RE/MAX HOLDINGS, INC. REPORTS FOURTH QUARTER 2024 RESULTS

Published: 2025-02-20 16:16:17 ET RMAX

Total Revenue of $72.5 Million, Adjusted EBITDA of $23.3 Million

DENVER, Feb. 20, 2025 /PRNewswire/ --

Fourth Quarter 2024 Highlights(Compared to fourth quarter 2023 unless otherwise noted)

Full-Year 2024 Highlights(Compared to full year 2023 unless otherwise noted)

Operating Statistics as of January 31, 2025(Compared to January 31, 2024, unless otherwise noted)

RE/MAX Holdings, Inc. (the "Company" or "RE/MAX Holdings") (NYSE: RMAX), parent company of RE/MAX, one of the world's leading franchisors of real estate brokerage services, and Motto Mortgage ("Motto"), the first and only national mortgage brokerage franchise brand in the U.S., today announced operating results for the quarter and year ended December 31, 2024.

"Our continued focus on operational efficiencies contributed to higher-than-forecasted fourth-quarter profit and margin performance, a trend we have seen now for three quarters in a row," said Erik Carlson, RE/MAX Holdings Chief Executive Officer. "With a strengthened leadership team overseeing exciting new initiatives and revenue opportunities, we are entering 2025 with increasing momentum and remain centered on delivering the absolute best customer experience possible."

Fourth Quarter 2024 Operating Results

Agent Count

The following table compares agent count as of December 31, 2024 and 2023:

As of December 31,

Change

2024

2023

U.S.

51,286

55,131

(3,845)

(7.0)

Canada

25,171

25,168

0.0

Subtotal

76,457

80,299

(3,842)

(4.8)

Outside the U.S. & Canada

70,170

64,536

5,634

8.7

Total

146,627

144,835

1,792

1.2

Revenue

RE/MAX Holdings generated revenue of $72.5 million in the fourth quarter of 2024, a decrease of $4.1 million, or 5.4%, compared to $76.6 million in the fourth quarter of 2023. Revenue excluding the Marketing Funds was $53.8 million in the fourth quarter of 2024, a decrease of $2.2 million, or 3.9%, versus the same period in 2023. The decrease in Revenue excluding the Marketing Funds was attributable to negative organic revenue growth of 3.5% and adverse foreign currency movements of 0.4%. Negative organic revenue growth was principally driven by a decrease in U.S. agent count and a reduction in revenue contribution from previous acquisitions (excluding independent region acquisitions).

Recurring revenue streams, which consist of continuing franchise fees and annual dues, decreased $2.0 million, or 5.0%, compared to the fourth quarter of 2023 and accounted for 69.9% of Revenue excluding the Marketing Funds in the fourth quarter of 2024 compared to 70.7% of Revenue excluding the Marketing Funds in the prior-year period.

Operating Expenses

Total operating expenses were $68.2 million for the fourth quarter of 2024, a decrease of $18.1 million, or 21.0%, compared to $86.3 million in the fourth quarter of 2023. Fourth quarter 2024 total operating expenses decreased primarily due to lower settlement and impairment charges and lower selling, operating and administrative expenses. Fourth quarter 2024 settlement and impairment charges included an expense of approximately $5.5 million related to the proposed settlement of certain industry class-action lawsuits in Canada.

Selling, operating and administrative expenses were $35.8 million in the fourth quarter of 2024, a decrease of $3.4 million, or 8.6%, compared to the fourth quarter of 2023 and represented 66.5% of Revenue excluding the Marketing Funds, compared to 69.9% in the prior-year period. Fourth quarter 2024 selling, operating and administrative expenses decreased primarily due to a decrease in bad debt and events-related expenses, partially offset by higher personnel costs.

Net Income (Loss) and GAAP EPS

Net income attributable to RE/MAX Holdings was $5.8 million for the fourth quarter of 2024 compared to net loss of ($10.9) million for the fourth quarter of 2023. Reported basic and diluted GAAP earnings per share were $0.31 and $0.29, respectively, for the fourth quarter of 2024 compared to basic and diluted GAAP loss per share of ($0.60) each in the fourth quarter of 2023.

Adjusted EBITDA and Adjusted EPS

Adjusted EBITDA was $23.3 million for the fourth quarter of 2024, an increase of $0.4 million, or 1.6%, compared to the fourth quarter of 2023. Fourth quarter 2024 Adjusted EBITDA increased primarily due to a decrease in bad debt and events-related expenses, partially offset by a decrease in U.S. agent count. Adjusted EBITDA margin was 32.2% in the fourth quarter of 2024, compared to 30.0% in the fourth quarter of 2023.

Adjusted basic and diluted EPS were $0.32 and $0.30, respectively, for the fourth quarter of 2024 compared to Adjusted basic and diluted EPS of $0.30 each for the fourth quarter of 2023. The ownership structure used to calculate Adjusted basic and diluted EPS for the quarter ended December 31, 2024, assumes RE/MAX Holdings owned 100% of RMCO, LLC ("RMCO"). The weighted average ownership RE/MAX Holdings had in RMCO was 60.1% for the quarter ended December 31, 2024.

Balance Sheet

As of December 31, 2024, the Company had cash and cash equivalents of $96.6 million, an increase of $14.0 million from December 31, 2023. As of December 31, 2024, the Company had $440.8 million of outstanding debt, net of an unamortized debt discount and issuance costs, compared to $444.6 million as of December 31, 2023.

Share Repurchases and Retirement

As previously disclosed, in January 2022 the Company's Board of Directors authorized a common stock repurchase program of up to $100 million. During the three months ended December 31, 2024, the Company did not repurchase any shares. As of December 31, 2024, $62.5 million remained available under the share repurchase program.

Outlook

The Company's first quarter and full year 2025 Outlook assumes no further currency movements, acquisitions, or divestitures.

For the first quarter of 2025, RE/MAX Holdings expects:

For the full year 2025, the Company now expects:

Webcast and Conference Call

The Company will host a conference call for interested parties on Friday, February 21, 2025, beginning at 8:30 a.m. Eastern Time. Interested parties can register in advance for the conference call using the link below:

https://registrations.events/direct/Q4I941153786

Interested parties also can access a live webcast through the Investor Relations section of the Company's website at http://investors.remaxholdings.com. Please dial-in or join the webcast 10 minutes before the start of the conference call. An archive of the webcast will be available on the Company's website for a limited time as well.

Basis of Presentation

Unless otherwise noted, the results presented in this press release are consolidated and exclude adjustments attributable to the non-controlling interest.

Footnotes:

1Revenue excluding the Marketing Funds is a non-GAAP measure of financial performance that differs from U.S. Generally Accepted Accounting Principles ("U.S. GAAP") and a reconciliation to the most directly comparable U.S. GAAP measure is as follows (in thousands):

Three Months Ended

Year Ended

December 31,

2024

2023

2024

2023

Revenue excluding the Marketing Funds:

Total revenue

72,467

76,600

307,685

325,671

Less: Marketing Funds fees

18,652

20,589

78,983

83,861

Revenue excluding the Marketing Funds

53,815

56,011

228,702

241,810

2The Company defines organic revenue growth as revenue growth from continuing operations excluding (i) revenue from Marketing Funds, (ii) revenue from acquisitions, and (iii) the impact of foreign currency movements. The Company defines revenue from acquisitions as the revenue generated from the date of an acquisition to its first anniversary (excluding Marketing Funds revenue related to acquisitions where applicable).

3Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EPS are non-GAAP measures. These terms are defined at the end of this release. Please see Tables 5 and 6 appearing later in this release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.

4Total open Motto Mortgage franchises includes only "bricks and mortar" offices with a unique physical address with rights granted by a full franchise agreement with Motto Franchising, LLC and excludes any "virtual" offices or BranchiseSM offices.

About RE/MAX Holdings, Inc.

RE/MAX Holdings, Inc. (NYSE: RMAX) is one of the world's leading franchisors in the real estate industry, franchising real estate brokerages globally under the RE/MAX® brand, and mortgage brokerages within the U.S. under the Motto® Mortgage brand. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Now with more than 145,000 agents in nearly 9,000 offices and a presence in more than 110 countries and territories, nobody in the world sells more real estate than RE/MAX, as measured by total residential transaction sides. Dedicated to innovation and change in the real estate industry, RE/MAX launched Motto Franchising, LLC, a ground-breaking mortgage brokerage franchisor, in 2016. Motto Mortgage, the first and only national mortgage brokerage franchise brand in the U.S., has over 220 offices across more than 40 states.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," "anticipate," "may," "will," "would" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to agent count; Motto open offices; franchise sales; revenue, including new revenue opportunities; the Company's outlook for the first quarter and full year 2025; non-GAAP financial measures; housing and mortgage market conditions; operational efficiencies; litigation settlement; the Company's expectations around its leadership team and new initiatives; our belief that we are entering 2025 with increased momentum; and our focus on delivering the best customer experience possible. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include, without limitation, (1) changes in the real estate market or interest rates and availability of financing, (2) changes in business and economic activity in general, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations, (6) the Company's ability to enhance, market, and protect its brands, (7) the Company's ability to implement its technology initiatives, (8) risks related to the Company's leadership transition, (9) fluctuations in foreign currency exchange rates, (10) the nature and amount of the exclusion of charges in future periods when determining Adjusted EBITDA is subject to uncertainty and may not be similar to such charges in prior periods, and (11) those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remaxholdings.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances.

TABLE 1

RE/MAX Holdings, Inc

Consolidated Statements of Income (Loss)

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

Year Ended

December 31,

2024

2023

2024

2023

Revenue:

Continuing franchise fees

29,788

31,373

122,011

127,384

Annual dues

7,843

8,243

32,188

33,904

Broker fees

11,657

11,544

51,816

51,012

Marketing Funds fees

18,652

20,589

78,983

83,861

Franchise sales and other revenue

4,527

4,851

22,687

29,510

Total revenue

72,467

76,600

307,685

325,671

Operating expenses:

Selling, operating and administrative expenses

35,770

39,131

152,258

171,548

Marketing Funds expenses

18,652

20,589

78,983

83,861

Depreciation and amortization

7,072

8,178

29,561

32,414

Settlement and impairment charges

5,483

18,783

5,483

73,783

Change in estimated tax receivable agreement liability

1,219

(381)

1,219

(25,298)

Total operating expenses

68,196

86,300

267,504

336,308

Operating income (loss)

4,271

(9,700)

40,181

(10,637)

Other expenses, net:

Interest expense

(8,562)

(9,364)

(36,258)

(35,741)

Interest income

903

1,102

3,738

4,420

Foreign currency transaction gains (losses)

(893)

(1,461)

419

Total other expenses, net

(8,552)

(8,226)

(33,981)

(30,902)

Income (loss) before provision for income taxes

(4,281)

(17,926)

6,200

(41,539)

Provision for income taxes

8,361

(453)

1,877

(56,947)

Net income (loss)

4,080

(18,379)

8,077

(98,486)

Less: net income (loss) attributable to non-controlling interest

(1,725)

(7,472)

954

(29,464)

Net income (loss) attributable to RE/MAX Holdings, Inc

5,805

(10,907)

7,123

(69,022)

Net income (loss) attributable to RE/MAX Holdings, Inc. per shareof Class A common stock

Basic

0.31

(0.60)

0.38

(3.81)

Diluted

0.29

(0.60)

0.37

(3.81)

Weighted average shares of Class A common stock outstanding

Basic

18,921,229

18,253,608

18,780,200

18,111,409

Diluted

19,985,471

18,253,608

19,293,827

18,111,409

Cash dividends declared per share of Class A common stock

—

0.69

TABLE 2

RE/MAX Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

As of

December 31,

2024

2023

Assets

Current assets:

Cash and cash equivalents

96,619

82,623

Restricted cash

72,668

43,140

Accounts and notes receivable, current portion, net of allowances

27,807

33,427

Income taxes receivable

7,592

1,706

Other current assets

13,825

15,669

Total current assets

218,511

176,565

Property and equipment, net of accumulated depreciation

7,578

8,633

Operating lease right of use assets

17,778

23,013

Franchise agreements, net

81,186

101,516

Other intangible assets, net

13,382

19,176

Goodwill

237,239

241,164

Income taxes receivable, net of current portion

355

—

Other assets, net of current portion

5,565

7,083

Total assets

581,594

577,150

Liabilities and stockholders' equity (deficit)

Current liabilities:

Accounts payable

5,761

4,700

Accrued liabilities

110,859

107,434

Income taxes payable

541

766

Deferred revenue

22,848

23,077

Current portion of debt

4,600

Current portion of payable pursuant to tax receivable agreements

1,537

822

Operating lease liabilities

8,556

7,920

Total current liabilities

154,702

149,319

Debt, net of current portion

436,243

439,980

Deferred tax liabilities

8,448

10,797

Deferred revenue, net of current portion

14,778

17,607

Operating lease liabilities, net of current portion

22,669

31,479

Other liabilities, net of current portion

3,148

4,029

Total liabilities

639,988

653,211

Commitments and contingencies

Stockholders' equity (deficit):

Class A common stock, par value $.0001 per share, 180,000,000 shares authorized; 18,971,435and 18,269,284 shares issued and outstanding as of December 31, 2024 andDecember 31, 2023, respectively

Class B common stock, par value $.0001 per share, 1,000 shares authorized; 1 share issuedand outstanding as of December 31, 2024 and December 31, 2023, respectively

—

Additional paid-in capital

565,072

550,637

Accumulated deficit

(133,727)

(140,217)

Accumulated other comprehensive income (deficit), net of tax

(1,864)

638

Total stockholders' equity attributable to RE/MAX Holdings, Inc.

429,483

411,060

Non-controlling interest

(487,877)

(487,121)

Total stockholders' equity (deficit)

(58,394)

(76,061)

Total liabilities and stockholders' equity (deficit)

581,594

577,150

TABLE 3

RE/MAX Holdings, Inc

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Year Ended

December 31,

2024

2023

2022

Cash flows from operating activities:

Net income (loss)

8,077

(98,486)

10,757

Adjustments to reconcile net income (loss) to net cash provided by operatingactivities:

Depreciation and amortization

29,561

32,414

35,769

Equity-based compensation expense

18,855

19,536

22,044

Bad debt expense

1,359

6,784

2,581

Deferred income tax expense (benefit)

(2,102)

49,387

(183)

Fair value adjustments to contingent consideration

(225)

(533)

(133)

Settlement charge

5,483

55,150

—

Impairment charge - goodwill

—

18,633

7,100

Impairment charge - leased assets

—

6,248

Loss on sale or disposition of assets, net

190

406

1,320

Non-cash lease benefit

(2,928)

(2,847)

(2,108)

Non-cash loss on lease termination

—

1,175

Non-cash debt charges

863

860

861

Payment of contingent consideration in excess of acquisition date fair value

(360)

—

Change in estimated tax receivable agreement liability

1,219

(25,298)

(702)

Other, net

(220)

Changes in operating assets and liabilities

Accounts and notes receivable, current portion

7,505

(8,442)

2,789

Other current and noncurrent assets

712

6,461

5,163

Other current and noncurrent liabilities

1,542

(20,249)

(17,533)

Payments pursuant to tax receivable agreements

(504)

(440)

(3,240)

Income taxes receivable/payable

(6,505)

298

(871)

Deferred revenue, current and noncurrent

(2,870)

(5,432)

Net cash provided by operating activities

59,652

28,264

71,142

Cash flows from investing activities:

Purchases of property, equipment and capitalization of software

(6,622)

(6,419)

(9,932)

Other

746

776

(1,568)

Net cash used in investing activities

(5,876)

(5,643)

(11,500)

Cash flows from financing activities:

Payments on debt

(4,600)

Distributions paid to non-controlling unitholders

—

(8,655)

(13,832)

Dividends and dividend equivalents paid to Class A common stockholders

(599)

(13,553)

(18,186)

Payments related to tax withholding for share-based compensation

(3,075)

(4,367)

(6,524)

Common shares repurchased

—

(3,408)

(34,101)

Payment of contingent consideration

—

(1,234)

(1,120)

Other financing

—

Net cash used in financing activities

(8,273)

(35,817)

(78,363)

Effect of exchange rate changes on cash

(1,979)

831

(1,550)

Net increase (decrease) in cash, cash equivalents and restricted cash

43,524

(12,365)

(20,271)

Cash, cash equivalents and restricted cash, beginning of period

125,763

138,128

158,399

Cash, cash equivalents and restricted cash, end of period

169,287

125,763

138,128

TABLE 4

RE/MAX Holdings, Inc.

Agent Count

(Unaudited)

As of

December 31,

September 30,

June 30,

March 31,

December 31,

September 30,

June 30,

March 31,

December 31,

2024

2023

2022

Agent Count:

U.S.

Company-Owned Regions

44,911

46,283

46,780

47,302

48,401

49,576

50,011

50,340

51,491

Independent Regions

6,375

6,525

6,626

6,617

6,730

6,918

6,976

7,110

7,228

U.S. Total

51,286

52,808

53,406

53,919

55,131

56,494

56,987

57,450

58,719

Canada

Company-Owned Regions

20,311

20,515

20,347

20,151

20,270

20,389

20,354

20,172

20,228

Independent Regions

4,860

4,878

4,846

4,885

4,898

4,899

4,864

4,899

4,892

Canada Total

25,171

25,393

25,193

25,036

25,168

25,288

25,218

25,071

25,120

U.S. and Canada Total

76,457

78,201

78,599

78,955

80,299

81,782

82,205

82,521

83,839

Outside U.S. and Canada

Independent Regions

70,170

67,282

64,943

64,332

64,536

63,527

62,305

61,002

60,175

Outside U.S. and Canada Total

70,170

67,282

64,943

64,332

64,536

63,527

62,305

61,002

60,175

Total

146,627

145,483

143,542

143,287

144,835

145,309

144,510

143,523

144,014

TABLE 5

RE/MAX Holdings, Inc.

Adjusted EBITDA Reconciliation to Net Income (Loss)

(In thousands, except percentages)

(Unaudited)

Three Months Ended

Year Ended

December 31,

2024

2023

2024

2023

Net income (loss)

4,080

(18,379)

8,077

(98,486)

Depreciation and amortization

7,072

8,178

29,561

32,414

Interest expense

8,562

9,364

36,258

35,741

Interest income

(903)

(1,102)

(3,738)

(4,420)

Provision for income taxes

(8,361)

453

(1,877)

56,947

EBITDA

10,450

(1,486)

68,281

22,196

Settlement charge (1)

5,483

150

5,483

55,150

Impairment charge - goodwill (2)

—

18,633

—

18,633

Equity-based compensation expense

4,412

5,486

18,855

19,536

Acquisition-related expense (3)

—

103

—

263

Fair value adjustments to contingent consideration (4)

(154)

(225)

(533)

Restructuring charges (5)

1,286

(35)

1,227

4,210

Change in estimated tax receivable agreement liability (6)

1,219

(381)

1,219

(25,298)

Other adjustments (7)

416

660

2,860

2,131

Adjusted EBITDA (8)

23,341

22,976

97,700

96,288

Adjusted EBITDA Margin (8)

32.2

30.0

31.8

29.6

(1)

Represents the settlements of certain industry class-action lawsuits.

(2)

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)

Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with acquisition activities and integration of acquired companies.

(4)

Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities.

(5)

During the fourth quarter of 2024, the Company restructured its support services intended to further enhance the overall customer experience. Additionally, during the third quarter of 2023, the Company announced a reduction in force and reorganization intended to streamline the Company's operations and yield cost savings over the long term.

(6)

Change in estimated tax receivable agreement liability is a result of a valuation allowance on deferred tax assets recorded during 2024 and 2023.

(7)

Other adjustments are primarily made up of employee retention related expenses from the Company's CEO transition.

(8)

Non-GAAP measure. See the end of this press release for definitions of non-GAAP measures.

TABLE 6

RE/MAX Holdings, Inc.

Adjusted Net Income (Loss) and Adjusted Earnings per Share

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

Year Ended

December 31,

2024

2023

2024

2023

Net income (loss)

4,080

(18,379)

8,077

(98,486)

Amortization of acquired intangible assets

4,621

5,741

19,706

23,040

Provision for income taxes

(8,361)

453

(1,877)

56,947

Add-backs:

Settlement charge (1)

5,483

150

5,483

55,150

Impairment charge - goodwill (2)

—

18,633

—

18,633

Equity-based compensation expense

4,412

5,486

18,855

19,536

Acquisition-related expense (3)

—

103

—

263

Fair value adjustments to contingent consideration (4)

(154)

(225)

(533)

Restructuring charges (5)

1,286

(35)

1,227

4,210

Change in estimated tax receivable agreement liability (6)

1,219

(381)

1,219

(25,298)

Other adjustments (7)

416

660

2,860

2,131

Adjusted pre-tax net income

13,231

12,277

55,325

55,593

Less: Provision for income taxes at 25% (8)

(3,307)

(3,069)

(13,831)

(13,898)

Adjusted net income (9)

9,924

9,208

41,494

41,695

Total basic pro forma shares outstanding

31,480,829

30,813,208

31,339,800

30,671,009

Total diluted pro forma shares outstanding

32,545,071

30,813,208

31,853,427

30,671,009

Adjusted net income basic earnings per share (9)

0.32

0.30

1.32

1.36

Adjusted net income diluted earnings per share (9)

0.30

1.30

1.36

(1)

Represents the settlements of certain industry class-action lawsuits.

(2)

(3)

Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with acquisition activities and integration of acquired companies.

(4)

Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities.

(5)

(6)

Change in estimated tax receivable agreement liability is a result of a valuation allowance on deferred tax assets recorded during 2024 and 2023.

(7)

Other adjustments are primarily made up of employee retention related expenses from the Company's CEO transition.

(8)

The long-term tax rate assumes the exchange of all outstanding non-controlling interest partnership units for Class A Common Stock that (a) removes the impact of unusual, non-recurring tax matters and (b) does not estimate the residual impacts to foreign taxes of additional step-ups in tax basis from an exchange because that is dependent on stock prices at the time of such exchange and the calculation is impracticable.

(9)

Non-GAAP measure. See the end of this press release for definitions of non-GAAP measures.

TABLE 7

RE/MAX Holdings, Inc.

Pro Forma Shares Outstanding

(Unaudited)

Three Months Ended

Year Ended

December 31,

2024

2023

2024

2023

Total basic weighted average shares outstanding:

Weighted average shares of Class A common stock outstanding

18,921,229

18,253,608

18,780,200

18,111,409

Remaining equivalent weighted average shares of stockoutstanding on a pro forma basis assuming RE/MAX Holdingsowned 100% of RMCO

12,559,600

Total basic pro forma weighted average shares outstanding

31,480,829

30,813,208

31,339,800

30,671,009

Total diluted weighted average shares outstanding:

Weighted average shares of Class A common stock outstanding

18,921,229

18,253,608

18,780,200

18,111,409

Remaining equivalent weighted average shares of stockoutstanding on a pro forma basis assuming RE/MAX Holdingsowned 100% of RMCO

12,559,600

Dilutive effect of unvested restricted stock units (1)

1,064,242

—

513,627

—

Total diluted pro forma weighted average shares outstanding

32,545,071

30,813,208

31,853,427

30,671,009

(1)

In accordance with the treasury stock method.

TABLE 8

RE/MAX Holdings, Inc.

Adjusted Free Cash Flow & Unencumbered Cash

(Unaudited)

Year Ended

December 31,

2024

2023

Cash flow from operations

59,652

28,264

Less: Purchases of property, equipment and capitalization of software

(6,622)

(6,419)

(Increases) decreases in restricted cash of the Marketing Funds (1)

(2,028)

13,825

Adjusted free cash flow (2)

51,002

35,670

Adjusted free cash flow (2)

51,002

35,670

Less: Tax/Other non-dividend distributions to RIHI

—

(12)

Adjusted free cash flow after tax/non-dividend distributions to RIHI (2)

51,002

35,658

Adjusted free cash flow after tax/non-dividend distributions to RIHI (2)

51,002

35,658

Less: Debt principal payments

(4,600)

Unencumbered cash generated (2)

46,402

31,058

Summary

Cash flow from operations

59,652

28,264

Adjusted free cash flow (2)

51,002

35,670

Adjusted free cash flow after tax/non-dividend distributions to RIHI (2)

51,002

35,658

Unencumbered cash generated (2)

46,402

31,058

Adjusted EBITDA (2)

97,700

96,288

Adjusted free cash flow as % of Adjusted EBITDA (2)

52.2 %

37.0 %

Adjusted free cash flow less distributions to RIHI as % of Adjusted EBITDA (2)

52.2 %

37.0 %

Unencumbered cash generated as % of Adjusted EBITDA (2)

47.5 %

32.3 %

(1)

This line reflects any subsequent changes in the restricted cash balance (which under GAAP reflects as either (a) an increase or decrease in cash flow from operations or (b) an incremental amount of purchases of property and equipment and capitalization of developed software) to remove the impact of changes in restricted cash in determining adjusted free cash flow.

(2)

Non-GAAP measure. See the end of this press release for definitions of non-GAAP measures.

Non-GAAP Financial Measures

The 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, Adjusted EBITDA and the ratios related thereto, Adjusted net income, Adjusted basic and diluted earnings per share (Adjusted EPS) and adjusted free cash flow. These measures are derived based on methodologies other than in accordance with U.S. GAAP.

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

The Company defines Adjusted EBITDA as EBITDA (consolidated net income before depreciation and amortization, interest expense, interest income and the provision for income taxes, each of which is presented in the unaudited consolidated financial statements included earlier in this press release), adjusted for the impact of the following items that are either non-cash or that the Company does not consider representative of its ongoing operating performance: loss or gain on sale or disposition of assets and sublease, settlement and impairment charges, equity-based compensation expense, acquisition-related expense, gain on reduction in tax receivable agreement liability, expense or income related to changes in the estimated fair value measurement of contingent consideration, restructuring charges and other non-recurring items. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of revenue.

Because Adjusted EBITDA and Adjusted EBITDA margin omit certain non-cash items and other non-recurring cash charges or other items, the Company believes that each measure is less susceptible to variances that affect its operating performance resulting from depreciation, amortization and other non-cash and non-recurring cash charges or other items. The Company presents Adjusted EBITDA and the related Adjusted EBITDA margin because the Company believes they are useful as supplemental measures in evaluating the performance of its operating businesses and provides greater transparency into the Company's results of operations. The Company's management uses Adjusted EBITDA and Adjusted EBITDA margin as factors in evaluating the performance of the business.

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

The Company's Adjusted EBITDA guidance does not include certain charges and costs. 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 quarters, such as gain or loss on sale or disposition of assets and sublease, settlement and impairment charges, equity-based compensation expense, acquisition-related expense, gains or losses from changes in the tax receivable agreement liability, expense or income related to changes in the fair value measurement of contingent consideration, restructuring charges and other non-recurring items. The exclusion of these charges and costs in future periods will have a significant impact on the Company's Adjusted EBITDA. The Company is not able to provide a reconciliation of the Company's non-GAAP financial guidance 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.

Adjusted net income is calculated as Net income attributable to RE/MAX Holdings, assuming the full exchange of all outstanding non-controlling interests for shares of Class A common stock as of the beginning of the period (and the related increase to the provision for income taxes after such exchange), plus primarily non-cash items and other items that management does not consider to be useful in assessing the Company's operating performance (e.g., amortization of acquired intangible assets, gain on sale or disposition of assets and sub-lease, non-cash impairment charges, acquisition-related expense, restructuring charges and equity-based compensation expense).

Adjusted basic and diluted earnings per share (Adjusted EPS) are calculated as Adjusted net income (as defined above) divided by pro forma (assuming the full exchange of all outstanding non-controlling interests) basic and diluted weighted average shares, as applicable.

Adjusted free cash flow is calculated as cash flows from operations less capital expenditures and any changes in restricted cash of the Marketing Funds, all as reported under GAAP, and quantifies how much cash a company has to pursue opportunities that enhance shareholder value. The restricted cash of the Marketing Funds is limited in use for the benefit of franchisees and any impact to adjusted free cash flow is removed. The Company believes adjusted free cash flow is useful to investors as a supplemental measure as it calculates the cash flow available for working capital needs, re-investment opportunities, potential Independent Region and strategic acquisitions, dividend payments or other strategic uses of cash.

Adjusted free cash flow after tax and non-dividend distributions to RIHI is calculated as adjusted free cash flow less tax and other non-dividend distributions paid to RIHI (the non-controlling interest holder) to enable RIHI to satisfy its income tax obligations. Similar payments would be made by the Company directly to federal and state taxing authorities as a component of the Company's consolidated provision for income taxes if a full exchange of non-controlling interests occurred in the future. As a result and given the significance of the Company's ongoing tax and non-dividend distribution obligations to its non-controlling interest, adjusted free cash flow after tax and non-dividend distributions, when used in conjunction with GAAP financial measures, provides a meaningful view of cash flow available to the Company to pursue opportunities that enhance shareholder value.

Unencumbered cash generated is calculated as adjusted free cash flow after tax and non-dividend distributions to RIHI less quarterly debt principal payments less annual excess cash flow payment on debt, as applicable. Given the significance of the Company's excess cash flow payment on debt, when applicable, unencumbered cash generated, when used in conjunction with GAAP financial measures, provides a meaningful view of the cash flow available to the Company to pursue opportunities that enhance shareholder value after considering its debt service obligations.

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SOURCE RE/MAX Holdings, Inc.