Re/Max Navigates Mixed Q1 with Margin Gains and Global Expansion

Re/Max Holdings Inc’s Q1 2025 earnings revealed a company navigating a challenging U.S. real estate market while demonstrating resilience in profitability and strategic growth. Despite missing revenue expectations, the firm’s focus on cost discipline and international expansion provided a glimpse of long-term stability.

Revenue Stumble, Margin Triumph

Re/Max reported total revenue of $74.5 million, falling short of the $75.24 million consensus estimate. The decline stemmed from a 4.3% drop in non-marketing fund revenue, driven by a 3.2% organic decline in the U.S. agent count, weaker mortgage segment performance, and foreign currency headwinds. However, the company delivered an adjusted diluted EPS of $0.24, a 33% beat over the $0.18 forecast. This outperformance was fueled by a 1.5% year-over-year increase in adjusted EBITDA to $19.3 million, with its margin expanding to 25.9%—a 164-basis-point improvement from Q1 2024.

Cost management was a standout factor. Operating expenses fell $2.7 million (5.9%) to $43 million, as the company reduced professional fees, event spending, and personnel costs. These savings offset investments in technology, such as its ARBOR system, and equity-based compensation. The result: a stronger bottom line amid top-line pressures.

Agent Count Dynamics: Domestic Struggles, Global Growth

While the U.S. agent count declined, global expansion surged, with agent numbers rising over 10% year-over-year. Markets like South America and Portugal emerged as growth engines, buoyed by Re/Max’s international franchise model. However, domestic headwinds persisted, with full-year 2025 guidance projecting a net agent count change of -1% to +1% versus 2024. This cautious outlook reflects lingering challenges in the U.S. housing market, including high mortgage rates and stagnant transaction volumes.

Strategic Initiatives: Tech and Talent as Counters to Headwinds

Re/Max is betting on technology and agent retention to offset domestic softness. Its Aspire program, designed to recruit and retain agents, and the MaxRefer global referral system aim to boost agent productivity. Meanwhile, tools like the HomeView app and Max Tech platform are meant to enhance customer engagement. Management emphasized that these initiatives, along with cost discipline, will support margins even as revenue growth remains constrained.

Risks on the Horizon

The company faces significant risks. The National Association of Realtors’ revised clear cooperation policy, which could reduce affiliate commissions, remains a concern. Additionally, mortgage segment pressures and uncertain interest rate trajectories add volatility. Re/Max’s leverage ratio of 3.61x, while manageable, leaves little room for error in a prolonged downturn.

Market Reaction and Valuation

Despite the mixed results, Re/Max’s stock rose 0.5% post-earnings to $7.83, though it remains near its 52-week low of $6.90. The stock’s 31.4% decline over six months has pushed its valuation to deeply discounted levels: a price-to-book (P/B) ratio of 0.36x and a price/earnings-to-growth (PEG) ratio of 0.2, both well below historical averages.

Conclusion: A Bargain with Potential, but Risks Linger

Re/Max’s Q1 results underscore a company prioritizing profitability over growth in a tough U.S. market. Its margin expansion and disciplined cost management suggest operational strength, while international growth offers a path to offset domestic weakness. Valuation metrics signal undervaluation, and strategic investments in technology and agent recruitment could pay dividends.

However, the stock’s near-term trajectory hinges on whether the U.S. real estate market stabilizes and the company can execute its global strategy without overextending. The 2025 guidance—revenue of $290–310 million and adjusted EBITDA of $90–100 million—hints at cautious optimism. For investors, Re/Max presents a high-risk, high-reward opportunity: its discounted valuation and margin improvements make it a compelling contrarian play, provided management can navigate the risks and reignite organic growth.

In a sector still grappling with macroeconomic headwinds, Re/Max’s resilience in profitability and global reach may yet position it for recovery—if not in Q1, then in quarters to come.