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Good morning, and welcome to the RE/MAX Holdings Second Quarter 2025 Earnings Conference Call and Webcast. My name is [ Tiffany ], and I will be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Joe Schwartz, Senior Vice President of Finance. Mr. Schwartz?

Thank you, operator. Good morning, everyone, and welcome to RE/MAX Holdings Second Quarter 2025 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, brand expansion, competition, technology, housing and mortgage market conditions, capital allocation, credit facility, dividends, share repurchases, litigation settlements, 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 second quarter 2025 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. With that, I'd like to turn the call over to them. Erik?

Thank you, Joe, and thanks to everyone for joining us this morning. We're entering the second half of 2025 with solid momentum. We ended Q2 with over 147,000 agents in our global network, an all-time high. We saw signs of stabilization in our U.S. agent count, and our profit and margin performance exceeded expectations once again. Our entire team remains focused on the customer experience and operational excellence. Despite the sluggish housing and macro backdrop, our business model continues to support solid top line performance. While U.S. existing home sales have been slow to recover, we've seen some green shoots in the form of rising inventory levels and new listings. The June RE/MAX National Housing Report showed inventory levels up 30% versus June of 2024, while new listings grew year-over-year for the 16th straight month. However, uncertainty around tariffs, inflation and consumer confidence, coupled with affordability challenges, including persistently high mortgage rates have caused us to temper our expectations around a potential housing rebound in the latter half of the year. For now, we remain laser-focused, focused on the things we can control, and our Q2 results are a testament to our efforts and to the resilience of our network and team. Within the industry, The National Association of Realtors clear cooperation policy continues to be a topic of debate and our stance remains unchanged. We're focused on driving positive outcomes for consumers, and we continue to believe that promoting listings to the broadest audience serves the best interest of buyers and sellers. Our ongoing pursuit to deliver the best experience to consumers as well as to RE/MAX agents and franchisees has fueled countless competitive advantages. It's why we have the most trusted real estate agents in the U.S. and Canada. We also have the most productive network in the world as evidenced by the results in the 2025 RealTrends Verified rankings, one of the industry's top independent surveys. For the 17th straight year, RE/MAX agents at large brokerages outperformed their competitors by a margin of more than 2:1. This significant advantage in the U.S. per agent productivity represents a clear differentiator, benefiting all RE/MAX affiliates in multiple ways. Another major advantage is the scale of our unmatched global footprint. Our worldwide agent count hit a record high as of June 30, and the second quarter marked our best U.S. agent count performance since Q2 of 2022. As we shared on our last earnings call, April was our strongest month for U.S. agent count in 3 years, and that momentum continued in May and June. Our continued focus on enhancing our value proposition is driving strong demand for the RE/MAX brand, and we're seeing early signs of U.S. agent count stabilization. Now this demand is showing up in our CM&A efforts as well, and we've closed several deals this year and are increasingly excited about the pipeline our new leaders are building. And as we just announced this morning, I would like to welcome RE/MAX Hawaii to our team. We are thrilled about this conversion that will soon add over 170 highly productive and professional agents to our network. This strategic move strengthens our market share in Hawaii, adds a strong and well-regarded operator to our system and reinforces that influential brokers continue to see real value in what we're building at RE/MAX. We're leaning in, investing in tools, technology, new programs, products and talent to empower our agents to win more listings, save time and build more profitable businesses for themselves, which in turn fuels brokerage profitability. As I mentioned earlier, we're making many bold moves to elevate and to expand our value proposition. Last quarter, for instance, we introduced Aspire, our innovative onboarding program designed to attract and develop the next generation of RE/MAX agents. As a reminder, Aspire combines world-class education, our advanced technology platform and a unique financial model that gives newer agents time to build a book of business. We're excited by the network's reception to Aspire. Nearly 60% of our brokerages in the U.S. and Canada have already signed up and hundreds of agents are enjoying the benefits. Aspire launched in April and May and June were the first 2 months of 2025 with a higher U.S. recruitment rate than the same period in 2024. This trend should continue as Aspire becomes even more integrated into the DNA of our network. Several other benefits of affiliation are also adding to our momentum. Our lead concierge program is continuing to build and contribute to the top line by connecting consumers with agents and converting curated leads into sales. And we recently launched our new AI-powered global referral system, a powerful real-time data platform that simplifies and scales the exchange of referrals across our unmatched global footprint of over 110 countries and territories. These new innovations are strategically tapping into the power of the RE/MAX community. After all, the network effect works best at scale, and no one does scale like RE/MAX. In addition, our RE/MAX Media Network is also beginning to contribute to the top line. While we remain confident in its long-term monetization opportunity, the launch has been slower than anticipated, in part due to challenging macro environment that also has impacted advertising spend. Nonetheless, infrastructure is in place with partners starting to come on board who are seeing the power of our brand and the value of our digital assets. Now on the mortgage side, the environment remains challenging, but our resilient operators continue to navigate it successfully. We're supporting them with new tools, including a recently launched pricing engine within our loan brokerage system. It's designed to boost productivity and help originators find the best loan options for consumers. We've made great progress in the search for the next leader of our mortgage business, and we'll make an announcement in the coming weeks. Mortgage continues to be an important component of our growth story, and we expect our next leader will help us continue to grow Motto and Wemlo while exploring additional avenues to grow our mortgage opportunity. As we look ahead, our focus remains clear: continue to grow the global RE/MAX agent network, especially in the U.S. and Canada, further enhance our value proposition and execute with the excellence across our brands. With the right people, platforms and programs in place, we're on the right path, and we're very optimistic about our future. Now I'll turn it over to Karri.

Thank you, Erik. Good morning, everyone. We are excited about the second quarter operational trends Erik discussed and are pleased with our financial performance. Our second quarter results were a continuation of a consistent trend driven by better-than-expected expense management that resulted in solid profit and improved margin performance for the fifth consecutive quarter. Our top line results were right in line with our expectations this quarter despite a sluggish spring housing market, highlighting the resilience of our financial model. Some of our notable quarterly financial highlights included total revenue of $72.8 million, adjusted EBITDA of $26.3 million, adjusted EBITDA margin of 36.1%, an increase of 30 basis points over the second quarter of 2024 and adjusted diluted EPS of $0.39. Looking closer at revenue, excluding the marketing funds, revenue was $54.5 million, a decrease of 6.8% compared to the same period last year, driven by negative organic growth of 5.7% and adverse foreign currency movements of 1.1%. The decline in organic growth was principally due to lower U.S. agent count, broker fees and revenue from previous acquisitions, partially offset by new revenue streams, including contributions from our RE/MAX Media Network and lead concierge initiatives. As mentioned, margin performance improved, thanks to our focus on ongoing operational efficiencies. Second quarter selling, operating and administrative expenses decreased $1 million or 2.8% to $33.9 million. This reduction was primarily due to certain lower personnel expenses, partially offset by severance expenses from a restructuring in the current year and some investments in our flagship websites. We continue to strategically evaluate every aspect of our business and leave no stone unturned. However, the broader macro and housing environment continues to be challenging, impacting our total leverage ratio, which was 3.58:1 as of June 30, roughly consistent with March 31. That said, we still expect our TLR to decrease as we get into the back half of the year. From a capital allocation perspective, our priorities remain unchanged. We are strategically reinvesting in the business and building our cash reserves as we work to lower our TLR below 3.5: 1. Now on to our guidance. We are excited about all of our ongoing initiatives and the momentum we are building. However, the existing uncertainty in the current macro environment has made forecasting future results increasingly difficult. It has also caused some of our initiatives, like our RE/MAX Media Network, in particular, to take longer to ramp up. As a result, we are tightening our revenue and profit range expectations for the rest of the year, but also increasing our agent count expectations, primarily due to the strength of our international agent count growth in the first half of the year. Our third quarter and full year 2025 outlook assumes no further currency movements, acquisitions or divestitures. For the third quarter of 2025, we expect agent count to increase 1% to 2% over third quarter 2024, revenue in a range of $71 million to $76 million, including revenue from the marketing funds in a range of $17 million to $19 million and adjusted EBITDA in a range of $23.5 million to $26.5 million. And for the full year 2025, we now expect agent count in a range from 0 to positive 1.5% over full year 2024, a change from negative 1% to positive 1%, revenue in a range of $290 million to $296 million, including revenue from the marketing funds in a range of $72 million to $74 million, a change from $290 million to $310 million, including revenue from the marketing funds in a range of $71 million to $75 million and adjusted EBITDA in a range of $90 million to $95 million, a change from $90 million to $100 million. With that, operator, let's open it up for questions.

[Operator Instructions] Your first question comes from Tommy McJoynt with KBW.

The first one, Karri, I just want to zoom in a little bit on the reduced guidance range. Just want to be clear, how much of that is driven by lower, what I'll call variable sort of brokerage fee-driven volumes versus just lower more recurring fees driven by the agent count?

Tommy, so great question. I think I'd highlight a couple of things just with respect to our second quarter. I think we saw some good momentum in the second quarter with respect to the agent count performance and some of the revenue contributions from the differentiated revenue streams from some of our new revenue streams. The reduced guidance, as we think about that in the back half of the year, I would really kind of point to 3 things that's impacting the top line that's then flowing through to the profit line. The first is just kind of a little bit of a delay in the ramp-up of our RE/MAX Media network. So we did see some contribution in the first half of the year, but that ramp-up is just a little bit slower than we expected. So that's the first thing really kind of coming in that franchise sales and other franchise revenue line item. The second thing -- the second component is a little bit more of a tempered outlook on broker fee. And so again, a little bit more on the variable side. And then I think the third component, as we think about it, is really more of a near-term impact kind of in the back half of this year is something that's impacting us related to Aspire. So Aspire has really been a fantastic, we've seen fantastic results from a business perspective and from an adoption standpoint as it really accelerated recruiting. As Erik said, April and when we launched it in April, May and June were the best months of recruiting we've seen in the U.S. But from a revenue perspective, near term, it's going to take a little while for us to see the revenue contribution. At scale, we think that the revenue per agent is on par or even a little bit better than what we see today. But on a near-term basis in the back half of the year, there's a little bit of pressure as those things ramp up. So it's really all 3 of those things. It's just causing a little bit of pressure on the top line, and that's what's rolling through to the bottom line that's contributed to that change.

Got it. Thanks for walking through on those pieces. And then also on the guidance front, it was good to see the agent count guide for the full year get raised that range. When you break apart sort of what's changed directionally since we got the guidance about 3 months ago between the different geographies of U.S., Canada and then the international side, which sort of could you rank order which of those geographies was most incremental toward that change in the agent count?

Yes. So I think we continue to see the global footprint and the international expansion as a key competitive advantage. We pointed not only to the agent count expansion, but what we're doing from a value delivery perspective with respect to our MAX referral program and really leveraging the power of the global footprint. And the strength that we've seen in our international agent count is really kind of probably the biggest driver to the guidance range like agent count. However, I really do want to stress the importance and the momentum of what we're seeing in the U.S. And as Erik mentioned in the scripted remarks, exciting announcement this morning with respect to a large-scale conversion in Hawaii, bringing some very high-quality productive agents and a really strong operator into the network. And the pipeline that we have new leaders, both in the U.S. and Canada are building is exciting as well.

Your next question comes from Nick McAndrew with

Maybe just to start, it's really encouraging to see all the progress with Aspire. And now that it's been live for about a full quarter, I'm just wondering, has your perspective evolved on which types of agents the program is resonating with? And are you able to share any just updated feedback from franchisees on how they're utilizing the program? Is it something that they're actively embracing as a core part of their recruiting strategy? Or is it still kind of more of a complementary tool at this point? Just curious.

Yes. This is Erik. I think the comments and our thoughts on Aspire continue to hold true, right? So we're seeing really positive adoption. Almost 2/3 of the brokerage that are eligible are participating in the program. Folks that are participating in the program are seeing higher recruitment rates over those that are not year-over-year, which is encouraging. I think the agent mix, although Aspire comes with a technology component to help folks understand how to use a CRM and start to nurture leads and get invested in the platform that we deploy, it also comes with a large educational component to make sure that we can help them to be productive sooner rather than later. And that helps with onboarding from a brokerage perspective also. And so we are seeing agents that are younger in tenure entering the program. We're also seeing some agents that are using it to transfer a book of business. So it's another tool kind of in the tool belt that a broker can use in order to attract new unlicensed agents, new lower tenured licensed agents that need an additional boost from a great brand and a great onboarding program. And then also it can help with obviously transferring a book of business with more mature, more productive agents that also want to be a part of our great brand. So we're seeing kind of all those components, Nick. And as you can imagine, the middle one is probably the biggest driver, and it's really helping us to bring kind of the next generation of agents to RE/MAX.

Yes, that makes a lot of sense. And I guess following up off of that, you've launched several agent-facing tools over the last few quarters, whether it's obviously Aspire, lead concierge, MaxRefer. I'm just curious, do you have any visibility into how many agents are actively using maybe just 1, 2, 3 or more tools? Because I'm trying to wonder if you're seeing a higher level of stickiness when agents are fully integrated with all of the tools in the toolkit at your disposal versus an agent that maybe isn't fully ingrained yet?

Yes. I think that's a great question regarding kind of retention and engagement. I think it's a little too early to tell to quite answer the tool on like the multiple tool engagement versus kind of single tool. Obviously, it's something we're laser-focused on based on especially on my prior experience. However, we are seeing good adoption on the tools that we have deployed. So folks are excited about our global referral platform and MAXEngage. We're seeing referrals flow through there. We're seeing closed deals flow through there. Lead concierge, we're seeing great conversion from an upper funnel to mid-funnel to lower funnel. We've got really nice adoption from a lot of agents who have to opt into the program. And if you recall on lead concierge, it was not only about delivering kind of an agent, a curated warmed lead, so to speak, but also really improving the consumer experience for either a buyer or a seller. And so we're continuing to make improvements in that program. And we've got a variety of other things that we've launched since R4. Our Marketing as a Service is in beta right now, and we'll go live here in the next couple of weeks, and we're seeing good adoption and good performance from a marketing perspective for agents. So we're really excited about some of the new things on how we've leaned into the network to help agents by improving the value proposition. We're all about just helping them win listings, do it in less time and make a little more money. And then obviously, that transfers to improved brokerage profitability. So the building blocks are in place. We're seeing good adoption. Now it's time to move into the execution phase.

That concludes our question-and-answer session. And I will now turn the call back over to Joe Schwartz for closing remarks.

Thank you, operator, and thank you all for joining the call today.