Is RE/MAX (RMAX) a Buy After Q2 Earnings? Decoding Profitability, Guidance, and Agent Growth in a Slowing Market

In a real estate market defined by volatility and shifting consumer behaviors, RE/MAX Holdings (RMAX) has emerged as a compelling contrarian investment. The company's Q2 2025 earnings report, while marked by a 7.3% revenue decline, revealed a resilient franchise model with strong EPS and EBITDA performance, expanding international agent counts, and strategic AI-driven innovations. For value investors, the question is whether these fundamentals justify a long-term bet on a company navigating a challenging macroeconomic environment.

Profitability Amid Revenue Headwinds

RE/MAX's Q2 earnings underscored a decoupling between revenue and profitability. Total revenue fell to $72.8 million, driven by a 5.7% organic decline in U.S. agent count and foreign currency pressures. Yet adjusted EBITDA held steady at $26.3 million—a 6.4% year-over-year dip but with a 36.1% margin, outperforming the prior year. This margin resilience, achieved through a 5.7% reduction in operating expenses to $58.7 million, highlights RE/MAX's cost discipline. Adjusted EPS of $0.39, slightly below 2024's $0.41, also beat expectations, suggesting management's ability to mitigate margin pressures.

The key takeaway: RE/MAX's franchise model is leaner and more efficient, even as it contends with a saturated U.S. market. For contrarian investors, this operational flexibility could be a critical edge in a sector where rigid cost structures often lead to underperformance.

Valuation Metrics Suggest Undervaluation

RE/MAX's valuation appears disconnected from its fundamentals. The stock trades at a P/E ratio of 19.9x, far below its 10-year average of 74.91x and the real estate industry peer average of 33.7x. Its P/B ratio of 0.39 implies the market is valuing the company at a steep discount to its book value—a rare anomaly in asset-heavy sectors. Meanwhile, the EV/EBITDA ratio of 0.7x suggests the company is trading at a fraction of its operating performance.

Historically, RE/MAX's PEG ratio of 0.12 has remained stable, indicating the stock is undervalued relative to its growth potential. While the company's debt-to-equity ratio of 1.08 raises concerns, its negative 2025 ratio (due to equity growth) signals improving financial health. These metrics collectively suggest a stock trading at a significant discount to intrinsic value—a hallmark of contrarian opportunities.

Agent Growth: A Tale of Two Markets

RE/MAX's agent count dynamics tell a nuanced story. The U.S. and Canadian markets, which account for 51% of revenue, saw a 5.0% decline in agent count to 74,635—a worrying trend in a franchise model reliant on local brokerages. However, international expansion has been a bright spot: agent counts outside North America grew by 11.5% to 72,438, driven by high-growth markets like Brazil, Mexico, and Southeast Asia.

This geographic diversification is critical. While the U.S. real estate market faces structural challenges (e.g., digital platforms eroding agent margins), RE/MAX's international push taps into emerging markets with untapped demand. The company's 2025 guidance—projecting 0.0% to 1.5% agent growth for the full year—may appear cautious, but the emphasis on international expansion suggests a long-term strategy to offset domestic headwinds.

Strategic Innovations: AI as a Game Changer

RE/MAX's 2025 AI-driven initiatives, particularly the launch of MAXRefer, position it as a leader in real estate technology. This global referral platform, powered by RESAAS, leverages AI to match agents with the most suitable partners for cross-border transactions. By automating referral workflows and streamlining payments, MAXRefer is expected to boost productivity by reducing administrative burdens and increasing transaction velocity.

The impact of such tools is already visible: U.S. RE/MAX agents averaged 11.7 transaction sides per agent in 2025—more than double the industry average. With MAXRefer, the company aims to scale this efficiency globally, creating a flywheel effect where agent productivity drives revenue growth. For investors, the integration of AI into a traditional franchise model represents a strategic pivot that could redefine RE/MAX's value proposition.

Market Context: A Public-Private Gap and Contrarian Opportunity

The broader real estate sector is experiencing a “public-private gap,” where public REITs like RE/MAX face sharper volatility compared to stable private funds. This divergence reflects public markets' sensitivity to near-term macro risks (e.g., interest rates, housing affordability) versus private markets' focus on long-term cash flows. For RE/MAX, this means its current valuation may underrepresent the stability of its underlying assets and the potential of its AI-driven initiatives.

While the company's 2025 guidance—$290–296 million in revenue and $90–95 million in EBITDA—is below pre-pandemic levels, it reflects a realistic assessment of a slowing market. Yet this caution also creates a margin of safety for investors. At current valuations, even a modest return to growth in U.S. agent counts or a successful international rollout could unlock significant upside.

Risks and Cautionary Notes

No contrarian investment is without risk. RE/MAX's debt load and the ongoing decline in U.S. agent counts remain red flags. Additionally, the rise of digital platforms (e.g., Zillow, Redfin) threatens to further erode agent commissions. The company's reliance on franchise fees also makes it vulnerable to agent attrition—a risk that has spiked in a competitive, low-margin environment.

However, these challenges are not unique to RE/MAX. The broader real estate sector is grappling with similar pressures, and RE/MAX's strategic focus on technology and international expansion offers a clear path to differentiation.

Investment Thesis: Buy the Dip, Not the Noise

For value investors, RE/MAX's Q2 earnings and valuation present a compelling case to “buy the dip.” The company's cost discipline, AI-driven innovations, and international growth trajectory suggest a fundamentally improving business, even amid a challenging macro backdrop. While the U.S. market remains a drag, the global opportunity is vast—and RE/MAX's 11.5% international agent growth in Q2 is a testament to its potential.

Entry strategy: Consider purchasing shares at or below $9 (in line with analyst targets) with a stop-loss at $8.50. A 12–18 month holding period allows time for international expansion and AI initiatives to materialize.

In a market where fear often overshadows fundamentals, RE/MAX's valuation offers a rare chance to invest in a resilient franchise model at a discount. For those willing to look beyond short-term noise, the long-term potential is clear.