U.S. Markets open in 4 hrs 3 mins

Edited Transcript of RMAX earnings conference call or presentation 2-Aug-19 12:30pm GMT

Q2 2019 Re/Max Holdings Inc Earnings Call

Denver Aug 7, 2019 (Thomson StreetEvents) -- Edited Transcript of Re/Max Holdings Inc earnings conference call or presentation Friday, August 2, 2019 at 12:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Adam M. Contos

RE/MAX Holdings, Inc. - CEO & Director

* Andy Schulz

RE/MAX Holdings, Inc. - VP of IR

* Karri R. Callahan

RE/MAX Holdings, Inc. - CFO

* Ward Morrison

Motto Franchising, LLC - President

================================================================================

Conference Call Participants

================================================================================

* Anthony Paolone

JP Morgan Chase & Co, Research Division - Senior Analyst

* Edward Christopher Gamaitoni

Compass Point Research & Trading, LLC, Research Division - MD & Head of Research

* Jason Scott Deleeuw

Piper Jaffray Companies, Research Division - VP & Senior Research Analyst

* John Robert Campbell

Stephens Inc., Research Division - MD

* Ryan McKeveny

Zelman & Associates LLC - Director of Research

* Stephen Hardy Sheldon

William Blair & Company L.L.C., Research Division - Analyst

* Thomas Patrick Mcjoynt-Griffith

Keefe, Bruyette, & Woods, Inc., Research Division - Assistant Analyst

* Vikram Malhotra

Morgan Stanley, Research Division - VP

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning, and welcome to the RE/MAX Holdings Second Quarter 2019 Earnings Conference Call and webcast. My name is Julie and I will be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Andy Schulz, Vice President of Investor Relations. Mr. Schulz?

--------------------------------------------------------------------------------

Andy Schulz, RE/MAX Holdings, Inc. - VP of IR [2]

--------------------------------------------------------------------------------

Thank you, operator. Good morning everyone and welcome to RE/MAX Holdings second quarter 2019 earnings conference call. Please visit the Investor Relations page of remax.com for all earnings-related materials and to access the live webcast and the replay of the call today. If you are participating through the webcast, please note that you will need to advance the slides as we move through the presentation.

Turning to Slide 2. Our prepared remarks and answers to your questions on today's call may contain forward-looking statements. Forward-looking statements include those related to agent count, franchise sales, financial measures and guidance, brand expansion, competition, technology, housing market conditions, dividends, strategic and operational plans and business models. Forward-looking statements represent management's current estimates. RE/MAX assumes no obligation to update any forward-looking statements in the future.

Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those projected in forward-looking statements. These are discussed in our second quarter 2019 financial results press release and other SEC filings. Also, we will refer to certain non-GAAP measures on today's call. Please see the definitions and reconciliations of non-GAAP measures contained in our most recent quarterly financial results press release, which is available on our website.

Joining me on our call today are Adam Contos, our Chief Executive Officer; and Karri Callahan, our Chief Financial Officer. Ward Morrison, President of Motto Mortgage will join us for the Q&A. With that, I'd like to turn the call over to RE/MAX Holdings CEO, Adam Contos. Adam?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [3]

--------------------------------------------------------------------------------

Thank you, Andy, and thanks to everyone for joining our call today. Our worldwide agent count topped 127,000 agents for the first time in our company's history during the second quarter. Continued Motto Mortgage expansion in the U.S. and healthy international RE/MAX agent growth helped offset lower revenue driven by uneven housing market conditions in the U.S. and Canada.

Our second quarter performance highlighted the strength of our differentiated business. Our diverse primarily recurring revenue streams and asset-light business delivered resilient results in a challenged end market. We continue to closely manage our cost structure while investing strategically and meaningfully in our network, our value proposition and future growth opportunities. Highlights of the quarter included revenue of $71.4 million, up due to the acquisition of the Marketing Funds on January 1st. Adjusted EBITDA of $29.9 million, up 4% over last year's second quarter performance and adjusted EPS of $0.65 per share, up almost 5% versus Q2 2018. The launch of the RE/MAX technology platform powered by booj is imminent, to be followed by a staged rollout across company-owned regions through the remainder of 2019.

Another substantial report recently reconfirmed our status as the industry's leader in agent productivity among large brokerages continuing a multi-year trend of independent recognition and Motto Mortgage continues to grow and has recently achieved a major milestone. Let's begin here.

Looking at Slide 4, our Motto Mortgage brand continues to expand at a solid pace. Our Motto franchises are opening their stores at an accelerated rate as we focus on continuous process improvements designed to reduce the time between the purchase of a franchise and the day it opens. In fact, our 100th Motto franchise recently opened its doors. This is a notable accomplishment for any franchise, regardless of industry, to achieve so soon after its introduction.

Motto was launched less than 3 years ago with the aim to upend the mortgage industry by providing more options, transparency and convenience for consumers. Motto not only creates ancillary business for current real estate brokerage firms, but also offers opportunities for mortgage professionals seeking to open their own businesses and independent investors interested in financial services. With 100 offices open in over 30 states, Motto's presence is growing nicely. Interest in owning a franchise remains steady and we look forward to celebrating more Motto milestones in the future.

Turning to Slide 5, RE/MAX is known throughout the industry for being home to top producers and third parties continue to confirm that view. RE/MAX, the world's most productive real estate network, had more agents recognized than any other real estate brand for the annual ranking of America's best real estate professionals by REAL Trends and Tom Ferry. This is the fifth consecutive year RE/MAX has been home to more of America's best agents with 20% of all participating agents and teams being members of the RE/MAX network.

The strength of the RE/MAX network has always been rooted in our brokers and agents, the stars of the real estate industry. RE/MAX has more agents in America's best ranking of real estate professionals than any other real estate brand. Our agents are consistent and unmatched in their productivity, talent and dedication to their businesses and clients.

Moving to Slide 6. Although many U.S. housing trends incrementally improved during the second quarter compared to the past several months, the housing market remains subdued and to-date has not picked up to the extent we expected. According to the most recent RE/MAX National Housing Report, June sale closings declined 4.7% for May and 7.8% from June 2018. This is notable because the month of June is typically the strongest month for home sales. In our report's 10-year history, this is only the second time the month of May has had more sales than the month of June. The month of June also typically posts the highest median sales price in a given calendar year and this year likely will be no exception.

In fact, June's median sales price was not only the high for 2019, it was an all-time high in the history of the report. June's record median sales price of $276,000 was 6.7% higher than the $259,000 recorded in June 2018. Furthermore, June's median sales price increase accelerated compared to the prior 3 months, each of which had a year-over-year price increase of just less than 3.5%. The jump in median sales price after months of moderation is worth watching for its impact on affordability and the pace of overall home sales. Ultimately, record prices appear to have kept June sales figures from topping a relatively solid May.

Positive news for buyers is that with sales slowing, June inventory increased 1.3% over June 2018, making the first year-over-year rise in June inventory in our housing report's history and while supply remains a concern, inventory grew in June for the ninth consecutive month as the report's 54 metro areas had the most units for sale since August 2016. Improving inventory levels along with ongoing demand and very favorable mortgage rates are encouraging longer-term trends as the market continues to rebalance. As we move through the second half of 2019, we remain cautiously optimistic that the U.S. housing market will show signs of improvement.

Flipping to Slide 7, we finished the second quarter of 2019 with over 127,000 agents in our global network, a record and an increase of over 3% year-over-year. Our agent count outside the U.S. and Canada continues to grow at a healthy pace. We added more than 5,500 agents in the past 12 months, a gain of over 15%. Parts of South America, Europe and Southeast Asia drove the strong international growth. Countries such as Argentina, Portugal and India continue to lead the pack of our top global performers.

Moving to Slide 8 where we saw strong growth internationally, our U.S. and Canadian agent count results remain pressured, particularly in the U.S. by the shifting housing market conditions and robust competition. As shown on the right, our Canadian agent count grew by 67 agents highlighted by steady gains in Ontario and Quebec. Our performance in Canada where we enjoy dominant market share remains resilient in the face of a changing market. Notably, June's net Canadian agent gain was our best monthly result in over a year.

On the left, you can see our U.S. agent count down by 2.8% year-over-year, which is a bit more than we anticipated at the beginning of the year. Our U.S. count most recently peaked in the summer of last year, right before the market cooled abruptly last fall. Our U.S. agent count has historically moved directionally with existing home sales. The uneven existing home sales performance during the quarter on the heels of 2 weak quarters that we experienced near double-digit declines has contributed to the lag in our agent count.

Furthermore, as I mentioned earlier, the overall market has been softer than expected amid a highly competitive environment contributing to slower than normal recruiting, and as a result, our agent count mix has been less favorable than anticipated. U.S. agent count performance varies based on geography, with the west and south being lesser performing regions in general, while the east and north have fared better.

Unfortunately, that means agent count in our company-owned regions where we derive substantially more annual revenue per agent has been weaker and this impacts our outlook for the rest of 2019. Although the recent environment has been more challenging than we anticipated, nothing has changed about our belief that there has never been a better time to be a RE/MAX broker, agent or team than right now.

Our core competitive advantages remain in place; our unique agent-centric model, the world's most productive network, our unmatched global footprint and the number one name in real estate. Nobody in the world sells more real estate than RE/MAX in terms of residential transaction sides and that leadership position creates business opportunities for every member of our organization.

Looking ahead, we remain confident in our ability to grow and create shareholder value over both the short and long term. We are focused on bolstering growth across our network. We are engaging with our brokers in an unprecedented manner and reinvigorating our U.S. agent count growth is a top priority. There is no better example of this focus than the impending launch of the booj platform, a step function in real estate technology.

I'll spend a moment discussing this further. Turning to Slide 9, the introduction of the booj platform truly represents a landmark moment in the long history of our company. Never has the world's most productive network been paired with such a powerful, fully integrated technology suite custom-built for our unique entrepreneurial culture of highly productive agents and teams supported by outstanding brokers. It is important to note that we've been very deliberate about the development of our technology.

After the acquisition last spring, we could have simply rebranded booj's impressive legacy product stack, given it to our network and declared victory. Instead, we strategically sacrificed short-term gain for substantial longer-term benefits. We took an already great set of products and supercharged it by collaborating with the most productive agents in the real estate business.

We engaged our network through exhaustive and iterative alpha and beta processes and customized the product suite for our unique culture, while simultaneously building advocacy and cultivating strong word-of-mouth within our network. We went slow in the beginning so we can go fast in the future. We've adopted a continuous integration, continuous deployment process, enabling constant innovation and ongoing updates to the product suite.

We are playing the long game here. The booj platform is an integrated suite of products that enables agents, teams and brokers to proactively establish, manage and grow relationships. It's about making our highly productive network even more productive and their businesses more successful by making easier connections with consumers, centralizing the interactions and enhancing the experience.

The first products to be released within the platform over the next few weeks will be the core set of agent tools. These center on productivity management tools with comprehensive CRM, the core of the booj platform that deeply integrates with the product suite. The platform addresses the main business challenges agents have identified, including building one's digital brand, lead management and cultivation, transaction management and importantly client engagement and experience.

Following the rollout of the platform to our company-owned regions this fall, we will then offer it to participating independent regions in Canada beginning next year. Ultimately we plan to take the platform globally. The booj platform can connect our unmatched global footprint in a transformational way. Through the combination of our brand, our physical footprint in over 110 countries and territories and this amazing technology platform, we believe we're the only network with the ability to create a truly global residential real estate marketplace over the next few years. The adoption of the booj platform should provide many better fits to our brokers, agents and teams.

Let me briefly touch on 5 of the most compelling potential advantages; ease of use, integration, profitability, productivity, and mobility. Everything about the platform is designed with ease of use in mind. From the initial contact information imports to lead cultivation to transaction management to communicating with customers, our development team has always kept ease of use top of mind. This focus facilitates an efficient and painless adoption experience and encourages agents, teams and brokers to make this system an essential part of their business. Perhaps its biggest selling point is how fully integrated the product suite is. Our brokers, agents and teams currently spend too much time logging on and inputting information in their own patchwork quilt of multiple third-party tech systems, none of which talk to one another.

The booj platform is fully integrated with CRM, websites, marketing, communications and more, virtually everything on a network of highly productive agents' and teams' needs all in one place. This should be a huge timesaver for our affiliates, making them more efficient and freeing them up to spend even more time helping consumers buy and sell homes. The adoption of the booj platform can also be a real money-saver for our network. For our company-owned agents, there is no incremental cost to use the booj platform. It's free in a sense as the cost is included in the dues and fees our brokers and agents already pay. In fact, the introduction of the booj platform is arguably the single greatest increase to our value proposition in our history. Brokers, agents and teams should be able to displace the cost of many third-party tech vendors to whom they pay significant sums of money.

Productivity improvement opportunities abound. Our development team has been laser-focused on automating just about everything. Additionally, the booj platform allows our agents and teams to connect with consumers in new and compelling ways through features like our lead management and cultivation toolset and the ability to build one's digital brand. These features improve the customer experience, which should in turn increase lead conversion rates as well as repeat and referral opportunities.

Lastly, today's consumer lives in a mobile world. One underappreciated element of booj's history is their insightful decision years ago to retain the development of mobile software in-house. For years, the booj design and development team has led with a mobile-first mindset, retrofitting booj's powerful software for the desktop as needed. This is especially apparent in our mobile CRM app being rolled out very soon to our agents and a consumer-facing app slated to be introduced by year's end and this is just the beginning. Still to come, the platform will be supplemented by a richer collection set of data supporting our consumer-facing app and the re-launch of a greatly enhanced remax.com.

Training has always been an important part of our value proposition and RE/MAX University has been an industry leader and innovator for many years. We have strategically increased our investment in training resources in advance of the launch of the booj platform. We now have a full technology engagement team to help affiliates understand and adopt the new tools connected to the booj platform as well as other products in our technology ecosystem. The rollout will be a challenging logistical exercise, but our team is prepared and ready to go. This has been an all-consuming effort for many in our company, particularly those in our tech and training functions as well as the thousands of brokers and agents who selflessly contributed their time and invaluable feedback.

We thank everyone who has participated to-date and we are confident the investment of time, effort and resources will pay off. The deployment of our new technology is a huge step forward for RE/MAX, creating efficiencies and competitive advantages for agents, teams and brokers alike. It's a new day for RE/MAX and we can't wait to get started.

With that, I'd like to turn the call over to Karri.

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [4]

--------------------------------------------------------------------------------

Thank you, Adam. Good morning, everyone. Moving to Slide 10. Revenue increased to $71.4 million during the second quarter due to the acquisition of the Marketing Funds on January 1st. Excluding the Marketing Funds, the expansion of Motto Mortgage and healthy international RE/MAX agent growth helped offset lower revenue caused by the uneven U.S. and Canadian housing markets.

Overall, organic revenue was down just 1.4% and unfavorable foreign currency movements decreased revenue less than 0.5%. While we are not immune to market pressures, we are more insulated than many others due to the diversity of our revenue streams and the recurring nature of most of our overall revenue. Our differentiated model tends to stand out during times like these.

As Adam referred to earlier, both our absolute U.S. agent count as well as our U.S. agent count mix were slightly unfavorable, which weighed on top line performance for the quarter and is expected to impact the full year. We are executing on multiple initiatives to help stimulate agent count growth, including the deployment of booj and we are optimistic these initiatives will positively influence next year's recruiting season.

Looking at Slide 11, selling, operating and administrative expenses were $25.7 million in the second quarter of 2019, a decrease of $2.6 million or 9.1% compared to the second quarter of 2018 and represented 48.2% of revenue ex the Marketing Funds compared to 52.2% in the prior year period. SO&A expenses decreased primarily due to changes in equity-based compensation expense and lower legal expenses, partially offset by increases in property taxes and bad debt expense.

Moving to Slide 12, our overall adjusted EBITDA margin excluding the Marketing Funds expanded about 300 basis points. Despite muted top line results, our margin expanded primarily due to the favorable timing of certain expenses, Motto expansion and our judicious management of our cost structure. Notably, we are beginning to see Motto's margin improve year-over-year as its top line grows against a flattening expense base. Motto is a great example of a long term investment we made just 3 years ago, which is not only an attractive opportunity for our core customers, but it also helps the diversification of our business, our overall organic growth profile and increasingly our margins and cash flow.

Turning to Slide 13, as Adam alluded to earlier, we have adjusted our full year 2019 outlook, primarily due to unfavorable U.S. agent count performance and overall housing market trends in both the U.S. and Canada. The adjustments represent a decrease of about 3% at the midpoint of our prior full year revenue guidance. The company's third quarter and full year 2019 outlook assumes no further currency movements, acquisitions or divestitures. For the third quarter of 2019, we expect agent count to increase 2.25% to 3.25% over third quarter 2018; revenue in a range of $69 million to $72 million including revenue from the Marketing Funds in the range of $17 million to $18 million; and adjusted EBITDA in a range of $25.5 million to $27.5 million.

For the full year 2019, we are adjusting our outlook and we now expect agent count to increase 2% to 4% over full year 2018; revenue in a range of $279.5 million to $283.5 million including revenue from the Marketing Funds in the range of $71.5 million to $73.5 million, down from $287 million to $291 million; and adjusted EBITDA in a range of $101 million to $104 million, down from a range of $104.5 million to $107.5 million.

Now I'll turn it back to Adam.

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [5]

--------------------------------------------------------------------------------

Thanks, Karri. Turning to Slide 14, our second quarter results once again highlighted the strengths of our differentiated business model. Our brand strength and value proposition remain as strong and as relevant today as ever and although we don't control the macro environment, we continue to invest heavily in our network, our value proposition and our future growth opportunities. The imminent launch of the booj platform marks a true milestone in the rich history of RE/MAX and we believe it will extend our position as a global leader in residential real estate.

With that, operator, let's open it up for questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And your first question comes from Jason Deleeuw with Piper Jaffray.

--------------------------------------------------------------------------------

Jason Scott Deleeuw, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [2]

--------------------------------------------------------------------------------

So just on the U.S. agent count and the Canada agent count, could you just parse out how much of the factors are just market-based? And how much are just competition for agent-based?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [3]

--------------------------------------------------------------------------------

I don't know that you could necessarily parse that out. I think it's a combination of both. A lot of times during any sort of a market slowdown or changes in the market, you don't necessarily see both of the factors coming together, or historically you don't necessarily see all the factors crashing into each other like what we've had over the past few years. But I think it's combination of both. But when you look at the historic trends of when the market feels some pressure, so does the agent count in those areas. And that I think also can be looked at as a strength of the RE/MAX system, our diversification through so many markets where we do see some in the U.S. that have some lift and others that don't. So I think it's combination of both, but to be able to put my finger on how that's divided up I don't necessarily think that I can. I'm going to say more marketing competition.

--------------------------------------------------------------------------------

Jason Scott Deleeuw, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [4]

--------------------------------------------------------------------------------

Okay. And then when we're looking at the dues and the fees per agent and the trends there, is that just simply the international agent mixing in at a lower revenue per agent level? Or are there any other factors going on driving those trends?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [5]

--------------------------------------------------------------------------------

I mean generally, that's the case. I think as we look at everything that's coming out from value proposition perspective, obviously with the rollout of booj here imminently, we're really excited about that. Right now, that's not an incremental fee and it's included in the value that is provided to the RE/MAX network. We really do think, as Adam mentioned in the scripted remarks, that that can displace cost and really help overall profitability at the agent level and at the broker level. And then in the future, we'll be able to evaluate in terms of the pricing and the per agent fee.

--------------------------------------------------------------------------------

Operator [6]

--------------------------------------------------------------------------------

And your next question comes from the line Tony Paolone with JPMorgan.

--------------------------------------------------------------------------------

Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [7]

--------------------------------------------------------------------------------

Adam, I was wondering if you can give us any sense as to why you think the U.S. for-sale housing market isn't performing better. Like what do you think is happening here? And what might change that?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [8]

--------------------------------------------------------------------------------

That's a really good question. I think there's just been a little bit of confusion in the rotation of the generations coming and going from the housing market, would be just kind of instinctively what I first draw on based on my conversations with the agents out there, the housing transaction is more complex than it ever has been. And I think people are a little more risk-averse than they ever have been. So I'd kind of go with a combination of that because once you see people sit down with an expert agent, a professional who can kind of guide them through the process, it's like a weight is lifted off of their shoulders and they can go and proceed with getting done what they need to get done in order to sell or buy a house. So probably biggest factor is the fear factor. People stop functioning as a response to fear. And once they get the reassurance from a good agent that, hey, this is something you can do and now's a good time to do it, we do see a move forward.

--------------------------------------------------------------------------------

Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [9]

--------------------------------------------------------------------------------

Okay. And then second question maybe follows up to what Jason asked. I know it's hard to tell whether the changes are share or just the agent population in general. But as you look ahead with you and others just spending a lot of time and money on making agents more efficient, do you think U.S. needs more agents? Or do you think that number should go down with efficiency over time? Or how do you think about that?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [10]

--------------------------------------------------------------------------------

That's a great question, Tony. And thanks for asking that because I think what that does is it begs for us to take a hard look at the segmentation in the agent population. An agent isn't an agent isn't an agent. And I think what we have is we have several different levels of agents operating in this space. We have -- when you look at the industry statistics and the average production rate of the RE/MAX agents, our agents are the highest producing agents according to the national surveys. I think we need more highest producing agents. And I think we have -- there's a place in the market for agents that are what you can call developing that are under the supervision of really good brokers or high producing agents to help them come to the level that the consumer expects.

And that's really the biggest cry that the consumer desires I believe is to have an expert representing them and an expert leading them the way through that. I think we will see a reduction or maybe an increase [churn] at the bottom in the marketplace, which with the ebb and flow of the marketplace we typically see that accelerate at different times. So to say that there should be, as a blanket statement, fewer agents, I think you could say, yes, that's probably correct. But I think where those agents come from in the segmentation in the marketplace is what should be noted. And I think that will be those that are willing to provide the greatest level of experience to the consumer through their professionalism and the tools and resources that they have available to them.

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [11]

--------------------------------------------------------------------------------

Yes, and just building on what Adam was talking about in terms of the tool, that's part of the reason why we have been investing so much in the overall value proposition. The creation of the booj platform is really designed to be the best technology for the best agents based on the unique culture and the highly productive workforce within the RE/MAX network. So all of those things are really a cornerstone of some of the initiatives and the investments that we have in our company going on right now.

--------------------------------------------------------------------------------

Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [12]

--------------------------------------------------------------------------------

Okay. And last question for me, in the press release you had noted bad debts picking up. Can you comment on what you're seeing as it relates to franchisee financial health and also just kind of what you're hearing from them as pain-points in their business right now?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [13]

--------------------------------------------------------------------------------

Yes, Tony, it's Karri. So with regards to the bad debt expense on a year-to-date basis, a couple things to keep in mind. Of that increase, about half of it has to do with the acquisition of the Marketing Funds which existed in the current year, but not in the prior year. So that's one piece of it. The other piece of it we do think is tied to the macro environment. So as there is some unevenness and choppiness in the end market, that is impacting our franchisees as well. But brokers' profitability has been a cornerstone of things we've been focused on for multiple years now.

So going back to one of the key reasons why we created Motto was designed to help from our brokerage profitability and a cash flow perspective. We're really starting to see some traction with that as we get Motto franchisees not only open, but open sooner and have that diversification of revenue and cash flow at the franchisee level. And then the creation and the deployment of the booj platform as well, so again designed to displace cost and we do believe that it should displace cost for both our franchisees and for our agents.

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [14]

--------------------------------------------------------------------------------

And I'll jump in a little bit, Tony, on brokerage profitability as well. It's a key focus of ours and really when we're dealing with thousands of offices operated by entrepreneurs, our goal as a franchise always to help them stay focused on and the growth and profitability of their office. Typically in the entrepreneur environment when people start to get more focused outward instead of inward and then start losing that balance of running your business and growing your business, that's when you see profitability come into question. So that's the strength of our new business model that when we adjusted how we segment and service our brokerages, we feel that that's going to help them keep a closer eye on that and strengthen their profitability or infrastructure as well as not to mention Motto Mortgage which is -- was really brought in as a boost to the brokerage profitability opportunities. So that's a key point that we continue to focus on as well to help them out.

--------------------------------------------------------------------------------

Operator [15]

--------------------------------------------------------------------------------

Your next question comes from Vikram Malhotra with Morgan Stanley.

--------------------------------------------------------------------------------

Vikram Malhotra, Morgan Stanley, Research Division - VP [16]

--------------------------------------------------------------------------------

Just maybe building on that Motto point, can you give us a bit more color on sort of how the mix is trending between existing RE/MAX office owners adopting Motto versus new independent brokers? And sort of any thoughts on now sort of run rate contribution over the next 12 months?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [17]

--------------------------------------------------------------------------------

Vikram, it's Adam. I'll jump in real quick and then I'll pass it off to the Motto brand President Ward Morrison. I think it's -- first of all Motto is really exciting for us. We continue to see Ward's team create some massive efficiencies in that. So I know that wasn't exactly part of your question, but I wanted to point that out to you to show that we, with our franchising expertise, Ward's doing a great job of creating the maximum efficiencies in these which increases their open array which is a key metric that we are focusing on and I want to make sure that you guys are aware of. That being said, to kind of dive into the rest of it, I'll hand it over to Ward.

--------------------------------------------------------------------------------

Ward Morrison, Motto Franchising, LLC - President [18]

--------------------------------------------------------------------------------

Sure. Vikram, the mix continues to be the lion's share being RE/MAX to little over 80% of our sales have been to RE/MAXs with the other 19% spread across independent real estate companies, investors and loan originators looking to set up their own shop. So it's about an 80-20 split right now, still the lion's share going to RE/MAX. Obviously, they're a great customer-base we can call on, we know them well, we talk about profitability, like Adam said earlier and Karri did. And we've been excited about those results. We are seeing some uptick in interest from independent real estate companies as they learn more and more that this is an offering to them, it is our offering to the industry. So we hope to see increases in independent real estate companies as well, but we continue to want to sell as many RE/MAXs as possible. So the growth trajectory is good, the pipeline is solid and we just are excited about some of the independents that we are getting interest from.

--------------------------------------------------------------------------------

Vikram Malhotra, Morgan Stanley, Research Division - VP [19]

--------------------------------------------------------------------------------

Great. And then just on the agent -- back to the agent growth question, do you have any sense of just looking at current attrition levels or new agents coming in, are there any changes in from where agents are coming or where agents are going, if you're able to monitor that in terms of independents versus say these technology platforms? Any change that you've seen say over the last 6-12 months versus maybe the longer-term average?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [20]

--------------------------------------------------------------------------------

Hey, Vikram, it's Karri. So with regards to attrition around looking at the mix between recruiting and retention numbers, around retention we haven't really seen meaningful changes around retention, maybe a slight uptick, but the retention side of the house is holding steady. I think again going back to the resiliency of the model, the quality of the RE/MAX agent who is staying with the network because the profile of the agency we're leaving is pretty consistent. So it tends to be agents who are doing less business and have lower GCI performance.

So from a net gain perspective, we're looking at that challenge as kind of being from the top end of the funnel. So again really focused on the different value proposition enhancements, the rollout of the booj technology platform, the changes to the service model to really help accelerate that agent count growth. And then in terms of where people are coming from and where people are going to, that actually has been pretty consistent in terms of comparison to recent time period. And so again really just focusing back on RE/MAX and what we have going on anecdotally we're hearing very good feedback from the network on the booj platform, the booj rollout, a lot of excitement from our franchisees saying I'm going to really --I really am excited to get back and leverage this product from a recruiting perspective. So all those of things provide us with some cautious optimism as we look into the back half of this year and into next year.

--------------------------------------------------------------------------------

Vikram Malhotra, Morgan Stanley, Research Division - VP [21]

--------------------------------------------------------------------------------

Okay. And then just last clarification just on the dues and the franchisees. I remember at least from historically a couple of times you've sort of increased both of those modestly. I'm assuming given sort of where we are in the cycle and some of the challenges over the near term, let's say, next 12 months to 18 months, there's no plan to alter any of those 2 line items?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [22]

--------------------------------------------------------------------------------

So with regards to -- there's not any plans for the rest of 2019. We'll continue to evaluate 2020 and beyond as part of our 2020 planning process and we'll have more information beginning of next year.

--------------------------------------------------------------------------------

Operator [23]

--------------------------------------------------------------------------------

Your next question is from Stephen Sheldon with William Blair.

--------------------------------------------------------------------------------

Stephen Hardy Sheldon, William Blair & Company L.L.C., Research Division - Analyst [24]

--------------------------------------------------------------------------------

On the U.S. kind of going back to agent count, you noted I think on the last call the trends had stabilized year-over-year late in the first quarter and into April. So can you maybe talk about the cadence of agent decline in the U.S. throughout the second quarter? Were there any notable differences by months that you can point out?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [25]

--------------------------------------------------------------------------------

Yes, Stephen. With regards to agent count and some of the comments on the last call, couple of things to keep in mind. As we look at March and April, the comments, they were really intended to be more sequential. So we really had had some significant pressure on -- from an agent count perspective sequentially as we looked at the back half of last year and the first part of the first quarter this year. In terms of looking at it on a continued sequential basis, that run rate of kind of plus or minus call it 50 to 100 agents has been pretty consistent on a sequential basis. However, when you look at it quarter-over-quarter, that's where last Q2 from a recruiting perspective we were a little bit more aggressive because from the macro perspective, the weakness hadn't really hit in the U.S. as much. With that said, continue to see pretty resilient performance from a U.S. agent count perspective. Year-to-date we're down less than 1% and obviously existing home sales down significantly more than that. So again really focused back in terms of the recruiting initiative; a lot closer connection with our franchisees; focused on growth; and then obviously the enhancements to the value proposition that are forthcoming as well.

--------------------------------------------------------------------------------

Stephen Hardy Sheldon, William Blair & Company L.L.C., Research Division - Analyst [26]

--------------------------------------------------------------------------------

Okay. And then it sounds like you are seeing progress on Motto Mortgages -- Motto margins as that continues to ramp. Can you talk about how much you're spending right now on Motto? And maybe thoughts on timing for potentially reaching breakeven margins there?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [27]

--------------------------------------------------------------------------------

Yes, it's a great question. We continue to be really excited about Motto and what it means for the overall company. Right now, we are seeing it still a net investment, but the margins did continue to -- we did see some benefit in the current quarter, $200,000. As we look forward depending on the pay for sales decision to potentially reinvest for supporting a catalyst or an inflection point of growth, we would look to do that. So near term, we could see anywhere from tens of thousands of dollars, $200,000 of margin benefit. Over the longer term in terms of breakeven, we think if we had a couple hundred Motto franchises up and paying the full complement of the monthly fees, it's at that point we would start to realize breakeven from a margin perspective. And then definitely over time, especially if there is that inflection point, the margin profile for Motto should be as good, if not better than the RE/MAX model.

--------------------------------------------------------------------------------

Stephen Hardy Sheldon, William Blair & Company L.L.C., Research Division - Analyst [28]

--------------------------------------------------------------------------------

Okay. That's helpful. And then just last one for me, can you walk through the factors that are leading you to lower the adjusted EBITDA guidance especially in the second half of the year? Is that almost predominantly the agent mix shifting more towards independent regions than you'd expected or has there been any broader changes in expectations for spending this year?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [29]

--------------------------------------------------------------------------------

Yes. No, so with regard to the guidance, a couple of different factors. From a top line perspective, it's primarily driven by the U.S. agent count performance, but it's also a combination in terms of just the overall macro environment as well. So it's about 50-50 split in terms of the top line. With respect to the bottom line, we continue to really invest and manage the cost structure on a very judicious and prudent basis. So we're not pulling costs out of the cost structure, continuing to invest. I think it's again a testament to the overall model that even with some of the headwinds from a revenue perspective, the overall margin profile will be pretty flat, if not up very, very slightly compared to the prior year.

--------------------------------------------------------------------------------

Operator [30]

--------------------------------------------------------------------------------

Your next question comes from Chris Gamaitoni with Compass Point.

--------------------------------------------------------------------------------

Edward Christopher Gamaitoni, Compass Point Research & Trading, LLC, Research Division - MD & Head of Research [31]

--------------------------------------------------------------------------------

Could you talk about the characteristic differences between the strong agent recruiting markets and the poor agent recruiting markets?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [32]

--------------------------------------------------------------------------------

Chris, it's Adam. That's an interesting question that we haven't been asked before. But I think as far as the recruiting markets go, I think it more has to do with the -- you look at the ebb and flow of the transactions, the opportunities that the agents and then it comes down to ultimately the leadership provided in the offices by the brokers. Agents look for a good culture that allows them to grow their business as much as they want to and that's really what the RE/MAX value proposition has been based on historically is our brokers providing everything that a great agent needs and then helping them achieve it.

So I think more than the market itself when it comes to the characteristics of the markets, obviously you need to have an opportunistic market for the agents which I think overall when you look at the -- our National Housing Report, we're looking at 2019 kind of close now with probably just less than 5.3 million resale houses, so 10.5 million transaction size. The market's got a lot opportunity in it. There's a great deal to be done out there, a lot of money to be made by the agents and it's a function of finding a great broker, which we pride ourselves on, and having that broker help that agent achieve beyond where they're at right now and going after their goal.

So I think more than anything it is the noise overriding their ability to function where they're at and do they have the leadership as well as is the market expansion enough there to not scare them out of making that move to the next level. And I guess when you look at the market, what is the pressure that puts on it, it puts a pressure psychologically on the agent to figure out can I scale my business right now. So we're working on all those different aspects. Obviously, we don't control the market, but we can help the brokers influence the agents around the opportunity that the market contains and we need to get them listening to our brokers as opposed to listening to the noise.

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [33]

--------------------------------------------------------------------------------

Yes, and I think one thing just to build on that in terms of what Adam was talking about in terms of not being able to control the macro and that's true, but I definitely think if you look at -- as we look at Q2 performance of 2018 versus 2019, obviously from a macro perspective, it was the -- the macro was pretty strong up into the right in terms of existing home sale performance number of transactions et cetera last year and we did see stronger recruiting numbers last year as well as even over a 5 year historical average. And over the last 9 months with us being kind of in a mini recession from a housing perspective, that's definitely challenged our overall agent count and that's pretty consistent with what we've seen on a overall historical basis in terms of agent count following the overall macro trend.

--------------------------------------------------------------------------------

Edward Christopher Gamaitoni, Compass Point Research & Trading, LLC, Research Division - MD & Head of Research [34]

--------------------------------------------------------------------------------

Okay. And you mentioned new initiatives to change the trajectory of agent recruitment for next year. I know you don't want to give away your secret sauce, but high level is there any way to frame kind of where you think you had been maybe less well able to compete and you feel like you are now, any specifics on those initiatives?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [35]

--------------------------------------------------------------------------------

I love that question because it kind of showcases the redesign, if you will, of our servicing model. Where most organizations kind of lose their effectiveness as they become a broad-based service provider and we, to an extent, lost track of the segmentation of our customer base in the brokerages. And while we have an amazing business model itself that we continued to grow, we didn't see the ability to segment that. And we took a step back and met with a lot of our customers, a lot of our brokers out there and the agents and saw some trends of how do we maximize these different levels that the brokerages get to. And as a result, we've re-implemented the new service model that focuses the coaching and the toolsets that are showcased at a particular time to the brokers and the agents to help them more succinctly grow their offices and be more effective where they're at.

So we're creating specialists in the different segmentation of our brokerages and I think that is really kind of the enlightening that we've had over the past year is taking a deeper look at how can we help each level of brokerage from maybe a new one all the way up to the big brokers that are -- have hundreds of agents and multiple offices, how you look at the differences in what their needs are. So I think overall customer segmentation, coaching segmentation and value delivery based on different needs of our franchisees is the answer to that question.

--------------------------------------------------------------------------------

Operator [36]

--------------------------------------------------------------------------------

Your next question comes from John Campbell with Stephens Inc.

--------------------------------------------------------------------------------

John Robert Campbell, Stephens Inc., Research Division - MD [37]

--------------------------------------------------------------------------------

Just curious about the launch of the consumer offering. It sounds like we're going to probably get a better look at that later this year, but at a higher level if you're able to share, how do you drive the consumer engagement I guess in the early stages? And are you leaning on your agents to drive that adoption? Or is there something you can do just from a corporate level to help trigger some of that ramp in adoption?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [38]

--------------------------------------------------------------------------------

Yes. Great question, John, and we're super-excited about this. This is a staged approach to bring the consumer into a higher level of experience interaction with the agent. But the way we start this and with our impending rollout here in the very near future is we get the agents to start operating their businesses within the infrastructure of the tech platform and then continue to expand that outward from there by providing really, really good tools that help them provide great outreach to the consumer. And then we utilize the network effect as a result.

So we've got 125,000-plus agents with an opportunity as we start expanding this region by region by region and getting people to bring their customers into the communication set and the experience that the agent interaction with the consumer provides. And through the end of the year as we build these agents into experts with using the technology they become more confident to invite more consumers to use it. So the data shows that this is a great progressive model for us. That's what the booj platform has been built upon is a great deal of testing and data to validate this launch process. We're following it very closely and measuring every step of the way. But we think you build the agents into great advocates and users of the platform from the foundation and you continue to add on it and add on it and they continue to progressively use it and reach out to their customers with it and that's how you build better consumer integration is the network effect there.

--------------------------------------------------------------------------------

John Robert Campbell, Stephens Inc., Research Division - MD [39]

--------------------------------------------------------------------------------

Yes...

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [40]

--------------------------------------------------------------------------------

Yes, and I think the one thing that -- oh, sorry. The one thing that I would just add to that, building on what Adam said, we're really, really excited about everything that's going to come throughout the back half of this year. With respect to remax.com, it's the #1 franchise or website out there, but despite the strength of the global brand and everything that we have going on, we do think it is an asset that we can continue to really look to leverage better in the future than we have in the past. And so given the strength of the network and the network effect that Adam was talking about, you couple that with the strength of the booj leadership and the technology platform that remax.com has been built on, really a data-driven design and really a ton of research has been done to really -- to enhance the overall consumer experience of working with and searching on remax.com and really leveraging remax.com to connect consumers and agents on a go-forward basis in a higher quality and consistent manner.

--------------------------------------------------------------------------------

John Robert Campbell, Stephens Inc., Research Division - MD [41]

--------------------------------------------------------------------------------

Got it. Really good color. Appreciate that. And then, Adam, I just want to get your take on the Amazon and Realogy partnership. I know that was a pretty big kind of breaking event for the industry, but if you think that that -- if that's a type of arrangement that makes sense? And if that's something that you guys might also explore maybe other large kind of consumer-driven tech companies?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [42]

--------------------------------------------------------------------------------

Great question. There's been a lot of chatter in the past I guess week, 1.5 week since they announced it. Still watching. We're obviously interested in any event flow in the industry, and we keep a good focus on it. Our agents are the top producers and they're looking to increase their leads. However, we pride ourselves on our referral fee free system that we provide and we've experimented with different other sources of lead-creation management, things like that. I don't see as discounting other people coming to us and offering that and as well as us going to other people and discussing that. We're always to open to how can we generate more business for our agents. So excited to continue to look for that opportunity for our folks. But ultimately, we'll see how it goes for them. And you've got to wish everybody the best with helping the consumer in generating business. But watching I guess you could say and learning in the process.

--------------------------------------------------------------------------------

John Robert Campbell, Stephens Inc., Research Division - MD [43]

--------------------------------------------------------------------------------

Yes, makes sense. One more quick one from me. If I look at just ex-Motto franchise sales or just the RE/MAX franchise sales, how did that fare in the quarter? And if you guys could provide maybe a little bit of color around the expected pace of lift from kind of the near to medium term?

--------------------------------------------------------------------------------

Ward Morrison, Motto Franchising, LLC - President [44]

--------------------------------------------------------------------------------

Hi, this is Ward. When it comes to Motto sales, we'll continue to sort of have a unfortunately better word is lumpy, they're always lumpy throughout the year. They sort of ebb and flow. We still believe that throughout this year and much like last year will be around the same pace. The tens of miles is what we believe we can continue to do. But like I said, we have been excited about the pipeline and particularly the independents that are drawing interest. So some of that could change, but right now we still feel like we're on par what we did last year.

--------------------------------------------------------------------------------

John Robert Campbell, Stephens Inc., Research Division - MD [45]

--------------------------------------------------------------------------------

Okay. That's helpful. And then...

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [46]

--------------------------------------------------------------------------------

And on the -- go ahead, John.

--------------------------------------------------------------------------------

John Robert Campbell, Stephens Inc., Research Division - MD [47]

--------------------------------------------------------------------------------

Yes. On the core -- no, I was just going to say on the RE/MAX core.

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [48]

--------------------------------------------------------------------------------

Yes, on the RE/MAX core, what we've been taking a look at with our redo of our service model is do we need to sell more franchises or do we need to strengthen the franchises that we sell? And what we've come to the conclusion of is we've been hitting it really hard in the past few years, seen this massive expansion of franchise sales. And we need to find a steady pace which is a little bit less than what we've sold in the past because ultimately it's not the franchise sales numbers that grows the network, it's the quality of agents that we add to the franchises that grows with the network. So looking at the ebb and flow, I think you'll see the core franchise sales this year a little bit less than last year overall, but that is -- that's a symptom of us growing the franchises that we have sold and moving a little more focus over to that direction.

We talked with about with the respect of Motto the best thing you can do is have a strong opening of your franchises. And Motto has done a fantastic job of that, and the lessons that we've learned with that is that in looking at onboarding and initial growth opportunities, we wanted to turn up the heat a little bit more on the RE/MAX side, and that's really been a key focus of our adapted servicing model is to accomplish that as well as to accommodate strategic growth. You don't want to over-saturate a marketplace, but at the same time you want to grow it to its maximum capacity and that's the balancing act we're engaged in.

--------------------------------------------------------------------------------

Operator [49]

--------------------------------------------------------------------------------

Your next question comes from Bose George with KBW.

--------------------------------------------------------------------------------

Thomas Patrick Mcjoynt-Griffith, Keefe, Bruyette, & Woods, Inc., Research Division - Assistant Analyst [50]

--------------------------------------------------------------------------------

This is Tommy on for Bose. Looking at the revenue guide for the third quarter and then for full year 2019, it looks like that suggests some sharper pressure on a year-over-year basis in the third quarter and then it's sort of easing a bit in the fourth quarter. Is that a matter of the comps getting easier or is that just based on your thinking the market might improve a bit beyond third quarter?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [51]

--------------------------------------------------------------------------------

Yes. No, I mean it's primarily looking at the comps getting better for sure in the back half of the year. With regards to the third quarter, just continuing to be pragmatic a little bit in terms of our expectations around existing home sales and overall pressure of geography. But the comp is definitely a key driver.

--------------------------------------------------------------------------------

Thomas Patrick Mcjoynt-Griffith, Keefe, Bruyette, & Woods, Inc., Research Division - Assistant Analyst [52]

--------------------------------------------------------------------------------

Okay. And then separately, you guys mentioned that booj should be able to replace a lot of third-party spend on CRM et cetera. Any idea how much the average U.S. agent spends on those third-party CRMs and other technologies that booj could effectively replace?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [53]

--------------------------------------------------------------------------------

Yes, I mean it's really a range. I think on average it's probably a couple of $100 a month. But it really, really can range depending on of the quality of the agent, the experience of the agent, the size of a team. And there is a very wide range that we see kind of in the network and when we evaluated the overall opportunity with booj.

--------------------------------------------------------------------------------

Operator [54]

--------------------------------------------------------------------------------

Your next question comes from Ryan McKeveny, Zelman & Associates.

--------------------------------------------------------------------------------

Ryan McKeveny, Zelman & Associates LLC - Director of Research [55]

--------------------------------------------------------------------------------

So Adam, you mentioned the concept of teams several times in the prepared remarks and certainly a trend has been rising in recent years. So curious, a few questions on that. I guess both for recruiting new teams, retaining agents that are forming teams, I guess can you talk about the pros and cons that an agent team would be contemplating with RE/MAX if you're making any let's say changes to increase the attractiveness for team-specific needs? And then the last part of that, just on kind of the economics thinking of teams, how do the fees flow like to RE/MAX in that case? Like if there is a team with support staff or administrative people, are -- does RE/MAX actually collect a fees on those? Are those just kind of people paid at the local level? Just curious how that flows. I know it's multipart, but on the topic of teams, I think it's interesting, so appreciate any color there.

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [56]

--------------------------------------------------------------------------------

Yes, that's a pretty deep question. Let me kind of carve off the value proposition of teams at RE/MAX first. We hear different people saying different things about teams are good here, teams are good there. But ultimately, the RE/MAX network is what we truly believe to be the best place for teams overall, simply because we're -- we pride ourselves on being a business, both business isn't ultimately a team, it's a business. It's a brokerage within a brokerage. And our network is set up best in order to support that with our predominantly fixed fee model. But really what a team looks for is leadership and efficiencies, and that's why a team is in place.

They're generating more business which you -- as you know RE/MAX continues to do with our brand awareness as well as the training tools and technology that we have to offer. And all of those things take away from the burden that a team leader or a team environment may have to go out and gather on its own. We provide all those things in a neat package. And that is even accentuated more by the impending launch of the booj platform that allows team leader to explore the best ways to leverage their team environment. So between our technology, our marketing tools and then the training, it allows a team to go out and do what they need to do best which is integrate with the consumer and list in sell houses.

So we truly believe ours to be the best. We've seen some very, very productive teams from other companies come over and say, well, I wish I'd done this earlier and in the process, we see a lot of upward pressure in their productivity by linking their team with the brand and growing it as a business instead of operating it as a group of people in the space. So that for productivity, again, we feel we're the best place to be of course.

With respect to the economics, having that predictable fixed fee model, and we do have a little bit of variation amongst regions throughout the system when it comes to the economics behind that, but generally it's a adapted version of the fixed fee model. Not much more to say on that other than we adjust a little bit of the regional fees, you add fund fees, things like that, in order to accommodate people who are more of a licensed assistant piece as opposed to team leader or a full producing agent.

--------------------------------------------------------------------------------

Ryan McKeveny, Zelman & Associates LLC - Director of Research [57]

--------------------------------------------------------------------------------

Yes, that's very helpful. And Karri, one for you as well. In the past, you've mentioned some of the lead generation steps from kind of remax.com. And along the lines of the Realogy-Amazon turnkey partnership and just other online players, I'm just curious if you can update us on any stats in terms that the lead flow that you're providing to your agents? And then how exactly does the booj -- like should we think the booj plays into that as well on the lead gen side in terms of improving obviously the CRM and the management, but in terms of lead generation, will that flow in there as well?

--------------------------------------------------------------------------------

Karri R. Callahan, RE/MAX Holdings, Inc. - CFO [58]

--------------------------------------------------------------------------------

Yes, Ryan. So with respect to our current dotcom, it's been pretty consistent performance that we have seen over the last several months. With the impending launch of the booj platform and the redesigned remax.com absolutely without a shadow of a doubt, lead capture, both for buyers as well as for sellers, is a key initiative. And as we look at our ability to really roll up lead traffic from remax.com, not only from property websites, but agent, team, office websites, all working the same under the remax.com umbrella, that's something that we're excited about from an overall lead generation perspective. Not to mention being able to capture leads from other sources as well.

We know that our agents are looking to leverage lead generation from other places. And so that's something else that we think the booj platform will provide efficiencies for, for our agents, so that they can really maximize their time with clients and minimize the time that they're spending using technology.

--------------------------------------------------------------------------------

Operator [59]

--------------------------------------------------------------------------------

Okay. That's all the time that we have for questions. Any closing remarks?

--------------------------------------------------------------------------------

Adam M. Contos, RE/MAX Holdings, Inc. - CEO & Director [60]

--------------------------------------------------------------------------------

Thank you, Julie. And thanks to all for joining the call today.

--------------------------------------------------------------------------------

Operator [61]

--------------------------------------------------------------------------------

Okay. Thank you again for your participation. This concludes today's conference call. You may now disconnect.