost structure which, combined with our recurring fee-based models, enables us to capitalize on the economic benefits of the franchising model, yielding high margins and significant cash flow. We are focused on operating our business as efficiently and effectively as possible, maintaining a growth mindset, and delivering the absolute best customer experience.
Independent Regions may contribute to regional or pan-regional creative and/or media campaigns to achieve economies of scale in the purchase of advertising but are generally responsible for any regional advertising in their respective areas. ● Agent Sponsored Local Campaigns.
Independent Regions may contribute to creative and/or media campaigns or technology initiatives to achieve economies of scale but are generally responsible for any regional advertising in their respective areas. ● Franchisee and Agent Sponsored Local Campaigns. Our franchisees and their agents engage in extensive promotional efforts within their local markets to attract customers and drive agent and brand awareness locally.
The monthly fees are initially discounted and ramp up to the full fixed monthly fee of $4,650 at set intervals over the initial 12-month period from date of franchise sale. Subsequently, we charge a fixed monthly fee of $4,650 throughout the remainder of the franchise agreement term. This revenue is included in Continuing Franchise Fees.
Our revenue is derived in the U.S. from fixed monthly fees, franchise sales and renewals, and mortgage loan processing. The monthly fees are initially discounted and ramp up to the 9 Table of Contents full fixed monthly fee of $4,650 at set intervals over the initial 12-month period from date of franchise sale.
In addition, our stable, fee-based model derives a majority of our revenue from recurring fees paid by our RE/MAX and Motto franchisees, RE/MAX Independent Region franchise owners and RE/MAX agents. This combination contributes to healthy margins and meaningful cash flow. ​ (1) Revenue excluding the Marketing Funds and Adjusted EBITDA are non-GAAP measures of financial performance that differ from U.S.
Segment Revenue and Profit As a franchisor, we maintain a low fixed-cost structure. In addition, our stable, fee-based model derives a majority of our revenue from recurring fees paid by our RE/MAX and Motto franchisees, RE/MAX Independent Region franchise owners and RE/MAX agents. This combination contributes to healthy margins and meaningful cash flow.
The chart below illustrates our consolidated revenue streams excluding the Marketing Funds. Holdings Revenue Streams as Percentage of 2023 Total Revenue Segment Revenue and Profit We have three reportable segments: Real Estate, Mortgage and Marketing Funds. Real Estate comprises our real estate brokerage franchising operations under the RE/MAX brand name and corporate-wide shared services expenses.
We have three reportable segments: Real Estate, Mortgage and Marketing Funds. Real Estate comprises our real estate brokerage franchising operations under the RE/MAX brand name and corporate-wide shared services expenses. Mortgage is comprised of our mortgage brokerage franchising operations under the Motto brand and mortgage loan processing software and services under the wemlo brand.
Our History RE/MAX was founded in 1973 with an innovative, entrepreneurial culture affording our franchisees and their agents the flexibility to operate their businesses with great independence.
We provide quality education, and innovative technology products, valuable marketing and we leverage our size and scale to continue to build the strength of our brands and enhance our competitive advantages. Our History RE/MAX was founded in 1973 with an innovative, entrepreneurial culture affording our franchisees and their agents the flexibility to operate their businesses with great independence.
Our customers are both RE/MAX and non-RE/MAX real estate brokers, real estate professionals, independent mortgage professionals and other investors seeking access to the mortgage brokerage industry. Financial Model As a franchisor, we maintain a low fixed-cost structure.
Our customers are both RE/MAX and non-RE/MAX real estate brokers, real estate professionals, independent mortgage professionals and other investors seeking access to the mortgage brokerage industry. Our Competition RE/MAX. The residential real estate brokerage industry is fragmented and highly competitive.
Holdings issued Class A common stock, which it exchanged for these common units of RMCO. RIHI then sold the Class A common stock to the market. When Holdings acquired common units in RMCO, it received a step-up in tax basis on the underlying assets held by RMCO.
At these times, Holdings acquired 11.5 million and 5.2 million Common Units, respectively, and then issued an equal number of Class A common stock in exchange for these Common Units, which RIHI subsequently sold to the market. When Holdings acquired the aforementioned Common Units, it received a step-up in tax basis for RMCO's assets.
Our model maximizes RE/MAX agents’ productivity by providing the following combination of benefits to our franchisees and agents: ● High Agent Commission Split and Low Franchise Fees .
Our model maximizes RE/MAX agents’ productivity by providing the following combination of benefits to our franchisees and agents: ● Affiliation with the Leading Brand in Residential Real Estate .
Several states also have “franchise relationship laws” or “business opportunity laws” that limit the ability of the franchisor to terminate franchise agreements or to withhold consent to the renewal or transfer of these agreements.
A number of states require registration and disclosure or impose bonding requirements on “business opportunities” which in some cases do not exempt franchises. Several states also have “franchise relationship laws” that limit the ability of the franchisor to terminate franchise agreements or to withhold consent to the renewal or transfer of these agreements.
Holdings Ownership of RMCO and Tax Receivable Agreements Holdings has twice acquired significant portions of the ownership in RMCO; first in October 2013 at the time of IPO when Holdings acquired its initial 11.5 million common units of RMCO and, second, in November and December 2015 when it acquired a total of 5.2 million additional common units.
Holdings Ownership of RMCO and Tax Receivable Agreements At the time of the Company’s IPO in October 2013 and again in November and December 2015, Holdings acquired significant ownership in RMCO in the form of RMCO Common Units.
In addition, while historically our franchising 26 Table of Contents operations have not been materially adversely affected by such regulation, we cannot predict the effect of any future federal or state legislation or regulation. Real Estate and Mortgage Regulation .
Although we believe that our franchise agreements comply with these statutory requirements, failure to comply with these laws could result in our company incurring civil and criminal liability. In addition, while historically our franchising operations have not been materially adversely affected by such regulation, we cannot predict the effect of any future federal or state legislation or regulation.
Marketing Funds revenues are fixed contractual fees paid monthly by RE/MAX and Motto franchisees based on the terms outlined in the franchise agreement. See Note 2, Summary of Significant Accounting Policies, included in “Part II, Item 8.—Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosures about our various revenue streams.
See Note 2, Summary of Significant Accounting Policies, included in “Part II, Item 8.—Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosures about our various revenue streams. Intellectual Property We believe that our intellectual property rights contribute significantly to the success of our business and our competitive position.
Mortgage is comprised of our mortgage brokerage franchising operations under the Motto brand and mortgage loan processing software and services under the wemlo brand. Marketing Funds represents our marketing campaigns designed to build and maintain brand awareness for both of our franchise brands and the costs of agent marketing technology such as kvCORE.
Marketing Funds represents our marketing campaigns designed to build and maintain brand awareness for both of our franchise brands and the costs of agent marketing technology such as BoldTrail. Other Revenue contains all other operations which are quantitatively insignificant.
Mortgage brokers are familiar with the latest loan programs and choices available through various wholesale lenders. A professional mortgage broker can introduce consumers to loan programs from several lenders, providing choice and information that consumers may be unlikely to locate on their own.
A professional mortgage broker and their affiliated loan originators can introduce consumers to loan programs from several lenders, providing choice and information that consumers may be unlikely to locate on their own. In 2024, approximately 19% of mortgage originations were handled by mortgage brokerages.
RE/MAX agents at large U.S. brokerages have consistently outsold competing agents at large brokerages on average more than two-to-one over the last thirteen years based on data in the REAL Trends 500 survey as noted below. RE/MAX agent productivity continued to outperform the competition as follows: ​ U.S.
RE/MAX agents are, on average, substantially more productive than the industry average. RE/MAX agents have consistently outsold competing agents at large U.S. brokerages on average more than two-to-one over the last fourteen years based on data in the RealTrends Verified Best Brokerage rankings.
The wemlo platform – called the Loan Brokering System ("LBS”) – has automated tasks and an intuitive 6 Table of Contents framework, enabling loan processors of varying levels of experience to manage the workflow and provide a high level of service to the loan originators they support.
In addition to being the system of record for our Motto franchise network, the LBS also has automated tasks with an intuitive framework that enables loan processors of varying levels of experience to manage the workflow and efficiently provide a high level of service to the loan originators they support.
Today, the RE/MAX brand has over 140,000 agents in over 9,000 offices and a presence in over 110 countries and territories—a global footprint bigger than any other real estate brokerage brand in the world. 5 Table of Contents The following summarize key statistics for the RE/MAX brand: ​ ​ ​ 144,835 Agents 9,022 Offices 121 Countries and Territories As of December 31, 2023 Motto.
Today, the RE/MAX brand has over 145,000 agents in nearly 9,000 offices and a presence in over 110 countries and territories—a global footprint bigger than any other real estate brokerage brand. ​ (1) In the U.S.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe cannot predict with certainty the costs of defense, the costs of filing claims, insurance coverage or the ultimate outcome of litigation and other proceedings filed by or against us, including remedies or damage awards, and adverse results in such litigation and other proceedings may harm our business and financial condition. 29 Table of Contents Such litigation and other proceedings may include, but are not limited to, the industry class-action lawsuits as disclosed in Note 14, Commitments and Contingencies, securities litigation including class actions and shareholder derivative litigation, privacy and Telephone Consumer Protection Act litigation including class actions, complaints from or litigation by franchisees, usually related to alleged breaches of contract or wrongful termination under the franchise arrangements, actions relating to intellectual property, commercial arrangements and franchising arrangements.
Biggest changeSuch litigation and other proceedings may include, but are not limited to, the industry class-action lawsuits as disclosed in Note 13, Commitments and Contingencies, securities litigation including class actions and shareholder derivative litigation, privacy and Telephone Consumer Protection Act litigation including class actions, complaints from or litigation by franchisees, usually related to alleged breaches of contract or wrongful termination under the franchise arrangements, or actions relating to intellectual property, commercial arrangements and franchising arrangements.
Additionally, we explore opportunities to acquire other businesses, including RE/MAX Independent Regions, or other businesses that are complementary to our core businesses.
Additionally, we explore opportunities to acquire other businesses, including businesses that are complementary to our core businesses or RE/MAX Independent Regions.
The failure of Independent Region owners to successfully develop or expand within their respective regions could adversely impact our revenue and earnings growth opportunities. We sold regional master franchises in the U.S. and Canada and have sold and continue to sell regional master franchises in our global locations outside of Canada.
The failure of Independent Region owners to successfully develop or expand within their respective regions could adversely impact our revenue and earnings growth opportunities. We sold regional master franchises in the U.S. and Canada (Independent Regions) and have sold and continue to sell regional master franchises in our global locations outside of Canada.
We, or our franchisees, are also subject to various other rules and regulations such as: ● the Gramm-Leach-Bliley Act, which governs the disclosure and safeguarding of consumer financial information; ● The Mortgage Acts and Practices (“MAP”) Advertising Rule; ● The Federal Trade Commission’s Franchise Rule; ● State franchise laws and regulations; ● the European Union’s General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act, the Personal Information Protection and Electronic Documents Act (Canada); and various other laws protecting consumer data; ● the USA PATRIOT Act and the proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada); ● restrictions on transactions with persons on the Specially Designated Nationals and Blocked Persons list promulgated by the Office of Foreign Assets Control of the Department of the Treasury; ● federal, state, and provincial “Do Not Call,” “Do Not Fax,” and “Do Not E-Mail” laws; 38 Table of Contents ● the Fair Housing Act and National Housing Act (Canada); ● laws and regulations, including the Foreign Corrupt Practices Act, that impose sanctions on improper payments; ● laws and regulations in jurisdictions outside the U.S. in which we do business; ● federal, state, and provincial employment, workplace and taxation laws and regulations, including any changes that would require reclassification of independent contractors to employee status, and wage and hour regulations ; and ● consumer fraud statutes.
We, or our franchisees, are also subject to various other rules and regulations such as: ● the Gramm-Leach-Bliley Act, which governs the disclosure and safeguarding of consumer financial information; ● The Mortgage Acts and Practices (“MAP”) Advertising Rule; ● The Federal Trade Commission’s Franchise Rule; ● State franchise laws and regulations; ● the European Union’s General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act, the Personal Information Protection and Electronic Documents Act (Canada); and various other laws protecting consumer data; ● the USA PATRIOT Act and the proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada); ● restrictions on transactions with persons on the Specially Designated Nationals and Blocked Persons list promulgated by the Office of Foreign Assets Control of the Department of the Treasury; ● federal, state, and provincial “Do Not Call,” “Do Not Fax,” and “Do Not E-Mail” laws; 24 Table of Contents ● the Fair Housing Act and National Housing Act (Canada); ● laws and regulations, including the Foreign Corrupt Practices Act, that impose sanctions on improper payments; ● laws and regulations in jurisdictions outside the U.S. in which we do business; ● federal, state, and provincial employment, workplace and taxation laws and regulations, including any changes that would require reclassification of independent contractors to employee status, and wage and hour regulations ; and ● consumer fraud statutes.
Upon the expiration of a franchise agreement, a franchisee may choose to renew their franchise with us, operate as an independent broker or to franchise with or join one of our competitors. Motto franchise agreements generally have a seven-year term. As Motto was founded in October 2016, 2024 is the first full year Motto has offices up for renewal.
Upon the expiration of a franchise agreement, a franchisee may choose to renew their franchise with us, operate as an independent broker or to franchise with or join one of our competitors. Motto franchise agreements generally have a seven-year term. As Motto was founded in October 2016, 2024 was the first full year Motto has offices up for renewal.
Our strategy hinges on our ability to recruit franchisees and help them recruit loan originators, on our ability to develop and maintain strong competencies within the mortgage brokerage and loan processing markets, on favorable conditions in the related regulatory environment and on our success in developing strong, respected brands.
Our strategy hinges on our ability to recruit franchisees and help them recruit and retain loan originators, on our ability to develop and maintain strong competencies within the mortgage brokerage and loan processing markets, on favorable conditions in the related regulatory environment and on our success in developing strong, respected brands.
Our business is significantly impacted by the availability of financing at favorable rates or on favorable terms for homebuyers, which may be changing macro-economic conditions as well as government regulations and policies.
Our business is significantly impacted by the availability of financing at favorable rates or on favorable terms for homebuyers, which may be affected by changing macro-economic conditions as well as government regulations and policies.
We also rely on third parties for technology that is critical to financial reporting, our franchise and membership tracking and billing, tools to support RE/MAX consumer facing websites, agents and office technology, and information security. We may enter into other key outsourcing relationships in the future.
We also rely on third parties for technology that is critical to financial reporting, our franchise and membership tracking and billing, tools to support RE/MAX consumer facing websites, and information security. We may enter into other key outsourcing relationships in the future.
The residential real estate and mortgage markets were negatively impacted by rising interest rates in 2022, which led to mortgage rates that more than doubled. Increased mortgage rates strained affordability, which resulted in a reduction in existing home sales that began in the second quarter of 2022 and continued throughout the second half of 2022 and throughout 2023.
The residential real estate and mortgage markets were negatively impacted by rising interest rates in 2022, which led to mortgage rates that more than doubled. Increased mortgage rates strained affordability, which resulted in a reduction in existing home sales that began in the second quarter of 2022 and continued throughout 2023 and 2024.
Our franchise systems provide substantial autonomy to these independent franchisees, more so than is common in other franchised industries such as hospitality. Given this autonomy, we have virtually no control over the day-to-day operations of our franchisees and no control over the fees they charge.
Our franchise systems provide more autonomy to these independent franchisees than is common in other franchised industries such as hospitality. Given this autonomy, we have virtually no control over the day-to-day operations of our franchisees and no control over the fees they charge.
For example, franchisees, agents or loan originators may become dissatisfied with the fees and dues owed to us, particularly in a period of economic downturn and uncertainty or in the event that we increase fees and dues. They may disagree with certain network-wide policies and procedures, including policies dictating brand standards or affecting their marketing efforts.
For example, franchisees, agents or loan originators may become dissatisfied with the fees and dues owed to us, particularly in a period of economic downturn and uncertainty or in the event that we increase fees and dues. Affiliates may also disagree with certain network-wide policies and procedures, including policies dictating brand standards or affecting their marketing efforts.
Our brands’ value could diminish significantly if any such incidents or other matters erode consumer confidence in us, which may result in a decrease in our total agent, loan officer and franchisee office counts and, ultimately, lower revenues, which in turn would materially and adversely affect our business and results of operations.
Our brands’ value could diminish significantly if any such incidents or other matters erode consumer confidence in us, which may result in a decrease in our total agent, loan officer 15 Table of Contents and franchisee office counts and, ultimately, lower revenues, which in turn would materially and adversely affect our business and results of operations.
We may experience service disruptions, outages, and other performance problems due to a variety of factors, including reliance on our third-party hosted services, infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of users accessing our platform simultaneously, and denial of service, fraud or other attacks.
We may 18 Table of Contents experience service disruptions, outages, and other performance problems due to a variety of factors, including reliance on our third-party hosted services, infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of users accessing our platform simultaneously, and denial of service, fraud or other attacks.
Our franchising activities are subject to a variety of laws and regulations regarding franchises, and any failure to comply with such existing or future laws and regulations could adversely affect our business. In the U.S., the sale of franchises is regulated by various state laws as well as by the Federal Trade Commission (“FTC”).
Risks Related to Governmental Regulations Our franchising activities are subject to a variety of laws and regulations regarding franchises, and any failure to comply with such existing or future laws and regulations could adversely affect our business. In the U.S., the sale of franchises is regulated by various state laws as well as by the Federal Trade Commission (“FTC”).
Of particular risk and focus in recent years is the potential penetration of internal or outsourced systems by individuals seeking to disrupt operations or misappropriate information (aka, cyberattacks). Cyberattacks, including the use of phishing and malware, continue to grow in sophistication making it impossible for us to mitigate all of these risks.
Of particular risk and focus in recent years is the potential penetration of internal or outsourced systems by individuals seeking to disrupt operations or misappropriate information (aka, cyberattacks). Cyberattacks, including the use of phishing and malware, continue to grow in 25 Table of Contents sophistication making it impossible for us to mitigate all of these risks.
On October 31, 2023, after a two-week trial, the jury in the Burnett Action found that an unlawful conspiracy existed and awarded approximately $1.8 billion against the three defendants that did not settle the case in advance of the trial: NAR, Keller Williams, and HSA.
On October 31, 2023, after a two-week trial, the jury in the Burnett Action found that an unlawful conspiracy existed and awarded approximately $1.8 billion against the three defendants that did not settle the case in advance of the trial: NAR, 19 Table of Contents Keller Williams, and HSA.
Competing businesses may offer fees that are lower than those we charge, or that they perceive as more attractive. Further, some of our largest competitors may have greater financial resources and larger budgets than we do to enhance their value proposition to agents, franchisees and consumers.
Competing businesses may offer fees that are lower than those we charge, or that are perceived as more attractive. Further, some of our largest competitors may have greater financial resources and larger budgets than we do to enhance their value proposition to agents, franchisees and consumers.
RE/MAX is a strong brand that we believe has contributed significantly to the success of our business, and the Motto brand continues to gain recognition. Maintaining, protecting and enhancing the RE/MAX brand, as well as our younger 30 Table of Contents brands such as Motto and wemlo, is critical to growing our business.
RE/MAX is a strong brand that we believe has contributed significantly to the success of our business, and the Motto brand continues to gain recognition. Maintaining, protecting and enhancing the RE/MAX brand, as well as our younger brands such as Motto and wemlo, is critical to growing our business.
If we fail to develop, execute, 27 Table of Contents or focus on our business strategy, fail to make good business decisions, fail to enforce a disciplined management process to ensure that our investment of resources aligns with our strategic plan and our core management and franchising competencies, or fail to properly allocate resources to and focus management attention on strategic areas, any of these could negatively impact our financial performance and results of operations.
If we fail to develop or execute on our business strategy, fail to make good business decisions, fail to enforce a disciplined management process to ensure that our investment of resources aligns with our strategic plan and our core competencies, or fail to properly allocate resources to and focus management attention on strategic areas, any of these could negatively impact our financial performance and results of operations.
Liniger also personally owns Class A common stock with an additional 1.1% of the voting power of the Company’s stock. Therefore, RIHI has the ability to significantly influence all matters submitted to a vote of our stockholders.
Liniger also personally owns Class A common stock with an additional 1.1% of the voting power of the 21 Table of Contents Company’s stock. Therefore, RIHI has the ability to significantly influence all matters submitted to a vote of our stockholders.
We constantly strive to increase the value proposition for our franchisees, agents, and loan originators. If we do not reinvest in our business in ways that make our networks attractive to franchisees, agents and loan originators, we may become less competitive.
We constantly strive to increase the value proposition for franchisees, agents, loan originators and consumers. If we do not reinvest in our business in ways that make our brands attractive to franchisees, agents, loan originators and consumers, we may become less competitive.
These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
These provisions could also 23 Table of Contents discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
Currently, six of the 13 provinces and territories have passed legislation requiring franchisors to provide extensive disclosure in connection with franchise sales. These laws also impose duties on the conduct of the franchisee-franchisor relationship.
Currently, seven of the 13 provinces and territories have passed legislation requiring franchisors to provide extensive disclosure in connection with franchise sales. Provincial laws also impose duties on the conduct of the franchisee-franchisor relationship.
Although RIHI no longer controls a majority of the voting power of RE/MAX Holdings’ common stock, RIHI remains a significant stockholder of the Company and through its ownership of the Class B common stock holds 40.7% of the voting power of the Company’s stock. Mr.
Although RIHI no longer controls a majority of the voting power of RE/MAX Holdings’ common stock, RIHI remains a significant stockholder of the Company and through its ownership of the Class B common stock holds 39.8% of the voting power of the Company’s stock. Mr.
Risks Related to Governmental Regulations Financing for homebuyers in the U.S. and Canada is regulated and a lack of residential real estate market financing at favorable rates and on favorable terms could have a material adverse effect on our financial performance and results of operations.
Financing for homebuyers in the U.S. and Canada is regulated and a lack of residential real estate market financing at favorable rates and on favorable terms could have a material adverse effect on our financial performance and results of operations.
A significant increase in consumer use of technology that eliminates or minimizes the role of the real estate agent or mortgage loan originator could have a material adverse effect on our business, prospects, and results of operations.
A significant increase in consumer use of technology that eliminates or minimizes the role of the real estate agent could have a materially adverse effect on our business, prospects and results of operations.
If we fail to maintain adequate internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed and we could fail to meet our financial reporting obligations. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If we fail to maintain adequate internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed and we could fail to meet our financial reporting obligations.
If the court modifies or does not approve the Settlement Agreement, the Company could incur substantial legal fees in continued litigation, and ultimately, RE/MAX, LLC could be found liable for damages and subject to injunctive relief, which could have a significant impact on our business and results of operations.
Settlement Agreement, the Company could incur substantial legal fees in continued litigation, and ultimately, RE/MAX, LLC could be found liable for damages and subject to injunctive relief, which could have a significant impact on our business and results of operations.
RE/MAX, LLC entered into the Settlement Agreement on October 5, 2023, with the plaintiffs in two of the Moehrl-related antitrust litigations (referred to as the Burnett Action and the Moehrl Action) and the terms of the Settlement Agreement extended to plaintiffs in another Moehrl-related antitrust litigation (referred to as the Nosalek Action) as well as any other similar claims on a nationwide basis.
Settlement Agreement on October 5, 2023, with the plaintiffs in two of the Moehrl-related antitrust litigations (referred to as the Burnett Action and the Moehrl Action) and the terms of the U.S. Settlement Agreement extended to plaintiffs in another Moehrl-related antitrust litigation (referred to as the Nosalek Action) as well as any other similar claims on a nationwide basis.
As younger businesses, they may carry a higher risk of failure. We sell residential mortgage brokerage franchises in the U.S. under the Motto Mortgage brand and trademarks and we provide loan processing services through our wemlo brand.
Our mortgage segment businesses operate in a heavily regulated and competitive industry. As younger businesses, they may carry a higher risk of failure. We sell residential mortgage brokerage franchises in the U.S. under the Motto Mortgage brand and we provide loan processing services through our wemlo brand.
We could continue to face strains on cash flows until the markets improve notably. Lastly, lower stock prices also limit our ability to raise capital in the form of equity. Additionally, our cash position could be adversely affected until market conditions improve.
We could continue to face strains on cash flows until the markets improve notably. Lastly, lower stock prices also limit our ability to raise capital in the form of equity.
While the majority of our revenues are derived from continuing franchise fees and annual dues, rather than being directly tied to residential real estate transaction volumes, these declines in the residential real estate and mortgage markets have had and are likely to continue to have a negative effect on our financial condition and results of operations, and such effect may be material.
While the majority of our revenues are derived from recurring fees based on the number of affiliated agents, offices, or open Motto offices, rather than being directly tied to residential real estate transaction volumes, these declines in the residential real estate and mortgage markets have had and are likely to continue to have a negative effect on our financial condition and results of operations, and such effect may be material.
Our franchise model can be subject to particular litigation risks. Litigation against a franchisee or its affiliated agents or loan originators, whether in the ordinary course of business or otherwise, may also include claims against us for liability by virtue of the franchise relationship. Franchisees may fail to obtain insurance naming the Company as an additional insured on such claims.
Our franchise model can be subject to particular litigation risks. Litigation against a franchisee or its affiliated agents or loan originators, whether in the ordinary course of business or otherwise, may also include claims against us for liability by virtue of the franchise relationship.
Therefore, if third parties were successful in asserting liability for practices of our franchise network in its entirety, and in holding us vicariously responsible for that liability, the resulting damages could exceed our available capital, could materially affect our earnings, or even render us insolvent. Our mortgage segment businesses operate in a heavily regulated and competitive industry.
Therefore, if third parties were successful in asserting liability for practices of our franchise network in its entirety, and in holding us vicariously 16 Table of Contents responsible for that liability, the resulting damages could exceed our available capital, could materially affect our earnings, or even render us insolvent.
These events may, in turn, materially and adversely affect our business and operating results. An organized franchisee association could also pose risks to our ability to set the terms of our franchise agreements and our pricing. Our financial results are affected directly by the operating results of franchisees and their agents and loan originators who operate independently from our control.
An organized franchisee association could also pose risks to our ability to set the terms of our franchise agreements and our pricing. 14 Table of Contents Our financial results are affected directly by the operating results of franchisees and their agents and loan originators who operate independently from our control.
These risks include: ● fluctuations in foreign currency exchange rates, primarily related to changes in the Canadian dollar and Euro to U.S. dollar exchange rates; ● exposure to local economic conditions and local laws and regulations, including those relating to the agents of our franchisees; ● economic and/or credit conditions abroad; ● potential adverse changes in the political stability of foreign countries or in their diplomatic relations with the U.S.; ● restrictions on the withdrawal of foreign investments and earnings; ● government policies against businesses owned by foreigners; ● diminished ability to legally enforce our contractual rights in foreign countries; ● withholding and other taxes on remittances and other payments by subsidiaries; and ● changes in tax laws regarding taxation of foreign profits. 31 Table of Contents We may be unable to execute on strategic acquisitions or transactions, including reacquiring the regional franchise rights of RE/MAX Independent Regions, or successfully integrate acquired companies.
These risks include: ● fluctuations in foreign currency exchange rates, primarily related to changes in the Canadian dollar and Euro to U.S. dollar exchange rates; ● exposure to local economic conditions and local laws and regulations, including those relating to the agents of our franchisees; ● economic and/or credit conditions abroad; ● potential adverse changes in the political stability of foreign countries or in their diplomatic relations with the U.S.; ● business interruptions resulting from geo-political instability; ● restrictions on the withdrawal of foreign investments and earnings; ● government policies against businesses owned by foreigners; ● diminished ability to legally enforce our contractual rights in foreign countries; ● withholding and other taxes on remittances and other payments by subsidiaries; and ● changes in tax laws regarding taxation of foreign profits.
To remain competitive in the sale of franchises and to retain 34 Table of Contents our existing franchisees at the time of renewal of their franchise agreements, we may have to reduce the cost of renewals and/or the recurring monthly fees we charge our franchisees.
To remain competitive in the sale of franchises and to retain our existing franchisees at the time of renewal of their franchise agreements, we may have to reduce the cost of renewals and/or the recurring monthly fees we charge our franchisees. We may have to offer incentives to encourage franchisees to recruit new agents and successfully manage teams of agents.
If mortgage loans are difficult to obtain, the ability and willingness of prospective buyers to finance home purchases or to sell their existing homes could be adversely affected, which would adversely affect our operating results. 37 Table of Contents While we are continuing to evaluate all aspects of legislation, regulations and policies affecting the real estate market, we cannot predict whether or not such legislation, regulation and policies may increase down payment requirements, increase mortgage costs, or result in increased costs and potential litigation for housing market participants, any of which could have a material adverse effect on our financial condition and results of operations.
While we are continuing to evaluate all aspects of legislation, regulations and policies affecting the real estate market, we cannot predict whether or not such legislation, regulation and policies may increase down payment requirements, increase mortgage costs, or result in increased costs and potential litigation for housing market participants, any of which could have a material adverse effect on our financial condition and results of operations.
As disclosed in Note 14, Commitments and Contingencies , we are a defendant in class action complaints referred to as the “Moehrl-related antitrust litigations” which allege violations of federal antitrust law, among other claims.
As disclosed in Note 13, Commitments and Contingencies , we are a defendant in multiple class action complaints including the “Moehrl-related antitrust litigations” which allege violations of federal antitrust law, among other claims. RE/MAX, LLC entered into the U.S.
If a material number of our franchisees were to underreport or erroneously report their agent counts, agent commissions, or fees due to us, it could have a material adverse effect on our financial performance and results of operations.
In addition, to the extent that we were underpaid, we may not have a definitive method for determining such underpayment. If a material number of our franchisees were to underreport or erroneously report their agent counts, agent commissions, or fees due to us, it could have a material adverse effect on our financial performance and results of operations.
As a result of this competition, we may face many challenges in adding franchises and attracting agents in new and existing markets to expand our network, as well as other challenges such as: ● selection and availability of suitable markets; ● finding qualified franchisees in these markets who are interested in opening franchises on terms that are favorable to us; ● increasing our local brand awareness in new markets; and ● attracting and educating qualified local agents.
As a result of this competition, we may face challenges in adding franchises and attracting agents and loan originators in new and existing markets to expand our network, as well as other challenges such as: ● selection and availability of suitable markets; ● finding qualified franchisees in these markets who are interested in opening franchises on terms that are favorable to us; ● increasing our local brand awareness in new markets; and ● attracting and educating qualified local agents. 20 Table of Contents Our results are tied to the residential real estate and mortgage markets, and we have been and likely will continue to be negatively impacted by downturns in these markets.
Our results are tied to the residential real estate and mortgage markets, and we have been and likely will continue to be negatively impacted by downturns in these markets. The residential real estate and mortgage markets tend to be cyclical and typically are affected by changes in general economic conditions which are beyond our control.
The residential real estate and mortgage markets tend to be cyclical and typically are affected by changes in general economic conditions which are beyond our control.
Any extended interruption of our systems or exposure of sensitive data to third parties could cause significant damage to our business or our brand, for which our business interruption insurance may be insufficient to compensate us for losses that may occur.
The use of emerging artificial intelligence technologies, which are becoming increasingly sophisticated, may further intensify these security risks. Any extended interruption of our systems or exposure of sensitive data to third parties could cause significant damage to our business or our brand, for which our business interruption insurance may be insufficient to compensate us for losses that may occur.
The criteria by which companies’ corporate responsibility practices are assessed may change, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria.
The criteria by which companies’ corporate responsibility practices are assessed may change, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. If we elect not to or are unable to satisfy such new criteria, investors may conclude that our policies with respect to corporate responsibility are inadequate.
Our ability to monitor the activities or performance of vendors may be constrained, which makes it difficult for us to assess and manage the risks associated with these relationships.
Our ability to monitor the activities or performance of vendors may be constrained, which makes it difficult for us to assess and manage the risks associated with these relationships. Additionally, the Company could be adversely affected with unsuccessful integration and adoption of these third-party technologies from our franchisees and agents.
Any failures by these third-party vendors could disrupt our business operations. We have outsourced certain key aspects of our business to external parties, including providing RE/MAX agent and office technology products, supporting our flagship external websites, all of which are key aspects of our value proposition.
We have outsourced certain key aspects of our business to external parties, including providing RE/MAX franchisee and agent technology products, Motto franchisee and loan originator technology products, and supporting our flagship external websites, all of which are key aspects of our value proposition.
In addition, franchisee noncompliance with the terms and conditions of our franchise agreements and our brand standards may reduce the overall goodwill of our brands, whether through diminished consumer perception of our brands, dilution of our intellectual property, noncompliance with applicable laws, or through the participation in improper or objectionable business practices.
In addition, franchisee noncompliance with the terms and conditions of our franchise agreements and our brand standards may reduce the overall goodwill of our brands, whether through diminished consumer perception of our brands, dilution of our intellectual property, noncompliance with applicable laws, or through the participation in improper or objectionable business practices. 17 Table of Contents Our global RE/MAX operations, including those in Canada, are subject to risks not generally experienced by our U.S. operations.
We may have to offer incentives to encourage franchisees to recruit new agents and successfully manage teams of agents. In addition, even with these measures, franchisees may choose not to renew their franchise, or may not recruit new agents.
In addition, even with these measures, franchisees may choose not to renew their franchise, or may not recruit new agents.
Our global RE/MAX operations, including those in Canada, are subject to risks not generally experienced by our U.S. operations. The risks involved in our global operations and relationships could result in losses against which we are not insured and therefore affect our profitability.
The risks involved in our global operations and relationships could result in losses against which we are not insured and therefore affect our profitability.
In addition, RIHI could have an interest in the structuring of future transactions to take into consideration its tax or other considerations, even in situations where no similar considerations are relevant to us. 35 Table of Contents Our tax receivable agreements require us to make cash payments based upon future tax benefits to which we may become entitled.
In addition, RIHI could have an interest in the structuring of future transactions to take into consideration its tax or other considerations, even in situations where no similar considerations are relevant to us.
Integration activities involves complex operational and personnel-related challenges and we may encounter unforeseen difficulties and higher than expected integration costs. Delays or difficulties encountered in connection with integration activities could lead to prolonged diversion of management’s attention away from other important business matters.
Delays or difficulties encountered in connection with integration activities could lead to prolonged diversion of management’s attention away from other important business matters.
If we are not able to access further borrowing under our line of credit, we may be required to rely on other sources of financing to fund our business operations and there can be no assurance that such financing sources will be available or that the terms of such alternative financing will not have an adverse effect on our financial condition and results of operation. 36 Table of Contents Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
If we are not able to access capital in the form of equity, we may be required to rely on other sources of financing to fund our business operations and there can be no assurance that such financing sources will be available or that the terms of such alternative financing will not have an adverse effect on our financial condition and results of operation.
The amounts that we may be required to pay could be significant, may be accelerated or deferred in certain circumstances and could significantly exceed the actual tax benefits that we ultimately realize. In connection with our IPO, we entered into tax receivable agreements that are currently held by RIHI and Parallaxes Rain Co-Investment, LLC (“Parallaxes” and together, the “TRA Parties”).
In connection with our IPO, we entered into tax receivable agreements that are currently held by RIHI and Parallaxes Rain Co-Investment, LLC (“Parallaxes” and together, the “TRA Parties”).
Our operating results are subject to fluctuations due to existing home sales, and results for any quarter may not necessarily be indicative of the results that may be achieved for the full fiscal year.
How consumers want to buy or sell houses will determine if these models reduce or replace the long-standing preference for full-service agents. Our operating results are subject to fluctuations due to existing home sales, and results for any quarter may not necessarily be indicative of the results that may be achieved for the full fiscal year.
Furthermore, if our competitors’ corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our competitors instead.
We may face reputational damage in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies. Furthermore, if our competitors’ corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our competitors instead.
We have significant debt service obligations and may incur additional indebtedness in the future. We have significant debt service obligations, including principal, interest and commitment fee payments due quarterly pursuant to RE/MAX, LLC’s Senior Secured Credit Facility.
We have significant debt service obligations, including principal, interest and commitment fee payments due quarterly pursuant to RE/MAX, LLC’s Senior Secured Credit Facility. Our currently existing indebtedness, or any additional indebtedness we may incur, could require us to divert funds identified for other purposes for debt service and impair our liquidity position.
Our success depends in part on our ability to attract home buyers and sellers to our websites, including our flagship websites remax.com, remax.ca, and mottomortgage.com through unpaid Internet search results on search engines. The number of users we attract from search engines is due in large part to how and where our websites rank in unpaid search results.
Our success depends in part on our ability to attract home buyers and sellers to our websites, including our flagship websites remax.com, remax.ca, and mottomortgage.com through unpaid Internet search results on search engines and connect those consumers to qualified agents and loan originators.
This could impact our ability to collect revenue owed to us by our Independent Regions, franchisees, and agents, and could affect our ability to forecast our performance accurately. Under our RE/MAX franchise agreements, franchisees, including Independent Regions, self-report (a) the number of agents and (b) gross commissions and other statistics from home sale transactions.
Under our RE/MAX franchise agreements, franchisees, including Independent Regions, self-report (a) the number of agents and (b) gross commissions and other statistics from home sale transactions. This data is used to determine our billings for continuing franchise fees, annual dues and broker fees.
However, we might not determine that we have effectively made an excess cash payment to either of the TRA Parties for a number of years following the initial time of such payment. As a result, it is possible that we could make cash payments under the tax receivable agreements that are substantially greater than our actual cash tax savings.
However, we might not determine that we have effectively made an excess cash payment 22 Table of Contents to either of the TRA Parties for a number of years following the initial time of such payment.
These options include direct-buyer companies (also called iBuyers) that purchase homes directly from sellers at below-market rates in exchange for speed and convenience, and then resell them shortly thereafter at market prices, and discounters who reduce the role of the agent or loan originator in order to offer sellers a low commission or a flat fee while giving rebates to buyers.
These options include cloud-based competitors such as direct-buyer companies that purchase directly from the seller, and online discounters who reduce the role of the agent in order to offer sellers a low commission or a flat fee while giving rebates to buyers.
Our certificate of incorporation and bylaws contain provisions that may make the acquisition of our Company more difficult without the approval of our Board of Directors.
Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable. Our certificate of incorporation and bylaws contain provisions that may make the acquisition of our Company more difficult without the approval of our Board of Directors.
Our failure to address these risks and uncertainties successfully could reduce our Internet presence, generate fewer leads for RE/MAX agents and damage our brand. We rely on third parties for certain important aspects of our business, including technology that is critical to our value proposition and to our internal operations.
We rely on third parties for certain important aspects of our business, including technology that is critical to our value proposition and to our internal operations. Any failures by these third-party vendors could disrupt our business operations.
Any of these aforementioned events – whether they be changes in general economic conditions or the regulatory environment or acts of nature – may lead us to grant fee concessions.
Any of these aforementioned events – whether they be changes in general economic conditions or the regulatory environment or acts of nature – may lead us to grant fee concessions. A significant adoption by consumers of alternatives to full-service agents or loan originators could have a material adverse effect on our business, prospects and results of operations.
Additionally, our growth strategy may also include pursuing complimentary businesses that enhance our value proposition. It is possible we may not be able to successfully capitalize on a given opportunity and/or achieve the expected returns, including the execution of expected cost and growth synergies.
It is possible we may not be able to successfully capitalize on a given opportunity and/or achieve the expected returns, including the execution of expected cost and growth synergies. Integration activities involve complex operational and personnel-related challenges and we may encounter unforeseen difficulties and higher than expected integration costs.
The Settlement Agreement was preliminarily approved by the court on November 20, 2023, and remains subject to final court approval, which is set for hearing on May 9, 2024. Further details on the Moehrl-related antitrust litigations and the Settlement Agreement are in Note 14, Commitments and Contingencies .
The U.S. Settlement Agreement was preliminarily approved on November 20, 2023 and granted final approval on May 9, 2024. Appeals were subsequently filed, including by one of the Batton plaintiffs. Further details on the Moehrl-related antitrust litigations, the U.S. Settlement Agreement, and other similar litigation matters are in Note 13, Commitments and Contingencies .
These rankings can be affected by a number of factors, such as changes in ranking algorithms which are not under our control and may change frequently. In addition, our websites face competition for audience from real estate portal websites such as Zillow, Redfin, Homes.com and Realtor.com.
The number of users we attract from search engines is due in large part to how and where our websites rank in unpaid search results. These rankings can be affected by a number of factors, such as changes in ranking algorithms which are not under our control and may change frequently.
We do not know whether we would be able to take such actions on a timely basis, on terms satisfactory to us, or at all. Future indebtedness may impose additional restrictions on us, which could limit our ability to respond to market conditions, to make capital investments or to take advantage of business opportunities.
Future indebtedness may impose additional restrictions on us, which could limit our ability to respond to market conditions, to make capital investments or to take advantage of business opportunities. Our level of indebtedness has important consequences to you and your investment in our Class A common stock.
If franchisees were to underreport or erroneously report such data, even unintentionally, we may not receive all the revenues due to us. In addition, to the extent that we were underpaid, we may not have a definitive method for determining such underpayment.
We have limited methods of validating the data and must rely on reports submitted and our internal protocols for verifying the data. If franchisees were to underreport or erroneously report such data, even unintentionally, we may not receive all the revenues due to us.
We terminate franchisees for non-payment, non-reporting and other non-compliance with their franchise agreements.
We terminate franchisees for non-payment, non-reporting and other non-compliance with their franchise agreements. We may terminate franchisees more frequently in the future which may, in turn, materially and adversely affect our business and operating results.
We may terminate franchisees more frequently in the future which may, in turn, materially and adversely affect our business and operating results. 28 Table of Contents Our RE/MAX franchisees self-report their agent counts and agent commissions which drive the fees due to us, and we have limited tools to verify these reports.
Our RE/MAX franchisees self-report their agent counts and agent commissions which drive the fees due to us, and we have limited tools to verify these reports. This could impact our ability to collect revenue owed to us by our Independent Regions, franchisees, and agents, and could affect our ability to forecast our performance accurately.
Historically, the resiliency of our operation model, which translates to the cash generative nature of our financial model, has allowed us to generate positive cash flows in periods of economic strength and weakness. However, given the recent litigation settlement and poor economic climate for the housing and mortgage markets, the risk of weakened cash generation has increased.
We face risks related to our cash position and liquidity if we are unable to access our line of credit or other sources of financing. Historically, the resiliency of our operation model, which translates to the cash generative nature of our financial model, has allowed us to generate positive cash flows in periods of economic strength and weakness.
Any reduction in the number of users directed to our websites could adversely impact our business and results of operations. 32 Table of Contents We are vulnerable to certain additional risks and uncertainties associated with websites, which include our lead referral system, remax.com, remax.ca, global.remax.com, theremaxcollection.com, remaxcommercial.com, mottomortgage.com, and wemlo.io.
We are vulnerable to certain additional risks and uncertainties associated with our websites, which include but are not limited to, our lead referral system, remax.com, remax.ca, global.remax.com, theremaxcollection.com, remaxcommercial.com, mottomortgage.com, and wemlo.io. These risks include changes in required technology interfaces, website downtime and other technical failures, security breaches and consumer privacy concerns.
Lenders may from time to time tighten their underwriting standards or cease to offer subprime and other alternative mortgage products in the marketplace.
Lenders may from time to time tighten their underwriting standards or cease to offer subprime and other alternative mortgage products in the marketplace. If mortgage loans are difficult to obtain, the ability and willingness of prospective buyers to finance home purchases or to sell their existing homes could be adversely affected, which would adversely affect our operating results.
Our currently existing indebtedness, or any additional indebtedness we may incur, could require us to divert funds identified for other purposes for debt service and impair our liquidity position. If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets or issue additional equity to obtain necessary funds.
If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets or issue additional equity to obtain necessary funds. We do not know whether we would be able to take such actions on a timely basis, on terms satisfactory to us, or at all.
A court set aside the CID, ruling that NAR had a valid settlement agreement with the DOJ which prohibited the CID at issue. The DOJ appealed the decision. It is not clear what rule changes, if any, may ultimately be implemented as a result.
A court set aside the CID, ruling that NAR had a valid settlement agreement with the DOJ which prohibited the CID at issue. The DOJ appealed the decision and the appeals court reversed the decision on April 5, 2024. On October 10, 2024, NAR petitioned the U.S.
Following the trial, on February 1, 2024, Keller Williams entered into a settlement with plaintiffs agreeing to make certain changes to its business practices and to pay a total settlement of $70 million. 33 Table of Contents Further, the Moehrl-related antitrust litigations and other legal proceedings may prompt regulatory changes to rules established by NAR, local or state real estate boards, or multiple listing services.
The indirect and direct effects of this action upon the real estate industry and the Company are not yet clear. Further, the Moehrl-related antitrust litigations and other legal proceedings may prompt additional regulatory changes to rules established by NAR, local or state real estate boards, or multiple listing services.
This growth strategy depends on our ability to find regional franchisees willing to sell the franchise rights in their regions, as well as our ability to finance, complete and integrate these transactions. The number of remaining Independent Regions is limited so we may have difficulty finding suitable regional franchise acquisition opportunities at an acceptable price.
We pursue growth initiatives with respect to strategic acquisitions that may include pursuing complimentary businesses that enhance our value proposition or the reacquisition of select RE/MAX Independent Regions. The number of remaining Independent Regions is limited so we may have difficulty finding suitable regional franchise acquisition opportunities at an acceptable price.
Removed
This data is used to determine our billings for continuing franchise fees, annual dues and broker fees. We have limited methods of validating the data and must rely on reports submitted and our internal protocols for verifying the data.
Added
These events may, in turn, materially and adversely affect our business and operating results.
Removed
While we are pursuing a strategy to reacquire select regional franchise rights in the U.S. and Canada, we still rely on independent regional master franchises in Independent Regions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe actively engage with internal and external experts and collaborate with our vendors and other third parties on threat intelligence, vulnerability management, and incident response. We provide our employees with periodic training and information on cybersecurity risks and threats, and we also provide educational resources and information to our franchisees about cybersecurity risks and threats.
Biggest changeWe actively engage with internal and external experts and collaborate with our vendors and other third parties on threat intelligence, vulnerability management, and incident response.
ITEM 1C. CYBERSECURITY RE/MAX Holdings, Inc.’s (collective, “Holdings”, the “Company” “we”, “our” or “us”) cybersecurity program is managed by a dedicated Information Security Officer (“ISO”) who is responsible for leading comprehensive cybersecurity strategy, policy, standards, architecture, and processes.
ITEM 1C. CYBERSECURITY RE/MAX Holdings, Inc.’s (collectively, “Holdings”, the “Company” “we”, “our” or “us”) cybersecurity program is managed by a dedicated Information Security Officer (“ISO”) who is responsible for leading comprehensive cybersecurity strategy, policy, standards, architecture, and processes .
For further discussion of the Company’s risk related to cybersecurity, see the risk factor “Cyberattacks, security breaches and 40 Table of Contents improper access to, disclosure or deletion of our data, personally identifiable information we collect, or business records could harm our business, damage our reputation and cause losses” in Part I, Item 1A of this Form 10-K.
For further discussion of the Company’s risk related to cybersecurity, see the risk factor “Cyberattacks, security breaches and improper access to, disclosure or deletion of our data, personally identifiable information we collect, or business records could harm our business, damage our reputation and cause losses” in Part I, Item 1A of this Form 10-K.
In addition, the ISO provides regular updates in areas such as rapidly evolving cybersecurity threats, cybersecurity technologies and solutions deployed internally, and major cybersecurity risk areas and efforts to mitigate those risks. To date we have not experienced any cybersecurity incident that has materially affected our business, results of operation or financial condition.
In addition, the ISO provides regular updates in areas such as rapidly evolving cybersecurity threats, cybersecurity technologies and solutions deployed internally, and major cybersecurity risk areas and efforts to mitigate those risks. To date we have not experienced any cybersecurity incidents that have materially affected our business, results of operations or financial condition.
Holdings has established a dedicated incident response and reporting team comprising cross-functional members across the Company. This team is responsible for identifying, assessing, and effectively managing cybersecurity incidents ensuring a comprehensive and coordinated approach to cybersecurity incident management. This team also facilitates the reporting of material cybersecurity incidents.
This team is responsible for identifying, assessing, and effectively managing cybersecurity incidents ensuring a comprehensive and coordinated approach to cybersecurity incident management. This team also facilitates the reporting of material cybersecurity incidents.
Added
We provide our employees with periodic training and information on cybersecurity risks and threats, and we also provide educational resources and information to our franchisees about cybersecurity risks and threats. ​ ​ Holdings has established a dedicated incident response and reporting team comprising cross-functional members across the Company.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough we do not believe any currently pending litigation will have a material adverse effect on our business, financial condition or operations, there are inherent uncertainties in litigation and other claims and regulatory proceedings and such pending matters could result in unexpected expenses and liabilities and might materially adversely affect our business, financial condition or operations, including our reputation.
Biggest changeAlthough we do not believe any currently pending litigation will have a material adverse effect on our business, financial condition or operations, there are inherent uncertainties in litigation and other claims and regulatory proceedings and such pending matters could result in unexpected expenses and liabilities and might materially adversely affect our business, financial condition or operations, including our reputation. 27 Table of Contents ITEM 4.
Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. Often these cases raise complex factual and legal issues, which are subject to risks and uncertainties and which could require significant time and resources from management.
Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. Often these cases raise complex factual and legal issues, which are subject to risks and uncertainties and could require significant time and resources from management.
ITEM 3. LEGAL PROCEEDINGS As disclosed in Note 14, Commitments and Contingencies , from time to time we are involved in litigation, claims and other proceedings relating to the conduct of our business, and the disclosures set forth in Note 14 relating to certain legal matters is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS As disclosed in Note 13, Commitments and Contingencies , from time to time we are involved in litigation, claims and other proceedings relating to the conduct of our business, and the disclosures set forth in Note 13 relating to certain legal matters is incorporated herein by reference.
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ITEM 4. MINE SAFETY DISCLOSURES None. PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES ​ 41 ​ PART II ​ 41 ​ ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ 41 ​ ITEM 6. RESERVED ​ 42 ​ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ 43 ​ ITEM 7A.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES ​ 28 ​ PART II ​ 28 ​ ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ 28 ​ ITEM 6. RESERVED ​ 29 ​ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ 30 ​ ITEM 7A.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK ​ 59 ​ ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ 60 ​
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK ​ 46 ​ ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ 48 ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn the fourth quarter of 2023, our Board of Directors decided to suspend the Company’s quarterly dividend. In light of the recent litigation settlement and ongoing challenging housing and mortgage market conditions, the Company’s Board of Directors believes this action to preserve the Company’s capital is prudent. All dividends declared and paid will not be cumulative.
Biggest changeIn the fourth quarter of 2023, our Board of Directors decided to suspend the Company’s quarterly dividend. The Company’s Board of Directors continues to believe this action to preserve the Company’s capital is prudent. As such, during 2024 our Board of Directors did not approve any quarterly cash dividends. All dividends declared and paid (if any) will not be cumulative.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table sets forth stock repurchases of our Class A common stock for the three months ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ Total Number of Shares ​ ​ ​ ​ Value of Shares that ​ ​ Purchased as part of ​ ​ ​ ​ May Yet be ​ ​ Publicly Announced ​ Average Price ​ Purchased Under the Period ​ Plans or Programs (a) ​ Paid Per Share ​ Plans or Programs Oct 1-31 ​ — ​ $ — ​ $ 62,491,567 Nov 1-30 ​ — ​ $ — ​ $ 62,491,567 Dec 1-31 ​ — ​ $ — ​ $ 62,491,567 Total ​ — ​ ​ ​ ​ ​ ​ (a) In January 2022, our Board of Directors authorized a common stock repurchase program of up to $100 million.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table sets forth stock repurchases of our Class A common stock for the three months ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ Total Number of Shares ​ ​ ​ ​ Value of Shares that ​ ​ Purchased as part of ​ ​ ​ ​ May Yet be ​ ​ Publicly Announced ​ Average Price ​ Purchased Under the Period ​ Plans or Programs (a) ​ Paid Per Share ​ Plans or Programs Oct 1-31 ​ — ​ $ — ​ $ 62,491,567 Nov 1-30 ​ — ​ $ — ​ $ 62,491,567 Dec 1-31 ​ — ​ $ — ​ $ 62,491,567 Total ​ — ​ ​ ​ ​ ​ ​ (a) In January 2022, our Board of Directors authorized a common stock repurchase program of up to $100 million.
See Note 5, Earnings Per Share and Dividends , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information.
See Note 5, Earnings (Loss) Per Share and Dividends , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUIT Y, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Class A common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “RMAX”. As of February 21, 2024, we had 34 stockholders of record of our Class A common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUIT Y, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Class A common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “RMAX”. As of February 19, 2025, we had 33 stockholders of record of our Class A common stock.
As of December 31, 2023, $62.5 million remains available under the program. All repurchase activity ceased in the first quarter of 2023 in light of the ongoing challenging housing and mortgage market conditions and subsequently the third quarter litigation settlement.
As of December 31, 2024, $62.5 million remains available under the program. All repurchase activity ceased in the first quarter of 2023 in light of challenging housing and mortgage market conditions and subsequently the third quarter 2023 litigation settlement (see Note 13, Commitments and Contingencies) .
This number does not include stockholders whose stock is held in nominee or street name by brokers. All shares of Class B common stock are owned by RIHI, Inc. (“RIHI”), and there is no public market for these shares.
This number does not include stockholders whose stock is held in nominee or street name by brokers. All shares of Class B common stock are owned by RIHI, Inc. (“RIHI”), and there is no public market for these shares. We did not declare any share dividends during 2024.
The performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
The performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act. 28 Table of Contents Comparison of Cumulative Five-Year Return Unregistered Sales of Equity Securities and Use of Proceeds None.
Performance Graph The following graph and table depict the total return to stockholders from December 31, 2018 through December 31, 2023, relative to the performance of a selected peer group and the S&P SmallCap 600 Index, S&P 500 Index, S&P Homebuilders Select Industry Index, and Russell 2000 Index.
Performance Graph The following graph and table depict the total return to stockholders from December 31, 2019 through December 31, 2024, relative to the performance of a selected peer group and the Russell 2000 Index.
The Company’s selected peer group includes Anywhere Real Estate Inc., Compass, Inc., Douglas Elliman Inc., eXp World Holdings, Inc., Fathom Holdings Inc., Redfin Corporation and The Real Brokerage Inc.
The Company’s selected peer group includes Anywhere Real Estate Inc., Compass, Inc., Douglas Elliman Inc., eXp World Holdings, Inc., Fathom Holdings Inc., Redfin Corporation and The Real Brokerage Inc. The graph assumes that $100 was invested at the closing price on December 31, 2019 and that all dividends were reinvested.
The graph assumes that $100 was invested at the closing price on December 31, 2018 and that all dividends were reinvested. 41 Table of Contents The performance graph is not intended to be indicative of future performance.
The performance graph is not intended to be indicative of future performance.
Removed
Comparison of Cumulative Five-Year Return Unregistered Sales of Equity Securities and Use of Proceeds None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

85 edited+34 added−34 removed47 unchanged
Biggest changeTotal ​ 55,131 ​ 58,719 ​ 61,327 ​ (3,588) ​ (6.1) % ​ (2,608) ​ (4.3) % Canada ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company-Owned Regions ​ 20,270 ​ 20,228 ​ 19,596 ​ 42 ​ 0.2 % ​ 632 ​ 3.2 % Independent Regions ​ 4,898 ​ 4,892 ​ 4,548 ​ 6 ​ 0.1 % ​ 344 ​ 7.6 % Canada Total ​ 25,168 ​ 25,120 ​ 24,144 ​ 48 ​ 0.2 % ​ 976 ​ 4.0 % U.S. and Canada Total ​ 80,299 ​ 83,839 ​ 85,471 ​ (3,540) ​ (4.2) % ​ (1,632) ​ (1.9) % Outside U.S. and Canada ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Independent Regions ​ 64,536 ​ 60,175 ​ 56,527 ​ 4,361 ​ 7.2 % ​ 3,648 ​ 6.5 % Outside U.S. and Canada Total ​ 64,536 ​ 60,175 ​ 56,527 ​ 4,361 ​ 7.2 % ​ 3,648 ​ 6.5 % Total ​ 144,835 ​ 144,014 ​ 141,998 ​ 821 ​ 0.6 % ​ 2,016 ​ 1.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ RE/MAX open offices: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. ​ 3,340 ​ 3,462 ​ 3,534 ​ (122) ​ (3.5) % ​ (72) ​ (2.0) % Canada ​ 956 ​ 972 ​ 1,025 ​ (16) ​ (1.6) % ​ (53) ​ (5.2) % U.S. and Canada Total ​ 4,296 ​ 4,434 ​ 4,559 ​ (138) ​ (3.1) % ​ (125) ​ (2.7) % Outside U.S. and Canada ​ 4,726 ​ 4,741 ​ 4,405 ​ (15) ​ (0.3) % ​ 336 ​ 7.6 % Total ​ 9,022 ​ 9,175 ​ 8,964 ​ (153) ​ (1.7) % ​ 211 ​ 2.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Motto open offices (1) : ​ 246 ​ 231 ​ 187 ​ 15 ​ 6.5 % ​ 44 ​ 23.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 vs. 2022 ​ ​ 2022 vs. 2021 ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ # ​ % ​ ​ # ​ % ​ RE/MAX franchise sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. ​ 184 ​ 184 ​ 184 ​ — ​ — % ​ — ​ — % Canada ​ 37 ​ 36 ​ 61 ​ 1 ​ 2.8 % ​ (25) ​ (41.0) % U.S. and Canada Total ​ 221 ​ 220 ​ 245 ​ 1 ​ 0.5 % ​ (25) ​ (10.2) % Outside U.S. and Canada ​ 727 ​ 743 ​ 824 ​ (16) ​ (2.2) % ​ (81) ​ (9.8) % Total ​ 948 ​ 963 ​ 1,069 ​ (15) ​ (1.6) % ​ (106) ​ (9.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Motto franchise sales (1) : ​ 27 ​ 40 ​ 64 ​ (13) ​ (32.5) % ​ (24) ​ (37.5) % (1) As of December 31, 2023, 2022 and 2021, there were 56, 58 and 31 offices, respectively, that we were offering short-term fi nancial relief and are temporarily not billed or are deferred. ​ ​ 46 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ Total revenue $ 325,671 ​ $ 353,386 ​ $ 329,701 ​ Total selling, operating and administrative expenses $ 171,548 ​ $ 173,980 ​ $ 179,491 ​ Operating income (loss) $ (10,637) ​ $ 38,212 ​ $ (9,931) ​ Net income (loss) $ (98,486) ​ $ 10,757 ​ $ (24,620) ​ Net income (loss) attributable to RE/MAX Holdings, Inc. $ (69,022) ​ $ 6,110 ​ $ (15,616) ​ Adjusted EBITDA (1) $ 96,288 ​ $ 121,632 ​ $ 119,583 ​ Adjusted EBITDA margin (1) ​ 29.6 % ​ 34.4 % ​ 36.3 % (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.
Biggest changeTotal ​ 51,286 ​ 55,131 ​ 58,719 ​ (3,845) ​ (7.0) % ​ (3,588) ​ (6.1) % Canada ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company-Owned Regions ​ 20,311 ​ 20,270 ​ 20,228 ​ 41 ​ 0.2 % ​ 42 ​ 0.2 % Independent Regions ​ 4,860 ​ 4,898 ​ 4,892 ​ (38) ​ (0.8) % ​ 6 ​ 0.1 % Canada Total ​ 25,171 ​ 25,168 ​ 25,120 ​ 3 ​ — % ​ 48 ​ 0.2 % U.S. and Canada Total ​ 76,457 ​ 80,299 ​ 83,839 ​ (3,842) ​ (4.8) % ​ (3,540) ​ (4.2) % Outside U.S. and Canada ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Independent Regions ​ 70,170 ​ 64,536 ​ 60,175 ​ 5,634 ​ 8.7 % ​ 4,361 ​ 7.2 % Outside U.S. and Canada Total ​ 70,170 ​ 64,536 ​ 60,175 ​ 5,634 ​ 8.7 % ​ 4,361 ​ 7.2 % Total ​ 146,627 ​ 144,835 ​ 144,014 ​ 1,792 ​ 1.2 % ​ 821 ​ 0.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ RE/MAX open offices: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. ​ 3,139 ​ 3,340 ​ 3,462 ​ (201) ​ (6.0) % ​ (122) ​ (3.5) % Canada ​ 938 ​ 956 ​ 972 ​ (18) ​ (1.9) % ​ (16) ​ (1.6) % U.S. and Canada Total ​ 4,077 ​ 4,296 ​ 4,434 ​ (219) ​ (5.1) % ​ (138) ​ (3.1) % Outside U.S. and Canada ​ 4,658 ​ 4,726 ​ 4,741 ​ (68) ​ (1.4) % ​ (15) ​ (0.3) % Total ​ 8,735 ​ 9,022 ​ 9,175 ​ (287) ​ (3.2) % ​ (153) ​ (1.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Motto open offices (1) : ​ 225 ​ 246 ​ 231 ​ (21) ​ (8.5) % ​ 15 ​ 6.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 vs. 2023 ​ ​ 2023 vs. 2022 ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ # ​ % ​ ​ # ​ % ​ RE/MAX franchise sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. ​ 109 ​ 184 ​ 184 ​ (75) ​ (40.8) % ​ — ​ — % Canada ​ 36 ​ 37 ​ 36 ​ (1) ​ (2.7) % ​ 1 ​ 2.8 % U.S. and Canada Total ​ 145 ​ 221 ​ 220 ​ (76) ​ (34.4) % ​ 1 ​ 0.5 % Outside U.S. and Canada ​ 654 ​ 727 ​ 743 ​ (73) ​ (10.0) % ​ (16) ​ (2.2) % Total ​ 799 ​ 948 ​ 963 ​ (149) ​ (15.7) % ​ (15) ​ (1.6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Motto franchise sales (1) : ​ 26 ​ 27 ​ 40 ​ (1) ​ (3.7) % ​ (13) ​ (32.5) % (1) As of December 31, 2024, 2023 and 2022, there were 53, 56 and 58 offices, respectively, that we were offering short-term fi nancial relief and are temporarily not billed or are deferred. ​ ​ 33 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2024 ​ 2023 ​ 2022 ​ Total revenue $ 307,685 ​ $ 325,671 ​ $ 353,386 ​ Total selling, operating and administrative expenses $ 152,258 ​ $ 171,548 ​ $ 173,980 ​ Operating income (loss) $ 40,181 ​ $ (10,637) ​ $ 38,212 ​ Net income (loss) $ 8,077 ​ $ (98,486) ​ $ 10,757 ​ Net income (loss) attributable to RE/MAX Holdings, Inc. $ 7,123 ​ $ (69,022) ​ $ 6,110 ​ Adjusted EBITDA (1) $ 97,700 ​ $ 96,288 ​ $ 121,632 ​ Adjusted EBITDA margin (1) ​ 31.8 % ​ 29.6 % ​ 34.4 % (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.
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.
Future capital allocation decisions with respect to return of capital either in the form of 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.
Its fair value is tied primarily to franchise sales over the next several years and the discount rate used in our discounted cash flow analysis. Therefore, we fully impaired the reporting unit’s goodwill and recorded a non-cash impairment charge of $18.6 million. See Note 8, Intangible Assets and Goodwill , for additional information.
Its fair value is tied primarily to franchise sales over the next several years and the discount rate used in our discounted cash flow analysis. Therefore, we fully impaired the reporting unit’s goodwill and recorded a non-cash impairment charge of $18.6 million. See Note 7, Intangible Assets and Goodwill , for additional information.
See Note 11, Fair Value Measurements , to the accompanying consolidated financial statements for more information. Commitments and Contingencies Our management does not believe there are any matters involving us that could result, individually or in the aggregate, in a material adverse effect on our financial condition, results of operations and cash flows.
See Note 10, Fair Value Measurements , to the accompanying consolidated financial statements for more information. Commitments and Contingencies Our management does not believe there are any matters involving us that could result, individually or in the aggregate, in a material adverse effect on our financial condition, results of operations and cash flows.
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 than 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 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 Financial and Operational Highlights, Results of Operations and Sources and Uses of Cash, for the years ended December 31, 2022 and 2021 and as compared to the years ended December 31, 2021 and 2020, respectively, has been previously disclosed in Item 7 of our 2022 Annual Report on Form 10-K and in Item 7 of our 2021 Annual Report on Form 10-K , and are incorporated herein by reference.
The Financial and Operational Highlights, Results of Operations and Sources and Uses of Cash, for the years ended December 31, 2023 and 2022 and as compared to the years ended December 31, 2022 and 2021, respectively, has been previously disclosed in Item 7 of our 2023 Annual Report on Form 10-K and in Item 7 of our 2022 Annual Report on Form 10-K , and are incorporated herein by reference.
Loss on Lease Termination (2022) During the second quarter of 2022, we terminated our booj office lease, which was owned by an entity controlled by former employees. As a result, we wrote off a right of use (“ROU”) asset of $2.7 million and derecognized $1.5 million of lease liability associated with the terminated lease.
Loss on Lease Termination (2022) During the second quarter of 2022, we terminated an office lease, which was owned by an entity controlled by former employees. As a result, we wrote off a right of use (“ROU”) asset of $2.7 million and derecognized $1.5 million of lease liability associated with the terminated lease.
(9) During the third quarter of 2023, we announced a reduction in force and reorganization intended to streamline our operations and yield cost savings over the long term and during the third quarter of 2022, we incurred expenses related to a restructuring associated with a shift in our technology offerings strategy.
Additionally, during the third quarter of 2023, we announced a reduction in force and reorganization intended to streamline our operations and yield cost savings over the long term and during the third quarter of 2022, we incurred expenses related to a restructuring associated with a shift in our technology offerings strategy.
Similar to the deferred tax assets, these liabilities would likely increase materially if RIHI redeems additional common units of RMCO or with future reversals of the valuation allowances. 58 Table of Contents New Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, for recently issued accounting pronouncements applicable to us and the effect of those standards on our financial statements and related disclosures.
Similar to the deferred tax assets, these liabilities would likely increase materially if RIHI redeems additional common units of RMCO or with future reversals of the valuation allowances. New Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, for recently issued accounting pronouncements applicable to us and the effect of those standards on our financial statements and related disclosures.
Future payments under these leases and commitments, net of payments to be received under sublease agreements of $5.9 million in the aggregate, are included in the table above, See Note 3, Leases , to the accompanying consolidated financial statements for more information.
Future payments under these leases and commitments, net of payments to be received under sublease agreements of $5.7 million in the aggregate, are included in the table above, See Note 3, Leases , to the accompanying consolidated financial statements for more information.
(5) During the fourth quarter of 2023, in connection with our annual goodwill impairment test, we concluded that the carrying value of the Mortgage reporting unit within the Mortgage segment exceeded its fair value, resulting in an impairment charge to the Mortgage reporting unit goodwill.
(3) During the fourth quarter of 2023, in connection with our annual goodwill impairment test, we concluded that the carrying value of the Mortgage reporting unit within the Mortgage segment exceeded its fair value, resulting in an impairment charge to the Mortgage reporting unit goodwill.
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”). On July 21, 2021, we amended and restated our Senior Secured Credit Facility to fund the acquisition of INTEGRA and refinance our existing facility.
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”). On July 21, 2021, we amended and restated our Senior Secured Credit Facility to refinance our existing facility.
(a) 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. generally accepted accounting principles (“U.S. GAAP”) measure for operating performance. Adjusted EBITDA 44 Table of Contents margin represents Adjusted EBITDA as a percentage of Total revenue).
(a) 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. generally accepted accounting principles (“U.S. GAAP”) measure for operating performance. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of Total revenue).
(“Holdings”) and its consolidated subsidiaries (collectively, the “Company,” “we,” “our” or “us”). Executive Summary Business Overview We are one of the world’s leading franchisors in the real estate industry. We franchise real estate brokerages globally under the RE/MAX brand and mortgage brokerages in the U.S. under the Motto Mortgage brand.
(“Holdings”) and its consolidated subsidiaries (collectively, the “Company,” “we,” “our” or “us”). Executive Summary Business Overview We are one of the world’s leading franchisors in the real estate industry. We franchise real estate brokerages globally under the RE/MAX ® brand (“RE/MAX”) and mortgage brokerages in the U.S. under the Motto Mortgage brand (“Motto”).
Therefore, we fully impaired the reporting unit’s goodwill and recorded a non-cash impairment charge of $18.6 million. See Note 8, Intangible Assets and Goodwill , for additional information.
Therefore, we fully impaired the reporting unit’s goodwill and recorded a non-cash impairment charge of $18.6 million. See Note 7, Intangible Assets and Goodwill , for additional information.
The liability pursuant to the TRAs will increase upon future exchanges by RIHI of RMCO common units or with future reversals of the valuation allowances, with the increase representing 85% of the estimated future tax benefits, if any, resulting from such exchanges. Payments are made on this liability as tax benefits are realized by Holdings.
The liability pursuant to the TRAs will increase upon future exchanges by RIHI of RMCO common units or with 43 Table of Contents future reversals of the valuation allowances, with the increase representing 85% of the estimated future tax benefits, if any, resulting from such exchanges. Payments are made on this liability as tax benefits are realized by Holdings.
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 raised in the public capital markets.
We may fund any such growth with various sources of capital including existing cash balances and 42 Table of Contents cash flow from operations, as well as proceeds from debt financings including under existing credit facilities or new arrangements raised in the public capital markets.
For 57 Table of Contents most of our reporting units, the fair value of the reporting unit exceeds its carrying value at the latest assessment date and only a qualitative impairment test was performed. During the 2023 annual impairment test, we concluded that the carrying value of the Mortgage reporting unit within the Mortgage segment exceeded its fair value.
For most of our reporting units, the fair value of the reporting unit exceeds its carrying value at the latest assessment date and only a qualitative impairment test was performed. During the 2023 annual impairment test, we concluded that the carrying value of the Mortgage reporting unit within the Mortgage segment exceeded its fair value.
GAAP measure for operating performance. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenue. Results of Operations Year Ended December 31, 2023 vs.
GAAP measure for operating performance. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenue. Results of Operations Year Ended December 31, 2024 vs.
The Senior Secured Credit Facility may require additional prepayments throughout the term of the loan based on our TLR as discussed above. (2) The variable interest rate on the Senior Secured Credit Facility is assumed at the interest rate in effect as of December 31, 2023 of 8.0%. (3) We are obligated under non-cancelable leases for offices and equipment.
The Senior Secured Credit Facility may require additional prepayments throughout the term of the loan based on our TLR as discussed above. (2) The variable interest rate on the Senior Secured Credit Facility is assumed at the interest rate in effect as of December 31, 2024 of 7.0%. (3) We are obligated under non-cancelable leases for offices and equipment.
Settlement and Impairment Charges Impairment Charge – Goodwill (2023) During the fourth quarter of 2023, in connection with our annual goodwill impairment test date of October 1, 2023, we concluded that the carrying value of the Mortgage reporting unit within the Mortgage segment exceeded its fair value.
Impairment Charge – Goodwill (2023) During the fourth quarter of 2023, in connection with our annual goodwill impairment test date of October 1, 2023, we concluded that the carrying value of the Mortgage reporting unit within the Mortgage segment exceeded its fair value.
Our cash flows and liquidity position are primarily affected by: (i) cash receipt of revenues; (ii) payment of selling, operating and administrative expenses; (iii) net investments in Mortgage; (iv) cash consideration for acquisitions and acquisition-related expenses; (v) principal payments and related interest payments on our Senior Secured Credit Facility; (vi) dividend payments to stockholders of our Class A common stock; (vii) distributions and other payments to non-controlling unitholders pursuant to the terms of RMCO’s limited liability company operating agreement (“the RMCO, LLC Agreement”); (viii) corporate tax payments paid by the Company; (ix) payments to the TRA parties pursuant to the TRAs; (x) payments related to legal settlements including the settlement of the industry class-action lawsuits and other legal settlements; and (xi) share repurchases.
(i) cash receipt of revenues; (ii) payment of selling, operating and administrative expenses; (iii) net investments in Mortgage; (iv) cash consideration for acquisitions and acquisition-related expenses; (v) principal payments and related interest payments on our Senior Secured Credit Facility; (vi) dividend payments to stockholders of our Class A common stock; (vii) distributions and other payments to non-controlling unitholders pursuant to the terms of RMCO’s limited liability company operating agreement (“the RMCO, LLC Agreement”); (viii) corporate tax payments paid by the Company; (ix) payments to the TRA parties pursuant to the TRAs; (x) payments related to legal settlements including the settlements of certain industry class-action lawsuits and other legal settlements; and (xi) share repurchases.
Holdings received distributions from RMCO on a quarterly basis that were equal to the dividend payments Holdings made to the stockholders of its Class A common stock. As a result, absent any additional distributions, Holdings may have insufficient funds to cover its estimated tax and TRA liabilities.
Holdings may receive distributions from RMCO on a quarterly basis equal to the dividend payments Holdings made to the stockholders of its Class A common stock. As a result, absent any additional distributions, Holdings may have insufficient funds to cover its estimated tax and TRA liabilities.
In addition, the step-up is governed by complex IRS rules that limit which intangibles are subject to step-up, and also imposes further limits on the amount of step-up.
In addition, the step-up is governed by complex IRS rules that 45 Table of Contents limit which intangibles are subject to step-up, and also imposes further limits on the amount of step-up.
Borrowings under the term loans and revolving loans began accruing interest based on Adjusted Term SOFR, subject to the same floor of 0.50%, plus the same applicable margin of 2.50%. As of December 31, 2023, the interest rate on the term loan facility was 8.0%.
Borrowings under the term loans and revolving loans began accruing interest based on Adjusted Term SOFR, subject to the same floor of 0.50%, plus the same applicable margin of 2.50%. As of December 31, 2024, the interest rate on the term loan facility was 7.0%.
Off Balance Sheet Arrangements We have no material off balance sheet arrangements as of December 31, 2023. 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.
Off Balance Sheet Arrangements We have no material off balance sheet arrangements as of December 31, 2024. 44 Table of Contents 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.
Revenue excluding the Marketing Funds is a non-GAAP measure of financial performance that differs from the U.S. Generally Accepted Accounting Principles. Revenue excluding the Marketing Funds is calculated directly from our consolidated financial statements as Total revenue less Marketing Funds fees.
Revenue excluding the Marketing Funds is a non-GAAP measure of financial performance that differs from U.S. GAAP. Revenue excluding the Marketing Funds is calculated directly from our consolidated financial statements as Total revenue less Marketing Funds fees.
See Note 8, Intangible Assets and Goodwill , for additional information. 49 Table of Contents Impairment Charge – Leased Assets (2022) During the first and third quarters of 2022, we subleased portions of our corporate headquarters.
See Note 7, Intangible Assets and Goodwill , for additional information. 36 Table of Contents Impairment Charge – Leased Assets (2022) During the first and third quarters of 2022, we subleased portions of our corporate headquarters.
(6) During the second quarter of 2022, a loss was recognized in connection with the termination of the booj office lease. See Note 3, Leases , for additional information. (7) Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with acquisition activities and integration of acquired companies.
(4) During the second quarter of 2022, a loss was recognized in connection with the termination of an office lease. See Note 3, Leases , for additional information. (5) Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with acquisition activities and integration of acquired companies.
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 settlement of the 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 or loss per share; and ● other companies may calculate these measures differently, so similarly named measures may not be comparable. 51 Table of Contents The adjustments to EBITDA in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods.
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; 38 Table of Contents ● 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 or loss per share; and ● other companies may calculate these measures differently, so similarly named measures may not be comparable.
A TRA liability of $0.8 million exists as of December 31, 2023 for the future cash obligations expected to be paid under the TRAs and is not discounted. The calculation of this liability is a function of the step-up described above and therefore has the same complexities and estimates.
A TRA liability of $1.5 million exists as of December 31, 2024 for the future cash obligations expected to be paid under the TRAs and is not discounted. The calculation of this liability is a function of the step-up described above and therefore has the same complexities and estimates.
The amounts present above are undiscounted. (5) Represents outstanding purchase orders with vendors initiated in the ordinary course of business for operating and capital expenditures, including payments from the Marketing Funds. (6) Represents estimated undiscounted payments to the former owner of Motto and former owners of Gadberry Group as required per the purchase agreements.
The amounts presented above are undiscounted. (5) Represents outstanding purchase orders with vendors initiated in the ordinary course of business for operating and capital expenditures, including payments from the Marketing Funds. (6) Represents estimated undiscounted payments to the former owner of Motto as required per the purchase agreement.
Capital Expenditures The total aggregate amount for purchases of property and equipment and capitalization of developed software was $6.4 million, $9.9 million and $15.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. These amounts primarily relate to spend on our corporate headquarters refresh and investments in technology.
Capital Expenditures The total aggregate amount for purchases of property and equipment and capitalization of developed software was $6.6 million, $6.4 million and $9.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. These amounts primarily relate to investments in technology and spend on property and equipment.
Acquisitions As part of our growth strategy, we may pursue acquisitions of 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.
Acquisitions As part of our growth strategy, we may pursue 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.
Return of Capital Our Board of Directors approved quarterly cash dividends of $0.23 per share on all outstanding shares of Class A common stock in the first three quarters of 2023 and every quarter in 2022, as disclosed in Note 5, Earnings Per Share and Dividends .
Return of Capital In the first three quarters of 2023, as disclosed in Note 5, Earnings Per Share and Dividends , our Board of Directors approved quarterly cash dividends of $0.23 per share on all outstanding shares of Class A common stock. During the fourth quarter 2023 our Board of Directors decided to suspend our quarterly dividend.
Capital Allocation Priorities Liquidity Our objective is to maintain a strong liquidity position. We have existing cash balances, cash flows from operating activities and access to 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.
We have existing cash balances, cash flows from operating activities and access to 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.
In addition, during the fourth quarter of 2022, in connection with the restructuring of the business and technology offerings, the Company made the decision to wind down the Gadberry Group, resulting in an impairment charge to the Gadberry Group reporting unit goodwill.
In addition, during the fourth quarter of 2022, in connection with the restructuring of the business and technology offerings, the Company made the decision to wind down the Gadberry Group, resulting in an impairment charge to the Gadberry Group reporting unit goodwill. See Note 7, Intangible Assets and Goodwill , for additional information.
Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenue. 45 Table of Contents Selected Operating and Financial Highlights The following tables summarize several key performance indicators and our results of operations for the last three years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2023 vs. 2022 ​ ​ 2022 vs. 2021 ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ # ​ % ​ ​ # ​ % ​ Agent Count: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company-Owned Regions ​ 48,401 ​ 51,491 ​ 53,946 ​ (3,090) ​ (6.0) % ​ (2,455) ​ (4.6) % Independent Regions ​ 6,730 ​ 7,228 ​ 7,381 ​ (498) ​ (6.9) % ​ (153) ​ (2.1) % U.S.
Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenue. 32 Table of Contents Selected Operating and Financial Highlights The following tables summarize several key performance indicators and our results of operations for the last three years. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2024 vs. 2023 ​ ​ 2023 vs. 2022 ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ # ​ % ​ ​ # ​ % ​ Agent Count: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company-Owned Regions ​ 44,911 ​ 48,401 ​ 51,491 ​ (3,490) ​ (7.2) % ​ (3,090) ​ (6.0) % Independent Regions ​ 6,375 ​ 6,730 ​ 7,228 ​ (355) ​ (5.3) % ​ (498) ​ (6.9) % U.S.
As long as the TLR remains above 3.50:1, we will be limited in the amount of restricted payments – primarily dividends and share repurchases – we can make up to the greater of $50 million or 50% of consolidated EBITDA on a trailing twelve-month basis (unless we can rely on other restricted payment baskets available under the Senior Secured Credit Facility).
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 consolidated EBITDA on a trailing twelve-month basis (unless we can rely on other restricted payment baskets available under the Senior Secured Credit Facility).
Payments Pursuant to the Tax Receivable Agreements As of December 31, 2023, the Company reflected a total liability of $0.8 million under the terms of its TRAs, with a portion to be paid in the first quarter of 2024.
Payments Pursuant to the Tax Receivable Agreements As of December 31, 2024, the Company reflected a total liability of $1.5 million under the terms of its TRAs, to be paid in 2025.
A reconciliation of Adjusted EBITDA to net income (loss) is set forth in the following table (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 ​ 2022 ​ 2021 Net income (loss) ​ $ (98,486) ​ $ 10,757 ​ $ (24,620) Depreciation and amortization ​ ​ 32,414 ​ ​ 35,769 ​ ​ 31,333 Interest expense ​ ​ 35,741 ​ ​ 20,903 ​ ​ 11,344 Interest income ​ ​ (4,420) ​ ​ (1,460) ​ ​ (217) Provision for income taxes ​ ​ 56,947 ​ ​ 7,371 ​ ​ 2,459 EBITDA ​ ​ 22,196 ​ ​ 73,340 ​ ​ 20,299 Settlement charge (1) ​ ​ 55,150 ​ ​ — ​ ​ — Loss on contract settlement (2) ​ ​ — ​ ​ — ​ ​ 40,900 Loss on extinguishment of debt (3) ​ ​ — ​ ​ — ​ ​ 264 Impairment charge - leased assets (4) ​ ​ — ​ ​ 6,248 ​ ​ — Impairment charge - goodwill (5) ​ ​ 18,633 ​ ​ 7,100 ​ ​ 5,123 Loss on lease termination (6) ​ ​ — ​ ​ 2,460 ​ ​ — Equity-based compensation expense ​ ​ 19,536 ​ ​ 22,044 ​ ​ 34,298 Acquisition-related expense (7) ​ ​ 263 ​ ​ 1,859 ​ ​ 17,422 Fair value adjustments to contingent consideration (8) ​ ​ (533) ​ ​ (133) ​ ​ 309 Restructuring charges (9) ​ ​ 4,210 ​ ​ 8,690 ​ ​ — Gain on reduction in tax receivable agreement liability (10) ​ ​ (25,298) ​ ​ (702) ​ ​ 382 Other ​ ​ 2,131 ​ ​ 726 ​ ​ 586 Adjusted EBITDA ​ $ 96,288 ​ $ 121,632 ​ $ 119,583 (1) Represents the settlement of the industry class-action lawsuits and other legal settlements.
A reconciliation of Adjusted EBITDA to net income (loss) is set forth in the following table (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2024 ​ 2023 ​ 2022 Net income (loss) ​ $ 8,077 ​ $ (98,486) ​ $ 10,757 Depreciation and amortization ​ ​ 29,561 ​ ​ 32,414 ​ ​ 35,769 Interest expense ​ ​ 36,258 ​ ​ 35,741 ​ ​ 20,903 Interest income ​ ​ (3,738) ​ ​ (4,420) ​ ​ (1,460) Provision for income taxes ​ ​ (1,877) ​ ​ 56,947 ​ ​ 7,371 EBITDA ​ ​ 68,281 ​ ​ 22,196 ​ ​ 73,340 Settlement charge (1) ​ ​ 5,483 ​ ​ 55,150 ​ ​ — Impairment charge - leased assets (2) ​ ​ — ​ ​ — ​ ​ 6,248 Impairment charge - goodwill (3) ​ ​ — ​ ​ 18,633 ​ ​ 7,100 Loss on lease termination (4) ​ ​ — ​ ​ — ​ ​ 2,460 Equity-based compensation expense ​ ​ 18,855 ​ ​ 19,536 ​ ​ 22,044 Acquisition-related expense (5) ​ ​ — ​ ​ 263 ​ ​ 1,859 Fair value adjustments to contingent consideration (6) ​ ​ (225) ​ ​ (533) ​ ​ (133) Restructuring charges (7) ​ ​ 1,227 ​ ​ 4,210 ​ ​ 8,690 Change in estimated tax receivable agreement liability (8) ​ ​ 1,219 ​ ​ (25,298) ​ ​ (702) Other adjustments (9) ​ ​ 2,860 ​ ​ 2,131 ​ ​ 726 Adjusted EBITDA ​ $ 97,700 ​ $ 96,288 ​ $ 121,632 (1) Represents the settlements of certain industry class-action lawsuits and other legal settlements.
See Note 10, Debt , for additional information. (4) Represents the impairment recognized on portions of our corporate headquarters office building. See Note 3, Leases , for additional information.
See Note 13, Commitments and Contingencies , for additional information. (2) Represents the impairment recognized on portions of our corporate headquarters office building. See Note 3, Leases , for additional information.
Because the Marketing Funds do not contribute to operating profit, we do not consider Marketing Funds revenue changes a part of our key performance indicators. We review year-over-year revenue growth excluding the Marketing Funds as a key measure of our success in addressing customer needs. We measure revenue growth in terms of organic, acquisitive, and foreign currency impacts.
We review year-over-year revenue growth excluding the Marketing Funds as a key measure of our success in addressing customer needs. We measure revenue growth in terms of organic, acquisitive, and foreign currency impacts.
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 the U.S. Generally Accepted Accounting Principles. Revenue excluding the Marketing Funds is calculated directly from our consolidated financial statements as Total revenue less Marketing Funds fees.
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 the U.S. Generally Accepted Accounting Principles.
These factors contributed to the following results for the year ended December 31, 2023: (Compared to the year ended December 31, 2022, unless otherwise noted) ● Total revenue decreased 7.8% to $325.7 million. ● Revenue excluding the Marketing Funds (a) , decreased 8.1%, or $21.3 million, which was driven by negative organic growth of 7.4% and adverse foreign currency movements of 0.7%. ● Net income (loss) attributable to RE/MAX Holdings, Inc. of ($69.0) million. ● Adjusted EBITDA (a) of $96.3 million and Adjusted EBITDA margin (a) of 29.6% compared to Adjusted EBITDA (a) of $121.6 million and Adjusted EBITDA margin (a) of 34.4% from the prior year. ● Total agent count increased by 0.6% to 144,835 agents. ● U.S. and Canada combined agent count decreased 4.2% to 80,299 agents with a 6.1% decline in U.S. agent count, partially offset by 0.2% Canadian agent growth. ● Total open Motto Mortgage offices increased 6.5% to 246 offices.
These factors contributed to the following results for the year ended December 31, 2024: (Compared to the year ended December 31, 2023, unless otherwise noted) ● Total revenue of $307.7 million, a decrease of 5.5% from the prior year. ● Revenue excluding the Marketing Funds (a) , decreased 5.4% to $228.7 million which was driven by negative organic growth of 5.2% and adverse foreign currency movements of 0.2%. ● Net income (loss) attributable to RE/MAX Holdings, Inc. of $7.1 million, compared to ($69.0) million in the prior year. ● Adjusted EBITDA (a) increased 1.5% to $97.7 million and Adjusted EBITDA margin (a) increased over 200 basis points to 31.8% from the prior year. ● Total agent count increased by 1.2% to 146,627 agents. ● U.S. and Canada combined agent count decreased 4.8% to 76,457 agents. ● Total open Motto Mortgage offices decreased 8.5% to 225 offices.
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.
As a result, we maintain a low fixed-cost structure which, combined with our recurring fee-based models, enables us to capitalize on the economic benefits of the franchising model, yielding high margins and significant cash flow. We are focused on operating our business as efficiently and effectively as possible, maintaining a growth mindset, and delivering the absolute best customer experience.
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.
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. 40 Table of Contents As of December 31, 2024, no ECF payment was required because the TLR was below 3.75:1 pursuant to the terms of the Senior Secured Credit Facility.
The effective tax rate for the twelve months ended December 31, 2023 is primarily driven by the establishment of a valuation allowance against our deferred tax assets and other nonrecurring adjustments recorded during the twelve months ended December 31, 2023 which resulted in an unusually low effective income tax rate.
The effective income tax rate for the year ended December 31, 2023 is lower than the statutory rate primarily driven by the establishment of a valuation allowance against our deferred tax assets and other nonrecurring adjustments.
In relation to this valuation allowance, we also remeasured the liability under the TRAs as of December 31, 2023 and recorded a $25.3 million gain on reduction in TRA liability. See Note 12, Income Taxes , for additional information.
In relation to this valuation allowance, we also remeasured the liability under the TRAs as of December 31, 2023, and recorded a $25.3 million change in estimated TRA liability.
Investing Activities During the year ended December 31, 2023, the change in cash used in investing activities was primarily the result of lower capitalizable investments in technology as compared to the prior year and no spend on our corporate headquarters refresh in the current year .
Investing Activities For the year ended December 31, 2024, the change in cash used in investing activities was primarily the result of higher spend on property and equipment as compared to the prior year, partially offset by lower spend on capitalizable investments in technology in the current year.
Depreciation and Amortization Depreciation and amortization expense decreased primarily due the acceleration of amortization of technology in the prior year (partially offset by current year accelerations) and lower franchise agreements amortization expense from independent region acquisitions, partially offset by an increase in amortization due to placing the wemlo technology platform in service .
Depreciation and Amortization Depreciation and amortization expense decreased primarily due to lower Franchise agreements amortization expense from prior years independent region acquisitions becoming fully amortized and the acceleration of amortization of technology in the prior year, partially offset by higher Mortgage segment amortization expense .
In addition, we are limited in the amount of restricted payments we can make as defined in the Senior Secured Credit Facility. 53 Table of Contents The Senior Secured Credit Facility provides for customary restrictions on, among other things, additional indebtedness, liens, dispositions of property, dividends, transactions with affiliates and fundamental changes such as mergers, consolidations, and liquidations.
The Senior Secured Credit Facility provides for customary restrictions on, among other things, additional indebtedness, liens, dispositions of property, dividends, transactions with affiliates and fundamental changes such as mergers, consolidations, and liquidations. These restricted payments include declaration or payment of dividends, repurchase of shares, or other distributions.
Other Expenses, Net A summary of the components of our operating expenses is as follows (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Change ​ ​ ​ December 31, ​ Favorable/(Unfavorable) ​ ​ ​ 2023 ​ 2022 ​ $ ​ % ​ Other expenses, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ $ (35,741) ​ $ (20,903) ​ $ (14,838) ​ (71.0) % Interest income ​ ​ 4,420 ​ ​ 1,460 ​ ​ 2,960 ​ n/m ​ Foreign currency transaction gains (losses) ​ ​ 419 ​ ​ (641) ​ ​ 1,060 ​ n/m ​ Total other expenses, net ​ $ (30,902) ​ $ (20,084) ​ $ (10,818) ​ (53.9) % Percent of revenue ​ ​ 9.5 % ​ 5.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ n/m - not meaningful ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other expenses, net increased primarily due to an increase in interest expense because of rising interest rates.
Other Expenses, Net A summary of the components of our operating expenses is as follows (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Change ​ ​ ​ December 31, ​ Favorable/(Unfavorable) ​ ​ ​ 2024 ​ 2023 ​ $ ​ % ​ Other expenses, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ $ (36,258) ​ $ (35,741) ​ $ (517) ​ (1.4) % Interest income ​ ​ 3,738 ​ ​ 4,420 ​ ​ (682) ​ (15.4) % Foreign currency transaction gains (losses) ​ ​ (1,461) ​ ​ 419 ​ ​ (1,880) ​ n/m ​ Total other expenses, net ​ $ (33,981) ​ $ (30,902) ​ $ (3,079) ​ (10.0) % Percent of revenue ​ ​ 11.0 % ​ 9.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ n/m - not meaningful ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other expenses, net increased primarily due to a decrease in interest income due to lower interest rate yields and declines in investable balances and an increase in interest expense because of rising interest rates.
We also sell ancillary products and services to our franchise networks, including loan processing services to our Motto network through our wemlo brand. RE/MAX and Motto are 100% franchised—we do not own any of the brokerages that operate under these brands.
We also sell ancillary products and services to our franchise networks, including loan processing services to our Motto network and other third parties through our wemlo ® brand. RE/MAX and Motto are 100% franchised.
During the fourth quarter 2023 our Board of Directors decided to suspend our quarterly dividend. In light of the settlement of the industry class-action lawsuits (for additional information see Note 14, Commitments and Contingencies) and ongoing challenging housing and mortgage market conditions, we believe this action to preserve our capital is prudent.
In light of the settlement of an industry class-action lawsuit (for additional information See Note 13, Commitments and Contingencies) and ongoing challenging housing and mortgage market conditions, we continue to believe this action to preserve our capital is prudent. As such, for 2024 our Board of Directors has not approved any quarterly cash dividends.
Financing Activities During the year ended December 31, 2023, the change in cash used in financing activities was primarily due to lower allocation of capital to our share repurchase program, lower dividends paid to Class A common stockholders and distributions paid to non-controlling interests due to the suspension of our quarterly dividend and lower tax withholding payments for share-based compensation .
Financing Activities For the year ended December 31, 2024, cash used in financing activities declined primarily due to the suspension of our quarterly dividend in the prior year, resulting in no dividend payments to Class A common stockholders and no distributions to non-controlling interests in 2024.
Year Ended December 31, 2022 Revenue A summary of the components of our revenue is as follows (in thousands except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Change ​ ​ ​ December 31, ​ Favorable/(Unfavorable) ​ ​ ​ 2023 ​ 2022 ​ $ ​ % ​ Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing franchise fees ​ $ 127,384 ​ $ 133,389 ​ $ (6,005) ​ (4.5) % Annual dues ​ ​ 33,904 ​ ​ 35,676 ​ ​ (1,772) ​ (5.0) % Broker fees ​ ​ 51,012 ​ ​ 62,939 ​ ​ (11,927) ​ (19.0) % Marketing Funds fees ​ ​ 83,861 ​ ​ 90,319 ​ ​ (6,458) ​ (7.2) % Franchise sales and other revenue ​ ​ 29,510 ​ ​ 31,063 ​ ​ (1,553) ​ (5.0) % Total revenue ​ $ 325,671 ​ $ 353,386 ​ $ (27,715) ​ (7.8) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Change ​ ​ ​ December 31, ​ Favorable/(Unfavorable) ​ ​ ​ 2023 ​ 2022 ​ $ ​ % ​ Revenue excluding the Marketing Funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ $ 325,671 ​ $ 353,386 ​ $ (27,715) ​ (7.8) % Less: Marketing Funds fees ​ ​ 83,861 ​ ​ 90,319 ​ ​ (6,458) ​ (7.2) % Revenue excluding the Marketing Funds ​ $ 241,810 ​ $ 263,067 ​ $ (21,257) ​ (8.1) % RE/MAX Holdings generated revenue of $325.7 million in 2023, a decrease of $27.7 million or 7.8%, compared to $353.4 million in the same period in 2022.
Year Ended December 31, 2023 Revenue A summary of the components of our revenue is as follows (in thousands except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Change ​ ​ ​ December 31, ​ Favorable/(Unfavorable) ​ ​ ​ 2024 ​ 2023 ​ $ ​ % ​ Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Continuing franchise fees ​ $ 122,011 ​ $ 127,384 ​ $ (5,373) ​ (4.2) % Annual dues ​ ​ 32,188 ​ ​ 33,904 ​ ​ (1,716) ​ (5.1) % Broker fees ​ ​ 51,816 ​ ​ 51,012 ​ ​ 804 ​ 1.6 % Marketing Funds fees ​ ​ 78,983 ​ ​ 83,861 ​ ​ (4,878) ​ (5.8) % Franchise sales and other revenue ​ ​ 22,687 ​ ​ 29,510 ​ ​ (6,823) ​ (23.1) % Total revenue ​ $ 307,685 ​ $ 325,671 ​ $ (17,986) ​ (5.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Change ​ ​ ​ December 31, ​ Favorable/(Unfavorable) ​ ​ ​ 2024 ​ 2023 ​ $ ​ % ​ Revenue excluding the Marketing Funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ​ $ 307,685 ​ $ 325,671 ​ $ (17,986) ​ (5.5) % Less: Marketing Funds fees ​ ​ 78,983 ​ ​ 83,861 ​ ​ (4,878) ​ (5.8) % Revenue excluding the Marketing Funds ​ $ 228,702 ​ $ 241,810 ​ $ (13,108) ​ (5.4) % RE/MAX Holdings generated revenue of $307.7 million in 2024, a decrease of $18.0 million or 5.5%, compared to $325.7 million in the same period in 2023.
Revenue excluding the Marketing Funds was $241.8 million for 2023, a decrease of $21.3 million, or 8.1%, compared to $263.1 million for 2022. This decrease was comprised of negative organic revenue growth of 7.4% and adverse foreign currency movements of 0.7%. Organic growth decreased primarily due to lower Broker fees and declines in RE/MAX U.S. agent count.
Revenue excluding the Marketing Funds was $228.7 million for 2024, a decrease of $13.1 million, or 5.4%, compared to $241.8 million for 2023. This decrease was comprised of negative organic revenue growth of 5.2% and adverse foreign currency movements of 0.2%.
The exclusion of these charges and costs in future periods will have a significant impact on our Adjusted EBITDA. We are not able to provide a reconciliation of anticipated non-GAAP financial information for future periods to the corresponding U.S.
We are not able to provide a reconciliation of anticipated non-GAAP financial information for future periods to the corresponding U.S. GAAP measures without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs.
Operating Expenses A summary of the components of our operating expenses is as follows (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Change ​ ​ ​ December 31, ​ Favorable/(Unfavorable) ​ ​ ​ 2023 ​ 2022 ​ $ ​ % ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, operating and administrative expenses ​ $ 171,548 ​ $ 173,980 ​ $ 2,432 ​ 1.4 % Marketing Funds expenses ​ ​ 83,861 ​ ​ 90,319 ​ ​ 6,458 ​ 7.2 % Depreciation and amortization ​ ​ 32,414 ​ ​ 35,769 ​ ​ 3,355 ​ 9.4 % Settlement and impairment charges ​ ​ 73,783 ​ ​ 15,808 ​ ​ (57,975) ​ n/m ​ Gain on reduction in tax receivable agreement liability ​ ​ (25,298) ​ ​ (702) ​ ​ 24,596 ​ n/m ​ Total operating expenses ​ $ 336,308 ​ $ 315,174 ​ $ (21,134) ​ (6.7) % Percent of revenue ​ ​ 103.3 % ​ 89.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ n/m - not meaningful ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, Operating and Administrative Expenses Selling, operating and administrative expenses consist of personnel costs, professional fee expenses, lease costs and other expenses.
Operating Expenses A summary of the components of our operating expenses is as follows (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Change ​ ​ ​ December 31, ​ Favorable/(Unfavorable) ​ ​ ​ 2024 ​ 2023 ​ $ ​ % ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, operating and administrative expenses ​ $ 152,258 ​ $ 171,548 ​ $ 19,290 ​ 11.2 % Marketing Funds expenses ​ ​ 78,983 ​ ​ 83,861 ​ ​ 4,878 ​ 5.8 % Depreciation and amortization ​ ​ 29,561 ​ ​ 32,414 ​ ​ 2,853 ​ 8.8 % Settlement and impairment charges ​ ​ 5,483 ​ ​ 73,783 ​ ​ 68,300 ​ n/m ​ Change in estimated tax receivable agreement liability ​ ​ 1,219 ​ ​ (25,298) ​ ​ (26,517) ​ n/m ​ Total operating expenses ​ $ 267,504 ​ $ 336,308 ​ $ 68,804 ​ 20.5 % Percent of revenue ​ ​ 86.9 % ​ 103.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ n/m - not meaningful ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, Operating and Administrative Expenses Selling, operating and administrative expenses consist of personnel costs, professional fee expenses, lease costs and other expenses.
Foreign currency transaction gains (losses) are primarily the result of transactions denominated in the Canadian Dollar. Provision for Income Taxes The comparison of effective tax rates for the years ended December 31, 2023 and 2022 is not meaningful.
Provision for Income Taxes The comparison of effective tax rates for the years ended December 31, 2024 and 2023 is not meaningful.
If any amount is drawn under the revolving line of credit under the Senior Secured Credit Facility the terms of the Senior Secured Credit Facility require the TLR to not exceed 4.50:1 in order for us to be able to access borrowings under the line of credit.
If any amounts are drawn on the $50 million revolving line of credit, the terms of the Senior Secured Credit Facility require the TLR to not exceed 4.50:1. 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.
(8) Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities. See Note 11, Fair Value Measurements, to the accompanying consolidated financial statements for additional information.
(6) Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities. See Note 10, Fair Value Measurements, to the accompanying consolidated financial statements for additional information. (7) During the fourth quarter of 2024, the Company restructured its support services intended to further enhance the overall customer experience.
In this regard, our short-term liquidity position from time to time has been, and will continue to be, affected by a number of factors including agents in the RE/MAX network, particularly in Company-Owned Regions and to a lesser degree, open offices in the Motto network.
Our short-term liquidity position has fluctuated and will continue to be impacted by various factors, including agent count in the RE/MAX network—particularly in Company-Owned Regions—and, to a lesser extent, the number of open Motto offices. Additionally, the timing and scale of new revenue diversification opportunities may also affect our and liquidity.
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.
This increase was partially offset by a decrease in U.S. agent count and a reduction in revenue from previous acquisitions (excluding independent region acquisitions) . 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.
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. 50 Table of Contents Adjusted EBITDA was $96.3 million for the year ended December 31, 2023, a decrease of $25.3 million from the comparable prior year period.
See Note 4, Non-controlling Interest, for further details on the allocation of income taxes between Holdings and the non-controlling interest and see Note 11, Income Taxes , for additional information. 37 Table of Contents 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.
As a result, as long as the TLR remains above 4.50:1, access to borrowings under the revolving line of credit will be precluded. 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.
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.
See Note 2, Summary of Significant Accounting Policies , for additional information. (10) Gain on reduction in tax receivable agreement liability recorded during 2023 is a result of a valuation allowance on deferred tax assets.
See Note 2, Summary of Significant Accounting Policies , for additional information. 39 Table of Contents (8) Change in estimated tax receivable agreement liability is the result of a valuation allowance on deferred tax assets. See Note 4, Non-controlling Interest and Note 11, Income Taxes , for additional information.
We also recognized a loss on termination of $2.5 million, which included a lease termination payment of $1.3 million. See Note 3, Leases , for additional information about our leases. Gain on Reduction in Tax Receivable Agreement Liability During 2023, we recorded an increase of $63.8 million to our valuation allowance on our U.S. net deferred tax assets.
We also recognized a loss on termination of $2.5 million, which included a lease termination payment of $1.3 million. See Note 3, Leases , for additional information about our leases.
This limitation does limit the restricted payments we can make to our shareholders. The TLR is calculated based on RE/MAX, LLC’s consolidated indebtedness and consolidated EBITDA, both defined in the Senior Secured Credit Facility. As of December 31, 2023, RE/MAX, LLC’s consolidated EBITDA, as defined in the Senior Secured Credit Facility, was $44.6 million on a trailing twelve-month basis.
The TLR is calculated quarterly and 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.
Financial Performance Indicators We believe that revenue growth excluding the Marketing Funds and Adjusted EBITDA (both in dollars and margin) are key financial measures of our success. Revenue Growth . The Marketing Funds operate at no profit; accordingly, there is no impact to overall profitability of the Company from these revenues.
Revenue Growth . The Marketing Funds operate at no profit; accordingly, there is no impact to overall profitability of the Company from these revenues. Because the Marketing Funds do not contribute to operating profit, we do not consider Marketing Funds revenue changes a part of our key performance indicators.
The restricted payments include declaration or payment of dividends, repurchase of shares, or other distributions. In general, we can make unlimited restricted payments, so long as the TLR is below 3.50:1 (both before and after giving effect to such payments). As of December 31, 2023, the TLR was 7.80:1.
In general, we can make unlimited restricted payments – primarily dividends and share repurchases – if the TLR is below 3.50:1 (both before and after giving effect to such payments).
Distributions and other payments pursuant to the RMCO, LLC Agreement and TRAs were comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 ​ 2022 Distributions and other payments pursuant to the RMCO, LLC Agreement: ​ ​ ​ ​ ​ ​ Pro rata distributions to RIHI as a result of distributions to RE/MAX Holdings in order to satisfy its estimated tax liabilities ​ $ — ​ $ 2,276 Dividend distributions ​ ​ 8,667 ​ ​ 11,556 Other ​ ​ (12) ​ ​ — Total distributions to RIHI ​ ​ 8,655 ​ ​ 13,832 Payments pursuant to the TRAs ​ ​ 440 ​ ​ 3,240 Total distributions to RIHI and TRA payments ​ $ 9,095 ​ $ 17,072 56 Table of Contents Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2023 and the effect such obligations are expected to have on our liquidity and cash flows in future periods (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by Period ​ ​ Total ​ Less than 1 year ​ 1-3 years ​ 3-5 years ​ After 5 years Senior Secured Credit Facility (including current portion) (1) ​ $ 448,500 ​ $ 4,600 ​ ​ 9,200 ​ ​ 434,700 ​ ​ — Interest payments on credit facility (2) ​ ​ 161,386 ​ ​ 36,202 ​ ​ 71,090 ​ ​ 54,094 ​ ​ — Undiscounted lease obligations (3) ​ ​ 39,337 ​ ​ 8,007 ​ ​ 18,536 ​ ​ 12,196 ​ ​ 598 Payments pursuant to tax receivable agreements (4) ​ ​ 822 ​ ​ 822 ​ ​ — ​ ​ — ​ ​ — Vendor contracts (5) ​ ​ 8,950 ​ ​ 7,251 ​ ​ 1,699 ​ ​ — ​ ​ — Estimated undiscounted contingent consideration payments (6) ​ ​ 3,253 ​ ​ 1,085 ​ ​ 2,168 ​ ​ — ​ ​ — ​ ​ $ 662,248 ​ $ 57,967 ​ $ 102,693 ​ $ 500,990 ​ $ 598 (1) We have reflected full payment of our Senior Secured Credit Facility in July 2028 at maturity.
Distributions and other payments pursuant to the RMCO, LLC Agreement and TRAs were comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2024 ​ 2023 Tax distributions ​ $ — ​ $ — Dividend distributions ​ ​ — ​ ​ 8,667 Other ​ ​ — ​ ​ (12) Total distributions to non-controlling unitholders ​ ​ — ​ ​ 8,655 Payments pursuant to the TRAs ​ ​ 504 ​ ​ 440 Total distributions to non-controlling unitholders and TRA payments ​ $ 504 ​ $ 9,095 Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2024 and the effect such obligations are expected to have on our liquidity and cash flows in future periods (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by Period ​ ​ Total ​ Less than 1 year ​ 1-3 years ​ 3-5 years ​ After 5 years Senior Secured Credit Facility (including current portion) (1) ​ $ 443,901 ​ $ 4,600 ​ ​ 9,200 ​ ​ 430,101 ​ ​ — Interest payments on credit facility (2) ​ ​ 109,495 ​ ​ 31,253 ​ ​ 61,530 ​ ​ 16,712 ​ ​ — Undiscounted lease obligations (3) ​ ​ 29,079 ​ ​ 8,514 ​ ​ 17,389 ​ ​ 2,862 ​ ​ 314 Payments pursuant to tax receivable agreements (4) ​ ​ 1,537 ​ ​ 1,537 ​ ​ — ​ ​ — ​ ​ — Vendor contracts (5) ​ ​ 33,435 ​ ​ 13,965 ​ ​ 12,966 ​ ​ 6,504 ​ ​ — Estimated undiscounted contingent consideration payments (6) ​ ​ 2,506 ​ ​ 1,549 ​ ​ 957 ​ ​ — ​ ​ — ​ ​ $ 619,953 ​ $ 61,418 ​ $ 102,042 ​ $ 456,179 ​ $ 314 (1) We have reflected full payment of our Senior Secured Credit Facility in July 2028 at maturity.
Continuing Franchise Fees Revenue from Continuing franchise fees decreased primarily due to a decrease in U.S. agent count, fee deferrals due to a reduction in collections and adverse foreign currency movements partially offset by Mortgage segment growth from an increase in Motto open offices. 47 Table of Contents Broker Fees Revenue from Broker fees decreased primarily due to lower average transactions per agent and from a decrease in U.S. agent count.
Broker Fees Revenue from Broker fees increased primarily due to an increase in average home sales prices and average transactions per agent in the U.S. and Canada, partially offset by a reduction in U.S. agent count. 34 Table of Contents Marketing Funds Fees and Marketing Funds Expenses Revenue from Marketing Funds fees decreased primarily due to a decrease in U.S. agent count.
Key Performance Indicators Operating Performance Indicators We believe that agent count (particularly in the U.S. and Canada) and open Motto offices, and to a lesser extent, RE/MAX and Motto franchise sales, are key operating measures of our success.
Key Performance Indicators Operating Performance Indicators We believe that agent count (especially in the U.S. and Canada), open Motto offices, and growing franchise sales across both brands are key operating measures of our success. 31 Table of Contents Financial Performance Indicators We believe that revenue growth excluding the Marketing Funds and Adjusted EBITDA (both in dollars and margin) are key financial measures of our success.
Financial and Operational Highlights In 2023, difficult housing and mortgage market conditions, primarily caused by high interest rates and limited housing supply, made for a challenging agent recruiting and retention environment, which resulted in declines in U.S. agent count, a slowing pace of Motto franchise sales and total revenue.
Financial and Operational Highlights In 2024, difficult housing and mortgage market conditions, primarily caused by high interest rates and accompanying affordability challenges persisted, resulting in declines in U.S. agent count, open Motto offices and total revenue.
Pursuant to the terms of the settlement, which requires court approval, we agreed to make certain changes to our business practices and to pay a total settlement amount of $55.0 million, which was recorded in the third quarter of 2023. See Note 14, Commitments and Contingencies for additional information.
See Note 13, Commitments and Contingencies for additional information. ​ Settlement Charge (2023) During the third quarter of 2023, we agreed to pay a total settlement of $55.0 million to settle the Nationwide Claims, as defined in Note 13, Commitments and Contingencies , which was deposited into the U.S. Settlement Fund in installments.
Marketing Funds Fees and Marketing Funds Expenses Revenue from Marketing Funds fees decreased primarily from a decrease in U.S. agent count, fee deferrals due to a reduction in collections and adverse foreign currency movements. We recognize an equal and offsetting amount of expenses to revenue such that there is no impact to our overall profitability.
We recognize an equal and offsetting amount of expenses to revenue such that there is no impact to our overall profitability.
Sources and Uses of Cash As of December 31, 2023, and 2022, we had $82.6 million and $108.7 million, respectively, in cash and cash equivalents, of which approximately $32.5 million and $23.5 million were denominated in foreign currencies, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 ​ 2022 Cash provided by (used in): ​ ​ ​ ​ ​ ​ Operating activities ​ $ 28,264 ​ $ 71,142 Investing activities ​ ​ (5,643) ​ ​ (11,500) Financing activities ​ ​ (35,817) ​ ​ (78,363) Effect of exchange rate changes on cash ​ ​ 831 ​ ​ (1,550) Net change in cash, cash equivalents and restricted cash ​ $ (12,365) ​ $ (20,271) Operating Activities Cash provided by operating activities decreased primarily as a result of: ● a decrease in Adjusted EBITDA of $25.3 million; ● a decrease due to increased interest payments of $14.9 million, due to higher interest rates in the current year; 54 Table of Contents ● a decrease due to higher payments of certain employee related liabilities; offset by; ● an increase due to lower costs associated with severance and related restructuring expenses; ● an increase due to a higher cash bonus payout in the prior year; and ● timing differences on various operating assets and liabilities.
As of December 31, 2024, we had $440.8 million of term loans outstanding, net of an unamortized discount and issuance costs, and no revolving loans outstanding under our Senior Secured Credit Facility. 41 Table of Contents Sources and Uses of Cash As of December 31, 2024, and 2023, we had $96.6 million and $82.6 million, respectively, in cash and cash equivalents, of which approximately $19.7 million and $32.5 million were denominated in foreign currencies, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2024 ​ 2023 Cash provided by (used in): ​ ​ ​ ​ ​ ​ Operating activities ​ $ 59,652 ​ $ 28,264 Investing activities ​ ​ (5,876) ​ ​ (5,643) Financing activities ​ ​ (8,273) ​ ​ (35,817) Effect of exchange rate changes on cash ​ ​ (1,979) ​ ​ 831 Net change in cash, cash equivalents and restricted cash ​ $ 43,524 ​ $ (12,365) Operating Activities Cash provided by operating activities increased primarily as a result of: ● lower spend in the Marketing Funds in the current year, which resulted in a $2.0 million increase in restricted cash and cash flow provided by operating activities.
See Note 4, Non-controlling Interest and Note 12, Income Taxes , for additional information. 52 Table of Contents Liquidity and Capital Resources Overview of Factors Affecting Our Liquidity Our liquidity position is affected by the growth of our agent, loan originator and franchise base as well as conditions in the real estate and mortgage markets.
(9) Other adjustments are primarily made up of employee retention related expenses from our CEO transition. Liquidity and Capital Resources Overview of Factors Affecting Our Liquidity Our liquidity position is influenced by trends in our agent, loan originator, and franchise base, as well as conditions in the real estate and mortgage markets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFluctuations in exchange rates of the U.S. dollar against foreign currencies can result, and have resulted, in fluctuations in (a) revenue and operating income (loss) due to a portion of our revenue being denominated in foreign currencies and (b) foreign exchange transaction gains and losses due primarily to cash, accounts receivable and liability balances denominated in foreign currencies, with the Canadian dollar representing the most significant exposure.
Biggest changeFluctuations in exchange rates of the U.S. dollar against foreign currencies can result, and have resulted, in fluctuations in (a) revenue and operating income (loss) due to a portion of our revenue being denominated in foreign currencies and (b) foreign exchange transaction gains and losses due primarily to cash, accounts receivable, the Canadian Settlement Amount payable related to the Canadian antitrust litigations, and other liability balances denominated in foreign currencies, with the Canadian dollar representing the most significant exposure.
As of December 31, 2023, the interest rate on our Senior Secured Credit Facility was based on Adjusted Term SOFR, subject to a floor of 0.50%, plus an applicable margin of 2.50%.
As of December 31, 2024, the interest rate on our Senior Secured Credit Facility was based on Adjusted Term SOFR, subject to a floor of 0.50%, plus an applicable margin of 2.50%.
To mitigate a portion of this risk related to (b), we enter into short-term foreign currency forwards to minimize exposures related to foreign currency. See Note 2, Summary of Significant Accounting Policies , for more information. In addition, we actively convert cash balances into U.S. dollars to mitigate currency risk on cash positions.
To mitigate a portion of this risk related to (b), we enter into short-term foreign currency 46 Table of Contents forwards to minimize exposures related to foreign currency. See Note 2, Summary of Significant Accounting Policies , for more information. In addition, we actively convert cash balances into U.S. dollars to mitigate currency risk on cash positions.
We transitioned from LIBOR to Adjusted Term SOFR during the third quarter of 2023 and borrowings under the term loans and revolving loans accrued interest based on Adjusted Term SOFR, beginning on July 31, 2023, subject to the same floor of 0.50%, plus the same applicable margin of 2.50%. As of December 31, 2023, the interest rate was 8.0%.
We transitioned from LIBOR to Adjusted Term SOFR during the third quarter of 2023 and borrowings under the term loans and revolving loans accrued interest based on Adjusted Term SOFR, beginning on July 31, 2023, subject to the same floor of 0.50%, plus the same applicable margin of 2.50%. As of December 31, 2024, the interest rate was 7.0%.
During the year ended December 31, 2023, a hypothetical 5% strengthening/weakening in the value of the U.S. dollar compared to the Canadian dollar would have resulted in a decrease/increase to operating income (loss) of approximately $1.5 million, respectively, related to currency risk (a) above. ​ 59 Table of Contents
During the year ended December 31, 2024, a hypothetical 5% strengthening/weakening in the value of the U.S. dollar compared to the Canadian dollar would have resulted in a decrease/increase to operating income (loss) of approximately $1.3 million, respectively, related to currency risk (a) above. ​ 47 Table of Contents
For the years ended December 31, 2023 and 2022, bad debt expense was 2.0% and 0.7% of revenue, respectively. Interest Rate Risk We are subject to interest rate risk in connection with borrowings under our Senior Secured Credit Facility which bear interest at variable rates.
For the years ended December 31, 2024 and 2023, bad debt expense was less than 1.0% and was 2.0% of revenue, respectively. Interest Rate Risk We are subject to interest rate risk in connection with borrowings under our Senior Secured Credit Facility which bear interest at variable rates.
At December 31, 2023, $448.5 million in term loans were outstanding under our Senior Secured Credit Facility. We currently do not engage in any interest rate hedging activity, but given our variable rate borrowings, we monitor interest rates and if appropriate, may engage in hedging activity prospectively.
At December 31, 2024, $443.9 million in term loans were outstanding under our Senior Secured Credit Facility. We currently do not engage in any interest rate hedging activity, but given our variable rate borrowings, we monitor interest rates and if appropriate, may engage in hedging activity prospectively.

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