RE/MAX Holdings, Inc. announced operating results for the second quarter ended June 30, 2021.
Revenue
RE/MAX Holdings generated total revenue of $77.2 million in the second quarter of 2021, an increase of $25.0 million, or 48.0%, compared to $52.2 million in the second quarter of 2020. Total revenue grew primarily due to increased broker fees stemming from higher total transactions per agent and rising home prices, fewer agent recruiting initiatives versus the prior year, incremental revenue from acquisitions and Motto growth.
Revenue in the second quarter of 2020 was adversely affected by temporary COVID-19 financial support initiatives. Second quarter 2021 revenue growth was partially offset by continued attrition of booj’s legacy customer base. Recurring revenue streams, which consist of continuing franchise fees and annual dues, increased $10.3 million, or 40.6%, compared to the second quarter of 2020 and accounted for 60.5% of revenue (excluding the marketing funds) in the second quarter of 2021, compared to 63.0% in the comparable period in 2020.
Operating Expenses
Total operating expenses were $63.8 million for the second quarter of 2021, an increase of $20.3 million, or 46.7%, compared to $43.5 million in the second quarter of 2020. Second quarter total operating expenses increased primarily due to higher selling, operating and administrative expenses. Second quarter 2020 selling, operating and administrative expenses were lower due to temporary COVID-19 costs savings measures. Excluding the marketing funds, second quarter 2021 operating expenses totaled $45.8 million, an increase of $14.0 million or 44.2% compared to $31.8 million in the second quarter of 2020.
Selling, operating and administrative expenses were $38.8 million in the second quarter of 2021, an increase of $13.5 million, or 53.1%, compared to the second quarter of 2020 and represented 50.2% of revenue, compared to 48.6% in the prior-year period. Selling, operating and administrative expenses increased primarily due to higher equity-based compensation expense related to acquisitions and the portion of the corporate bonus paid in stock; higher personnel costs from headcount increases largely from acquisitions, and the elimination of the corporate bonus and suspension of the 401(k) match in the prior year; an increase in acquisition-related expenses; an increase in legal fees; increased investments in technology; and higher travel and events expenses compared to the prior year; partially offset by lower bad debt expense driven by improved collections.
Depreciation and amortization expenses increased primarily due to incremental acquisition-related amortization expense and placing internally developed software into service.
Balance Sheet
As of June 30, 2021, the company had cash and cash equivalents of $107.3 million, an increase of $5.9 million from Dec. 31, 2020. As of June 30, 2021, the company had $222.6 million of outstanding debt, net of an unamortized debt discount and issuance costs, a decrease of $1.0 million compared to $223.6 million as of Dec. 31, 2020.
On July 21, 2021, RE/MAX Holdings announced RE/MAX, LLC amended and restated its credit agreement to raise $460 million in term loans and increase the capacity of the revolving facility to $50 million. RE/MAX, LLC used the proceeds from the amended credit agreement to repay existing indebtedness of approximately $225 million and to fund the $235 million acquisition of the RE/MAX INTEGRA North American regions.
Commentary
“Record financial results in the second quarter were driven by a historically strong housing market, improved performance from our core operations, and contributions from recent acquisitions,” stated Adam Contos, RE/MAX Holdings chief executive officer. “Our second quarter revenue and Adjusted EBITDA totals were quarterly records. We added more than 8,000 new agents compared to last year’s second quarter, highlighted by solid agent growth in the U.S. and Canada. Open Motto offices increased nearly 30% year-over-year, and we continued to sell Motto franchises at a brisk pace.”
Contos continued, “Last month, we were pleased to close our acquisition of RE/MAX INTEGRA’s North American operations, the most significant acquisition in our history. We also amended and expanded our credit facility at attractive terms, further fortifying our already-strong balance sheet. The performance trends we see in our business remain positive and we believe our strategy and investments position us well to continue to capture the opportunities we see ahead of us to drive profitable growth.”
For more information, please visit www.remax.com.
