REMAX’s shrinking US operations could soon become Real’s problem
REMAX Holdings’ first earnings report since agreement to be taken over by The Real Brokerage showed continued pressure on the franchisor’s core North American business even as the number of agents continued to grow worldwide. The results provide a better picture of the business that Real is preparing to absorb – one of the best-known brands in residential real estate, with a global franchise network and almost 150,000 agents, but one that remains under pressure in the US and Canada.
In SEC filings released Friday, the Denver-based franchisor reported first-quarter revenue of $70.2 million, down 5.7 percent from a year earlier, or 4 percent to $53.4 million, excluding marketing program fees. Adjusted EBITDA fell 19.3 percent to $15.6 million. REMAX also reported an attributable net loss of $9.7 million, compared to a loss of $2 million in the first quarter of 2025. Adjusted earnings per share fell to $0.16, compared to $0.24 a year earlier.
The company said it will not report quarterly results and does not expect to do so in coming quarters while the merger with Real is pending. REMAX also said it does not plan to provide quarterly or annual guidance during that period, as the transaction is expected to close in the second half of 2026, pending regulatory and shareholder approval.
REMAX’s total agent count increased 2.1 percent year over year to 149,192 agents. But that growth was driven by markets outside the US and Canada, where the number of agents rose 6.7 percent to 75,900 agents. In the US, the number of REMAX agents fell by 4.8 percent to 47,443. In the United States and Canada combined, the number of agents fell by 2.3 percent to 73,292. The company’s number of U.S. offices also fell 4.7 percent year over year, from 3,080 to 2,935.
REMAX attributed the revenue decline in part to changes in its standard compensation models, including the Aspire and Ascend programs, and lower U.S. agent numbers. Recurring revenue streams, including ongoing franchise fees and annual membership fees, declined 10.2 percent from a year earlier. Continued franchise fees alone decreased from $29.4 million to $25.8 million.
Motto Mortgage footprint is getting smaller
The pressure has spread to REMAX’s mortgage franchise business, even as Real executives have pointed out that mortgages could be a potential source of future benefit from the combined company’s larger transaction base.
REMAX Motto Mortgage’s number of open offices fell 29.9 percent year over year, from 224 to 157. The company said it continued to terminate Motto franchisees that received significant financial support or otherwise failed to perform operationally, including 13 Motto franchisees in the first quarter. The number of offices receiving short-term financial support fell from 58 a year earlier to 22.
On Real own income calling this weekCEO Tamir Poleg told investors that the combined Real and REMAX networks closed more than 700,000 U.S. transaction sides last year, creating potential upside for the company’s mortgage, title and fintech businesses. Poleg estimated that a 1 percent mortgage foreclosure rate on that basis would generate approximately $25 million in high-margin revenue for the combined company after closing.
Poleg also pointed to the productivity of REMAX agents, saying that the average REMAX agent closes more than 10 transactions per year, which is roughly double both the industry average and the average of Real’s own agents.
Real investors ask the debt question
The results also drew renewed attention to how Real plans to handle REMAX’s debt, which has emerged as one of the key financial issues surrounding the merger. REMAX ended the quarter with $436 million in outstanding debt, net of unamortized debt discounts and issuance costs, compared to $436.8 million at the end of 2025. Real, on the other hand, ended its own first quarter with $62.9 million in unrestricted cash and short-term investments and no debt.
During Real’s earnings call on Thursday, CFO Ravi Jani answered the highest-voted question submitted Real’s question and answer portal for private investors on whether the company was concerned about taking on REMAX’s debt and how quickly it expected to pay it off.
Jani said Real takes a “very conservative” approach to leverage, adding that both companies are asset light and cash generative. He said REMAX’s recurring franchise revenue creates visibility into future free cash flow, and said the combined company’s first priority post-closing will be to reduce debt.
Real expects to reach net debt of twice adjusted EBITDA by the end of the second full fiscal year after closing, Jani said. He also said the combined company’s leverage would be lower than REMAX’s standalone leverage on a net leverage basis.
Operating under deal period restrictions
When Real and REMAX announced their merger agreement on April 26, leaders indicated the deal is expected to close in the second half of 2026, subject to shareholder and regulatory approval. If completed, the newly merged Real REMAX Group would be one of the top three real estate companies in terms of scale, behind Compass International Holdings and Keller Williams.
Real executives have said their top three priorities before the shutdown are retaining agents and franchisees, ensuring operational stability on day one and achieving $30 million in projected run-rate savings from duplicating overhead and operating costs.
REMAX’s latest quarterly filing also lays out the risks associated with the deal, including the possibility that the merger or its announcement could harm the company’s ability to retain agents, franchisees and staff. The filing also warns that the deal could disrupt management attention, lead to unexpected costs or litigation, or limit REMAX’s ability to pursue certain business opportunities or strategic transactions while the merger is pending.
The company had $62.5 million remaining under an existing $100 million share repurchase authorization at the end of the quarter, although REMAX did not repurchase any shares during the first quarter and is not allowed to do so without Real’s approval while the deal is pending.
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