Good morning, and welcome to the RE/MAX Holdings Third Quarter 2024 Earnings Conference Call and Webcast. My name is John, and I'll be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Andy Schulz, Senior Vice President of Investor Relations. Mr. Schulz?

Thank you, operator. Good morning, everyone, and welcome to RE/MAX Holdings third quarter 2024 earnings conference call. Please visit the Investor Relations section of www.remaxholdings.com for all earnings-related materials, including our standard earnings presentation and to access the live webcast and the replay of the call today. 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 and open offices, financial measures and outlook, hurricane-related financial support, brand expansion, competition, technology, housing and mortgage market conditions, capital allocation, credit facility, dividends, share repurchases, litigation settlement, strategic and operational plans and business models. Forward-looking statements represent management's current estimates. RE/MAX Holdings 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 third quarter 2024 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 Erik Carlson, our Chief Executive Officer; and Karri Callahan, our Chief Financial Officer. Our brand leaders, Ward Morrison and Amy Lessinger are also here and will join us for Q&A. With that, I'd like to turn the call over to RE/MAX Holdings' CEO, Erik Carlson. Erik?

Thank you, Andy, and thanks to everyone for joining us today. Before discussing our quarterly performance, I wanted to start with a few comments regarding the recent hurricane activity. These were extraordinary storms, and most of us probably know someone who is directly affected by them. Unfortunately, we tragically lost one of our brokers and their spouse, and the thousands of affiliates impacted have now begun the task of rebuilding their lives. We are proud of the way RE/MAX and Motto Networks rallied to support their affiliates and their communities. Our team from around the world is doing what they always do in times of crisis, stepping up to help. Given the magnitude of destruction from these historic storms, we plan to provide limited financial relief for those impacted based on individual facts and circumstances. We want to do what we can to help our networks rebuild and bridge the interruption to their respective businesses and lives. Karri will provide more details in a few moments on the financial impact. Moving to our earnings; we generated better-than-forecasted financial performance for the second quarter in a row. Our team is working on running our core business better each day, and that effort has contributed to our strong margin over the past two quarters, which is an encouraging trend. Both the real estate and mortgage industries were working their way through uncertain times. So we remain centered on what we can control, and we believe our third quarter financial results are further proof that our actions are making a difference. Karri will get into the financial details shortly, but the strength of our business model was again evident during the quarter, highlighted by strong cash flow generation, driven by ongoing cost management efforts and strong RE/MAX collections alongside improvement in our total leverage ratio. The past quarter was also notable for the real estate industry as it implemented business practice changes because of the NAR settlement. The lead-up to August 17 brought heightened attention to the crucial role professional agents and brokers bring to the home buying or selling experience. For market participants like RE/MAX, we were confident that trusted professionals would rise to the occasion and adapt as they've done so many times before. And that initially appears to be the case in the weeks immediately after the business practice changes were implemented. We're proud of the way our team and our network handled this significant chapter in the history of real estate. We, alongside our franchisees and many of our nearly 3,200 offices across the U.S., leaned into focus on education, and we spoke loudly about the value professional agents bring to homebuyers and sellers and what agents can and should be doing to thrive. Having both a global and local presence, along with a well-established culture of professionalism and productivity are true competitive advantages. Skill is essential in this market, and RE/MAX is home to the highly skilled full-time agents, who are also the most trusted by consumers. RE/MAX agents are simply the gold standard. As anticipated, additional items will pop up as we navigate the new landscape. One thing that's currently being debated in the industry is NAR's clear cooperation policy. Our view on the matter is straightforward. RE/MAX is in favor of policies that help buyers and sellers achieve their homeownership dreams. We support full transparency in real estate transactions. Agents and companies who promote listings to the widest possible audience are serving the best interest of buyers and sellers alike and honoring their fiduciary responsibilities. Buyers deserve equal access to available properties, and sellers deserve the broadest possible exposure for their homes. We stand for trust, transparency, and professionalism. We believe in prioritizing consumer interests over practices that benefit a few at the expense of many. As the industry moves forward, there will continue to be discussions around industry practices that may result in further change. We consistently remind our affiliates to stay focused, focused on articulating their value as trusted professionals and providing their buyers and sellers the best customer experience each and every day. Another significant event at the macro level this past quarter was last month's 50 basis point cut by the Federal Reserve. Look, this was welcomed by many in the industry. It appears that some negative housing trends may be bottoming out, although October's rise in mortgage rates may result in softer demand trends in the near-term. Despite all that, overall, there's growing optimism for 2025. We share that. We're optimistic the moves we're making to drive efficiency and growth have pointed us in the right direction. Granted, there's much more work still to be done, especially when it comes to agent count, but it is rewarding to see our results beginning to show up in our financial performance. Improving agent count is essential to a better top line. So agent stabilization and growth remains a major objective. On the positive side, we saw our international agent count continue to rise in the third quarter, increasing nearly 6% over last year's Q3. In fact, our September 30 total of over 67,000 agents outside the U.S. and Canada was a record. So far in 2024, notable performers include Brazil and Argentina. Successful recruiting, training, and retention programs have aided in their progress. In Canada, we totaled almost 25,400 agents as of September 30, also a record. In this extremely competitive market, RE/MAX continues to be the place more professional agents choose to operate their business than any other brand. Now here in the U.S., significant industry-wide agent attrition is widely reported and is a real factor. But we know we need to improve upon what we can control to advance our performance. One way we aim to stem and ultimately reverse this trend is by focusing on providing the best customer experience we can. For example, at our annual Broker Owner Conference in August, we announced an expansion of our MAX/Tech powered by BoldTrail partnership. In addition to increasing agent-focused processes and tools, the expansion aids brokerage functionality, creating a front office, back-office alignment benefiting both RE/MAX agents and brokers. This platform features a state-of-the-art user interface, AI-driven workflow tools and actionable business insights aiming to augment recruiting activities, enhance agent productivity, streamline operations, facilitate connectivity between the agent and consumer and, in general, help deliver a superior customer experience. We've got a growth mindset, and we are working to get our top line moving in the right direction. While better results from our growth initiatives will certainly help, we're also exploring other ways to innovate. To that end, we've identified additional opportunities to enhance the customer experience, which can also drive revenue. That's a powerful combination. For example, we mentioned last quarter the launch of MAX/Tech Lead Concierge. It's an optional program that delivers vetted, conversation-ready home buying and selling leads from remax.com and remax.ca. With this program, real people contact leads within minutes of their inquiry, a speed that aligns with evolving consumer expectations and aids in maintaining that consumer trust in the RE/MAX brand. Research suggests that the chances of connecting with a lead are 100 times greater if contact is made within five minutes rather than 30. It makes a difference. It's still very early, but the majority of remax.com leads sent to Concierge have turned into qualified conversation-ready referrals. Thousands of RE/MAX agents have opted into the program, and we're seeing the initial leads convert. It's exciting to see this capability take hold and show signs of success so early on. We're also interested in optimizing assets across the portfolio. One set of underappreciated assets is our websites, remax.com and remax.ca. We've been making purposeful investments in our websites over the past year to improve functionality and customer experience. These investments not only have enabled Lead Concierge, but also supported a new capability that allows display ads to appear on dot com and they will soon appear on dot ca. Given our iconic brand, the strong market share we have, and franchisor leading websites, we view the monetization of our digital assets as an innovative and relatively low-risk, high-reward opportunity. Now looking at our Mortgage business, our recent results show that rates do matter. September was the best month of Motto franchise sales since March of 2023. Similarly, during September, wemlo enjoyed its best month of the year so far in loan submissions. Despite this recent bright spot, continued elevated mortgage rates have made it a tough time to be in the mortgage business. We're feeling the effects as the number of open Motto offices is declining slightly for the first time ever as franchise sales have slowed and a few existing franchises have terminated due to their financial position, lack of transaction activity, or not being connected to the real estate transaction. While Motto has seen some of those terminations increase during the past year as the macro economy changes, we do believe we'll be able to start growing that open office count again soon. Now I'll wrap up my comments by pointing out that we continue to make steady progress at running our business as efficiently and effectively as possible, having that growth mindset and most importantly, delivering the absolute best customer experience possible. Setting aside the one-time impact associated with supporting our networks affected by the hurricanes, we believe we're well-positioned to end the year with momentum with increasing optimism about the trajectory of our future interest rates, about growing global agent count and about our new initiatives, including providing innovative and enhanced technology products to our networks, improving the agent customer experience through our Lead Concierge program and starting to monetize our digital assets. We believe we're headed in the right direction but we're very optimistic about the future. With that, I'll turn it over to Karri.

Thank you, Erik. Good morning, everyone. We had another solid quarter, highlighted by effective cost management and strong collections, which generated robust free cash flow alongside expanding margins. Some of our notable quarterly financial metrics included total revenue of $78.5 million, adjusted EBITDA of $27.3 million, up 2% over Q3 of last year, adjusted EBITDA margin of 34.8%, an increase of 190 basis points over the third quarter of 2023 and adjusted diluted EPS of $0.38. Looking closer at revenue, excluding the marketing funds, revenue was $58.4 million, a decrease of just 3.3% compared to the same period last year, driven by negative organic growth of 3% and adverse foreign currency movements of 0.3%. Negative organic growth was principally due to lower U.S. agent count and reduced revenues from previous acquisitions, partially offset by higher broker fee revenue. The increase in broker fee revenue was primarily driven by higher sales prices and to a lesser extent, slightly increased productivity in the U.S., which collectively more than offset the impact from reduced agent count. The uptick in U.S. agent productivity was great to see and highlighted the strength of our network in the current environment despite the recent industry practice changes. Importantly, third quarter selling, operating and administrative expenses decreased $7.2 million or 16.6% to $35.9 million. The cost reductions were broad-based in nature and evidenced across most of our cost structure and highlighted by lower personnel costs, a decrease in bad debt, legal, and other technology expenses. Like last quarter, decreased personnel expenses on a year-over-year basis were principally a function of the restructuring announced in Q3 of 2023. And RE/MAX Collections also continued to improve, which is an encouraging positive trend. Lower legal expenses and miscellaneous reductions, eliminations, and efficiencies elsewhere across the company all contributed to this quarter's solid results. From a capital allocation perspective, we remain patient. The good news is our Total Leverage Ratio, or TLR, is now under 4.5:1 as expected. Importantly, we now have access to our revolving credit facility should we need it, although we currently have no plans to tap it. Further reducing our TLR by the end of the year remains a focal point for our entire company. Once our TLR returns to a desired level, we will evaluate our capital allocation opportunities and priorities, including debt repayment, stock buybacks, and strategically reinvesting in our business, among others. The cash-generative nature of our business is perhaps our most attractive financial characteristic. Before I get to our outlook, and as Erik alluded to earlier, several of our affiliates were severely impacted given the magnitude of the recent hurricanes. We currently estimate that our fourth quarter financial performance will be lower than previously expected as limited financial support is extended to affected affiliates. As a result, we reduced our fourth quarter and full-year revenue guidance by approximately $1 million to $1.5 million. In addition to the impact from the hurricanes, our fourth quarter and full-year 2024 outlook assumes no further currency movements, acquisitions, or divestitures. For the fourth quarter of 2024, we expect agent count to change 0% to 1% over fourth quarter 2023, revenue in a range of $71 million to $76 million, including revenue from the marketing funds in a range of $18.5 million to $20.5 million, and adjusted EBITDA in a range of $20.5 million to $23.5 million. And for the full year 2024, we now expect agent count to change 0% to 1% over full year 2023; revenue in a range of $306 million to $311 million, including revenue from the marketing funds in a range of $78.5 million to $80.5 million, and adjusted EBITDA in a range of $95 million to $98 million. With that, operator, let's open it up for questions.

Thank you. We will now begin our question-and-answer session. Our first question comes from Ryan McKeveny with Zelman & Associates. Please go ahead.

Hey, good morning. Thank you for taking the questions. So first one on the MAX/Tech Lead Concierge, really interesting to think through the potential there. I know it's early days, but I guess anything you could share about how we should think about the potential economics of those deals, how that gets split up between kind of agents, franchise owners, and corporate? And similarly, on the cost side and kind of the infrastructure needed to vet those leads, is that done via your partnerships? Is that done internally? And just thoughts around kind of investment needed or costs that may or may not be needed to kind of get this rolled out and scaled. Thank you.

Yes. Hey Ryan, it's Erik. I'll start off. And if my answer needs any cleaning up, the team will help me here. And look, thanks to everyone for joining us the morning after Halloween. So hopefully, everyone got treats and not tricks. But look, the MAX/Tech program, it's really kind of the Lead Concierge program is a capability that we've been building for over the course of the year. When you think about it, we get some decent traffic, organic traffic off of dot com and dot ca. I'll focus a little bit on the U.S. here, Ryan, just for purposes of the example. And it's really about improving the customer experience, first and foremost, right, making sure that those leads, we're responding to them in a very timely manner. Folks that show interest, obviously, we want to get back to and convert in order to improve that experience. And then also, it's about the agent experience really, right? Leads are obviously filtered out, sent to a lot of brokers in today's world, whether it's in real estate or other industries, not qualified. And at least in real estate, the agent has to do a lot of work in order to qualify that lead. So what we're trying to do with Lead Concierge initially is in testing the capability is taking traffic off of dot com, folks that show an interest, warming those leads through a relationship that we have. So it's a low investment from our perspective there and making sure that they're ready and qualified from a sales qualified perspective before we give them to an opted-in agent, right? So you can think about the actors in the play, all of them want someone to take action or they're ready to take action. So I think it's a win-win kind of on the customer side. It's a win-win for the agent because they're opted in. On the economics, we are taking a bit of a piece in order to help support the program. Part of that is shared with our partner that's doing some of the warming or the qualifying of the lead. Some of that comes back to us. Some of that comes to the broker and obviously, the agent sees the majority of that deal. So when you think about it, it's really a low investment from our perspective on this initial program. But for us, it's really about building this capability off a dot com initially, and then we can see kind of where we can take it.

I might add to that just a little bit. And this is Amy. In the fact that we're trying to drive productivity in our agents, and we're trying to help enable them to do more in less time. And so I think that the overwhelming response from the network has really shown that they see this as a big value as well.

Yes, that's very helpful. Thank you for that color. And Erik and Karri, maybe on the cost side of things. So within the release, I think it's pretty obvious you mentioned driving operational efficiency, business optimization and just financially I think at least for the last couple of quarters, the SO&A expense has been better than we've expected at least. So maybe you could talk a little about the focus on the cost side of things, driving efficiencies. Like is the low-hanging fruit already taken care of? How do you think about the cost structure moving forward and into '25 through this lens of still having a growth mindset, but is there also further progress you can make on the efficiencies and kind of keeping costs contained?

Good morning, Ryan. It's encouraging to see a positive trend over the past two quarters. We have been very careful in ensuring that every dollar we spend is utilized wisely and focused on driving revenue growth. We're investing in essential capabilities, as Erik and Amy mentioned, and we are approaching this with caution. We've also made intelligent decisions in the last year regarding our organization, personnel, and legal matters. Moreover, our franchisee operations continue to show positive results, particularly in managing bad debt. As we look towards the fourth quarter, we anticipate a slight increase in our SO&A run rate compared to Q2 and Q3, but it won't be significant. As we move into next year, we are carefully planning our investments to ensure they effectively enhance our capabilities and contribute to revenue growth.

That's great. Thank you so much.

The next question comes from the line of John Campbell from Stephens. Please go ahead.

Hey guys, good morning.

Hey, just morning. I wanted to start on just the pace of RE/MAX franchise sales, whether you guys feel like there's an inflection point back to growth at some point on the horizon? And then just kind of related to that, just some broad color on how impactful the franchise growth has been to just overall agent count growth in prior years.

Yes, sure, John. Thanks for the question. As we've discussed previously, I'll let Amy share some specifics about what she's hearing from the field regarding agent count growth, both from existing brokers and also about franchise and the pipeline. We find ourselves in a wait-and-see type market. We are undergoing a transition, and that applies not just to RE/MAX but to the broader industry as well. There are several factors at play, including lawsuits, low inventory, policy and practice changes, and higher interest rates. As you probably know, the number of transactions is at a historic low. This context leads me to say that from a broker's perspective, whether or not you're considering moving to the RE/MAX brand or if you're already a part of it and active in your local community, there is a prevailing wait-and-see attitude. Although I don't want to imply there's excessive noise, there is heightened attention on practice changes and ensuring the best service for customers. At RE/MAX, we continue to be the most trusted and productive environment. Our brokers, owners, and agents are dedicating substantial time to improving their skills, ensuring they secure the right listings, and sometimes reeducating agents on the other side about the implications of practice changes for transactions. While there is interest, it seems independents are facing challenges. Agents may not be receiving the coaching, mentorship, or education they need, whether from a headquarters brand like RE/MAX or locally, which is a strength of our model as we offer both corporate and community-based support and training. We are experiencing some inbound activity, but I wouldn't expect that to convert in the short term; however, we're laying a solid foundation to enhance those conversions heading into 2025 due to some ongoing industry challenges. We hope to resolve one of these issues next week. It's important to recognize the current level of caution mixed with optimism, as individuals are diligently working to improve their ongoing business. Now, I'll let Amy, who has been in the field recently, provide some specifics.

Yes. Many independents are quite distracted and focused on navigating various industry changes independently, which has led to some frustration and concern. It's particularly challenging for small to midsize brokerages to keep pace with technological advancements, education, tools, services, and support. Our interest in this area is significant given our resources that can help brokers enhance agent productivity and education. I believe this trend will undoubtedly persist, and we will remain vigilant in capitalizing on these opportunities. This presents a fantastic chance for us to be their solution, guiding them through changes and assisting with succession and growth planning in the industry.

And John, let me add one more point. The RE/MAX value proposition is strong. It is a well-recognized brand that represents trust and productivity, and we are enhancing it with new productivity tools and platforms, including programs like Lead Concierge. You will start to see the results of the efforts we've made in the first half of the year as these programs roll out, whether it's technology that comes with a process or initiatives like Lead Concierge that assist agents in being more productive and converting consumer-ready, sales-qualified leads at a higher rate. It's still early, but I am optimistic about the initiatives and investments we've made, either in terms of time or resources, as we prepare ourselves for success in 2025.

That's a great insight. Additionally, do the independent conversions contribute to the actual RE/MAX franchise sales?

I can add that we are observing a concept called roll-in, where some may choose not to establish their own footprint but instead integrate into an existing brokerage. In this case, it's not counted as a full franchise in those numbers, yet we are noticing an increase in this trend. Yes, and those independent ones do count in those totals. We have maintained strong momentum, particularly among the smaller groups of independents joining the network. When we look at franchise sales from an agent count perspective, what's exciting is that we are seeing growth in agent count, particularly at the top of the funnel during new franchise sales and conversion activities. This is why there has been so much emphasis on it and, as Erik and Amy mentioned, from a foundational standpoint, the additional value propositions we offer make these initiatives crucial. We are continuing to see positive momentum, and they are reflected in the franchise sales counts.

Got it. I have one more question regarding your focus on Lead Concierge and the website, and how that connects to your position on CCP. It seems that your larger competitors have been more outspoken in the market and are taking a different approach to the CCP discussion. Like you, I believe they would likely benefit from the removal of CCP. I wanted to revisit your position, how confident you are, and get more insight on why you don't align with your larger competitors on this issue.

We are really focused on providing a great experience for both buyers and sellers. We believe that transparency is crucial for building professionalism and trust with agents, and it leads to better outcomes for buyers and sellers. You are correct to point out that the strength of our brand and network is evident in our performance. Hypothetically, if the CCP were eliminated, we might see short-term benefits. However, we are committed to long-term growth. With 51 years in business, honoring the legacy of Dave and Gail and the foundations they built, we believe the best approach is not to manipulate buyers and sellers but to offer them the best distribution and transparency regarding market opportunities. Ultimately, we will prioritize the consumer, the agent, and the professionalism and trust that our agents provide. If there are changes to the CCP, we will be prepared and are already discussing what that could mean. Our focus will remain on enhancing the buyer and seller experience, as this will benefit our brand and our network of agents and brokers in the long run.

That's very helpful. Thank you, guys.

Your next question comes from the line of Anthony Paolone from J.P. Morgan. Please go ahead.

Great. Thanks. Good morning. Maybe for Amy, since it sounds like you're out in the field. Can you give us any early data on what's been happening to buy-side commissions and also a sense as to what RE/MAX is doing top of the house down to the agents to kind of help them with that initial relationship and agreement?

Yes, for sure. Our agents are continuing to navigate change and they lean in and they're out there articulating their value. I do think that not enough time has passed for us to draw any large conclusions from it. That said the difference in average rates was very negligible so far. And I just think that our agents are having more discussions with buyers, and they're welcoming the opportunity to discuss the value of a professional trusted agent. Prior to the announcement of the settlement, we were preparing for broad education on these topics. And so we've done nothing but lean into that since we announced our settlement months ago. And so we wanted our agents to be fully prepared. And what we're hearing is that buyers are appreciating those conversations. They value being represented by a professional and trusted agent. And so that's where things stand in the field at this point.

Let me add one thing. While I haven't been in the field as much as Amy, I have spent some time with agents and brokers. The great aspect of our model and community is that we can create and distribute training on a nationwide level. Amy has been a standout figure in the agent and broker community as a RE/MAX professional for over 25 years. We have been producing content and deploying it in various ways, including live events where Amy shares insights on rule changes and educational topics. We've seen agents gather in local brokerages for watch parties, and interestingly, agents from other brands are often invited to these sessions. This kind of training can be implemented from the headquarters level, and brokers are also initiating their own watch parties, inviting others from the community to assist agents with specific needs. The strength of our brand in the community means that we can provide training at an HQ level through video or events, while our brokers engage with their communities daily. They understand the specific needs within their areas and are available to support agents directly. We've had positive results in preparing for the August rule changes, and we’re witnessing success in helping our team post-changes while also demonstrating the strength of our brand to potential future team members.

Yes. Got it. And then maybe for Karri, can you talk about just what's happening with franchisee credit? It seemed to be okay in the quarter, but just kind of where that stands? And also as it relates, I think, to Motto because it seemed like the opens went down a little bit again.

Sure. We are continuing to see strong performance regarding bad debt exposure. Our franchisees are seasoned business professionals who have navigated market fluctuations in the past and make informed local decisions to operate their businesses efficiently. This has positively impacted our collections performance. The team has done an exceptional job, significantly contributing to our cash flow strength in the third quarter. We converted approximately one-third of our revenue into free cash flow and about two-thirds of our adjusted EBITDA into free cash flow during the quarter, which is encouraging and driven by solid collections on the RE/MAX side. On the mortgage side, there are indeed challenges, likely more pronounced than in the real estate sector. However, the encouraging news is that we saw strong interest in September, marking the best month for franchise sales in about 18 months. While we are facing some difficulties with collections in the mortgage segment, there is cautious optimism operationally as we seem to be progressing in the right direction.

And I would add on there, we continue to try and work in conjunction with our broker owners, much like the RE/MAX side. We're trying to educate. We're trying to support. We're trying to help them in recruiting and retention. We're trying to help them grow their businesses. So even though they are having some issues right now in one of the toughest mortgage markets ever, we continue to provide that support, that education, and the tools that they need to be successful. And we're just trying to develop just like the other side, adoption and really some coaching to try and get them through this unusual market.

Okay, thanks for that.

Your next question comes from the line of Tommy McJoynt from KBW. Please go ahead.

Good morning, guys. Thanks for taking my question. I just want to clarify on the expense side, Karri. Was there anything sort of temporary or one-time in this quarter that lowered the expenses?

Yes. There wasn't really anything in particular in Q3 that's impacting us. I mean, obviously, in the release and in the scripted remarks, we did call out the one-time item that we expect in Q4 with respect to just providing that limited assistance to our affiliates that were impacted by the hurricanes. But I think the thing that's good about that is given the strong cost contain that we saw and the effective cost management in Q3 that we're expecting to hit into Q4. I mean, absent that, the raise from an earnings perspective in Q4 would have been possibly even a little bit higher.

Okay, got it. And then just second question, can you remind me of the typical seasonality that you expect with the U.S. and Canada agent counts just over the next couple of quarters? Remind me like into the spring selling season, what usually happens with those agent counts?

Sure. So really focusing primarily on the U.S. and Canada, I would say that from a seasonality perspective, it kind of tends to follow existing home sales. So it tends to follow kind of existing home sales. So Q4 and Q1 tend to be a little bit more sluggish, and then it ramps up into Q2 and into Q3.

Thanks.

Your next question comes from the line of Ronald Kamdem with Morgan Stanley. Please go ahead.

I noticed that the October operating statistics you usually provide are missing. Was this intentional, or is there any update or data you could share regarding the agent count model franchises for October?

Yes, we typically provide that information when we issue a release after the quarter concludes. This quarter just ended, and since the month was not complete when we sent out the release yesterday, it was simply a timing issue. From a seasonality standpoint and according to our guidance, everything was largely as expected. The trends we observed through September 30 across all key geographies in terms of agent count in the U.S. were quite consistent with the October results.

Okay, great. My second question is about the agent count. The international numbers remain very strong, but there seems to be some softness in the U.S. and Canada. Could you provide more details on that? Are there any noticeable trends regarding the agents leaving, such as whether they are mostly individuals, or are they unproductive agents? How much more of this decline do you expect? Additionally, what is driving the growth in international markets? Are you gaining market share, or is there significant traction for other reasons? I’m curious about that as well.

Sure. I'll start by discussing the numbers. From a Canadian viewpoint, we achieved a record high. Although our market share is nearly 30%, which makes growth challenging, we are managing to grow effectively, and this quarter was a record for us. There’s still significant momentum, illustrated by large conversions that occurred at the end of Q2 and the beginning of Q3. This is encouraging, as it indicates that both individual agents and large companies are eager to join our brand in that region. Internationally, we also reached a record high with 67,000 agents outside Canada. Erik pointed out several driving factors in South America, which underscores the strength of our entrepreneurial network and the quality of operators we have across the 110 countries and territories in which we operate. In Brazil, for instance, we saw a significant conversion in the third quarter, contributing to our market share as we transition larger groups of agents from other brands to RE/MAX, thanks to our size, scale, and brand power. In the U.S., it's noteworthy that we experienced some productivity gains among our agents this quarter. While we’re still feeling pressure concerning agent count, the productivity improvements are mainly seen among higher-performing agents. Consequently, the drop in numbers tends to come from less productive agents. To support our current agents and attract future ones, we are concentrating on enhancing the tools, services, and capabilities we provide, aiming to drive their productivity forward.

Great, that's it for me. Thanks so much.

As there are no further questions at this time, I would like to turn the call over back to Mr. Schulz for closing remarks.

Thank you, operator. Thanks to everyone for joining our call today. Have a great weekend.

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