10-Q: RE/MAX Holdings Q3 2025: Net Income Rises Amidst Revenue Dip

RE/MAX Holdings reported a significant increase in net income for Q3 2025 despite a decline in total revenue, driven by global agent growth and strategic program launches.

Summary

• Total revenue decreased 6.7% to $73.2 million for the three months ended September 30, 2025, and 6.3% to $220.4 million for the nine months ended September 30, 2025, compared to the prior year periods.
• Net income attributable to RE/MAX Holdings, Inc. increased significantly to $4.0 million for the three months ended September 30, 2025, from $1.0 million in the prior year, and to $6.7 million for the nine months from $1.3 million in the prior year.
• Adjusted EBITDA decreased 5.6% to $25.8 million for the three months ended September 30, 2025, and 3.0% to $71.3 million for the nine months ended September 30, 2025.
• Global agent count increased 1.4% to a record high of 147,547 agents as of September 30, 2025.
• U.S. and Canada combined agent count decreased 5.1% to 74,198 agents as of September 30, 2025.
• Total open Motto Mortgage offices decreased 10.3% to 210 offices as of September 30, 2025.
• Launched new agent programs: AspireSM in April 2025, and AscendSM and AppreciateSM effective September 1, 2025, designed to enhance recruiting and retention.
• Recorded a $2.1 million cost recovery in Q3 2025 related to a previous settlement from an escrow fund from a prior acquisition.

Sentiment

Score: 7

Explanation: While revenue declined, the significant increase in net income, improved Adjusted EBITDA margin, global agent growth, and proactive strategic initiatives (new agent programs, MaaS) in a challenging market indicate resilience and positive operational adjustments. The legal settlements are progressing, and debt interest expense is down. However, U.S. and Canada agent count decline and Motto office decline are headwinds, preventing a higher score.

Positives

• Net income attributable to RE/MAX Holdings, Inc. significantly increased to $3.986 million in Q3 2025 from $0.966 million in Q3 2024.
• Global agent network grew to a record high of 147,547 agents, a 1.4% increase year-over-year.
• Signs of stabilization in U.S. agent count for two consecutive quarters and relatively flat agent count activity in Canada.
• Successful launch of new agent programs (AspireSM, AscendSM, AppreciateSM) designed to improve recruitment and retention.
• Increased advertising revenue on flagship websites.
• A cost recovery of $2.1 million related to a previous settlement positively impacted Q3 2025 results.
• Interest expense decreased by $1.195 million (12.9%) for Q3 2025 and $3.736 million (13.5%) for the nine months ended September 30, 2025, due to lower interest rates.
• Adjusted EBITDA margin increased to 35.2% in Q3 2025 from 34.8% in Q3 2024.

Negatives

• Total revenue decreased 6.7% to $73.2 million for Q3 2025 and 6.3% to $220.4 million for the nine months ended September 30, 2025.
• Revenue excluding Marketing Funds decreased 5.6% for Q3 2025 and 5.5% for the nine months.
• U.S. and Canada combined agent count decreased 5.1% to 74,198 agents.
• Total open Motto Mortgage offices decreased 10.3% to 210 offices.
• Continuing franchise fees decreased 10.9% for Q3 2025 and 7.0% for the nine months.
• Marketing Funds fees decreased 9.7% for Q3 2025 and 8.4% for the nine months.
• Franchise sales and other revenue decreased 9.1% for the nine months ended September 30, 2025.
• Professional fees increased 70.1% for Q3 2025 and 24.0% for the nine months, primarily due to higher investments in technology and legal fees.
• Bad debt expense increased to 1.0% of revenue for the nine months ended September 30, 2025, from 0.4% in the prior year.
• Suspension of quarterly dividend since Q4 2023.
• Motto franchise sales decreased 44.4% for the nine months ended September 30, 2025.

Risks

• Ongoing economic uncertainties and difficult housing and mortgage market conditions in the U.S. and Canada, including persistently high mortgage rates that are stretching affordability.
• Proposed and enacted changes in legislation and regulation, including tariffs and other trade policies, contributing to continued uncertainty in the global economy.
• Exposure to various legal proceedings, including the Moehrl-related antitrust litigations (Nationwide Claims), Canadian antitrust litigations (Sunderland Action, McFall Action), the Batton Action, and the Homie Technology, Inc. lawsuit.
• Inability to reasonably estimate the financial impact of litigation beyond accrued settlement amounts, with potential for additional litigation if settlement approvals are not upheld on appeal.
• Credit risk related to receivables from franchisees, evidenced by an increase in bad debt expense to 1.0% of revenue for the nine months ended September 30, 2025.
• Interest rate risk due to variable rate borrowings under the Senior Secured Credit Facility, where a hypothetical 0.25% increase would result in an additional $1.1 million in annual interest expense.
• Currency risk from fluctuations in exchange rates, particularly the Canadian dollar, which can impact revenue, operating income, and foreign exchange transaction gains/losses.
• Impact of the One Big Beautiful Bill Act (OBBBA) on executive compensation, leading to a non-deductible compensation charge of $0.8 million in Q3 2025.

Future Outlook

The company expects an increase in recruitment of newer agents and higher retention rates due to the recently launched Aspire, Ascend, and Appreciate programs. It plans to continue re-investing in the business to improve operational efficiencies and enhance the tools and services provided to affiliates. Total capital expenditures for 2025 are projected to be between $7.0 million and $8.0 million. The company may also pursue acquisitions of RE/MAX Independent Regions in the U.S. and Canada, as well as additional investments in complementary businesses, services, and technologies.

Management Comments

• Our global agent network has grown to a record high with over 147,000 agents worldwide.
• We have also seen signs of stabilization for two straight quarters in our U.S. agent count for the first time since 2022 and relatively flat agent count activity in Canada.
• This performance occurred despite ongoing economic uncertainties and difficult housing and mortgage market conditions in the U.S. and Canada, including persistently high mortgage rates that are stretching affordability.
• We continue to focus on growth initiatives to elevate and expand the value proposition for our affiliates that are designed to empower them to win more business, save time and build more profitable businesses.
• These programs are designed to offer greater flexibility and an attractive, competitive fee structure for recruits and existing agents, positioning them for sustained success in an evolving market environment.
• As these programs are adopted, we expect an increase in the recruitment of newer agents and a higher retention rate, which we are beginning to see for the Aspire program that was launched in April 2025.
• We continue to believe this action [suspension of quarterly dividend] to preserve our capital is prudent.

Industry Context

The company operates within a challenging real estate and mortgage market, characterized by ongoing economic uncertainties and persistently high mortgage rates that continue to impact housing affordability. Despite these headwinds, the global agent network is expanding, and the U.S. agent count shows signs of stabilization. The company is proactively responding to market dynamics by introducing new flexible fee models (Aspire, Ascend, Appreciate) and investing in technology (Marketing as a Service) to enhance its value proposition, support franchisees, and drive business growth in a competitive and evolving industry landscape.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• **Moehrl-related antitrust litigations (Nationwide Claims)**: RE/MAX, LLC entered into a settlement agreement in 2023 for $55.0 million to resolve nationwide claims. Final approval was granted on May 9, 2024, but appeals are ongoing. The U.S. Settlement Amount is held in a restricted fund.
• **Canadian antitrust litigations (Sunderland Action, McFall Action)**: RE/MAX OA entered a long-form settlement agreement on April 29, 2025, to resolve claims, agreeing to pay $7.8 million Canadian dollars into a third-party interest-bearing account. The court approved this settlement on October 8, 2025.
• **Batton Action**: A putative class action alleging harm to homebuyers, similar to Moehrl. The company's motion to dismiss was denied on November 22, 2024. Plaintiffs filed a motion to certify a class on September 22, 2025. The company intends to vigorously defend against all remaining claims, including appeals.
• **Homie Technology, Inc. lawsuit**: Filed on August 22, 2024, alleging antitrust violations and tortious interference. The court dismissed the lawsuit on July 15, 2025, but Homie filed a notice of appeal on August 7, 2025. The company intends to vigorously defend the appeal.
• A cost recovery of $2.1 million was recorded in Q3 2025 in connection with a previous settlement from an escrow fund from a prior acquisition.
• An immaterial legal matter was settled during Q1 2025, with payments being made over twelve months starting in Q2 2025.

Stakeholder Impact

• **Shareholders**: Experienced a significant increase in net income and improved Adjusted EBITDA margin, which are positive. However, the continued suspension of quarterly dividends and ongoing litigation create uncertainty.
• **Franchisees/Agents**: Benefit from new strategic programs (Aspire, Ascend, Appreciate) offering greater flexibility and competitive fee structures, as well as the launch of Marketing as a Service (MaaS) to enhance marketing support and business growth.
• **Creditors**: The company's Total Leverage Ratio (TLR) of 3.41:1 as of September 30, 2025, is below the 3.50:1 threshold for unlimited restricted payments, indicating compliance with debt covenants. The extension of the revolving loan facility maturity provides enhanced financial stability.
• **Employees**: The company incurred $2.9 million in severance and related expenses during the nine months ended September 30, 2025, due to restructuring support services, indicating workforce adjustments. Equity-based compensation benefits were also recognized.

Next Steps

• Continue to vigorously defend against remaining legal claims and appeals, including the Batton Action and the Homie Technology, Inc. lawsuit appeal.
• Evaluate the full implications of the One Big Beautiful Bill Act (OBBBA) and adjust compensation and tax planning strategies accordingly.
• Monitor the adoption and impact of new agent programs (Aspire, Ascend, Appreciate) on recruitment and retention.
• Continue re-investing in the business to improve operational efficiencies and enhance tools and services provided to affiliates.
• Potentially pursue acquisitions of RE/MAX Independent Regions in the U.S. and Canada, as well as additional investments in complementary businesses, services, and technologies.
• The Board of Directors will make future capital allocation decisions regarding dividends and share buybacks, taking into account market conditions and financial health.
• Settle the Tax Receivable Agreements (TRAs) liability for the tax year ending December 31, 2024, in the fourth quarter of 2025.
• The Canadian dollar forward contract matures in the fourth quarter of 2025.
• Adopt ASU 2023-09 in the annual financial statements for the twelve months ended December 31, 2025, and for interim periods beginning in 2026.
• Adopt ASU 2024-03 for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.
• Adopt ASU 2025-06 for annual periods beginning after December 15, 2027, and interim periods within those fiscal years.

Key Dates

Recommendation

While RE/MAX Holdings demonstrated strong net income growth and improved Adjusted EBITDA margin in Q3 2025, driven by cost recovery and lower interest expenses, the underlying revenue decline and continued decrease in U.S. and Canada agent count remain concerns. The company's strategic initiatives like Aspire, Ascend, Appreciate, and MaaS are positive steps to address market challenges and enhance franchisee value, but their full impact on revenue and agent growth is yet to be realized. The ongoing antitrust litigations, despite settlements in some cases, still present a degree of uncertainty. Given the mixed financial performance, the challenging housing market, and the long-term potential of strategic investments, a 'hold' recommendation is appropriate for investors to observe the effectiveness of these initiatives and the resolution of legal matters.

Keywords

RE/MAX, Motto Mortgage, real estate franchising, mortgage brokering, SEC filing, 10-Q, financial results, agent count, revenue, net income, Adjusted EBITDA, housing market, mortgage rates, antitrust litigation, franchise sales, capital allocation, share repurchase, dividend, Aspire program, Ascend program, Appreciate program, Marketing as a Service