Adam Contos stated throughout an earnings name Friday that his firm’s third-quarter acquisitions improve RE/MAX’s worth proposition and supply new income streams.
RE/MAX has lengthy sought to strengthen its firm footprint by acquisition and re-acquiring impartial areas. However lately, the corporate has additionally bolstered its tech workforce and diversified its choices to each affiliated brokers and shoppers by means of acquisitions.
On the corporate’s third-quarter earnings name, RE/MAX CEO Adam Contos gave perception into the actual property franchisor’s merger and acquisition (M&A) technique.
“A lot of our focus over time has been on re-acquiring impartial areas however we additionally proceed to discover intriguing, complimentary alternatives in and round our core companies of franchising, mortgage and actual property,” Contos stated. “Finally, as a part of our ongoing and disciplined capital allocation course of, we deal with these alternatives that we imagine have the best value-creating potential.”
Splendid acquisition candidates test two packing containers for RE/MAX and it’s franchise manufacturers, which embody each the residential actual property franchises and Motto Mortgage, in response to Contos.
“A key goal of our M&A technique is reinforcing and enhancing the worth proposition of our two franchise manufacturers and serving to drive their long run progress,” Contos stated. “We’re additionally taken with alternatives that diversify and broaden our income and progress potential.”
Each the third-quarter acquisitions of wemlo and Gadberry Group accomplish these goals, Contos stated. The 2 bolt-on acquisitions the corporate made within the third quarter naturally improve RE/MAX’s core companies.
Wemlo is a 20-month-old, Florida-based fintech startup that gives third-party mortgage mortgage processing providers. The corporate developed a cloud service for mortgage brokers.
RE/MAX plans to combine wemlo merchandise into the Motto Mortgage house, however will proceed to market to impartial mortgage brokerages, offering the corporate one other income stream.
In mid-September, RE/MAX additionally introduced it acquired Gadberry Group, an Arkansas-based location intelligence knowledge firm with 16 workers.
The agency offers tech merchandise aimed toward fixing geospatial challenges — basically these associated to location mapping — by means of correct and exact location knowledge, in response to RE/MAX.
RE/MAX had been a shopper of the agency for greater than a 12 months and it’s location software program providers had been integral to the revamped RE/MAX consumer-facing expertise. The acquisition permits RE/MAX to retain its present providers with no disruption. It additionally permits the corporate to “dive a lot deeper into the info world,” in response to Contos.
“That may open up all kinds of attention-grabbing new potentialities for us,” Contos stated.
Gadberry Group has shoppers throughout a number of industries and RE/MAX plans to develop its shopper base.
The RE/MAX know-how platform for each shoppers and brokers was additionally constructed on the again of the earlier acquisition of booj. Earlier within the 12 months, RE/MAX additionally acquired the AI-powered real estate lead nurturing startup First.
Contos gave perception into the corporate’s M&A technique on the again of the corporate’s third-quarter outcomes, the place the corporate reported agent depend elevated 5.1 % from the earlier quarter and complete open Motto Mortgage franchises elevated 27.9 %.
RE/MAX additionally reported complete income of $71.1 million within the third quarter, a lower of 0.5 % year-over-year due largely partly to beforehand introduced agent recruiting initiatives that diminished each persevering with franchise charges and advertising and marketing charges funds. The corporate reported a web earnings of $3.6 million for the quarter.
“Evolution of our technique, continued funding in our companies and a deal with worthwhile progress, alongside the housing trade’s exceptional run has helped our enterprise recuperate rapidly,” Contos stated. “We imagine we’ve recaptured the momentum we had initially of 2020, earlier than the pandemic upended every part.”