Good morning, and welcome to the RE/MAX Holdings Fourth Quarter 2019 Earnings Conference Call and Webcast. My name is Laura and I will be facilitating the audio portion of today's call. At this time, I would like to turn the call over to Andy Schulz, Vice President of Investor Relations. Mr. Schulz?

Thank you, Operator. Good morning, everyone and welcome to RE/MAX Holdings fourth quarter and full-year 2019 earnings conference call. Please visit the Investor Relations page of remax.com for all earnings-related materials and to access the live webcast and the replay of the call today. If you are participating through the webcast, please note that you will need to advance the slides as we move through the presentation. Turning to Slide 2, 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, financial measures and guidance, brand expansion, competition, technology, housing and mortgage market conditions, capital allocation, dividends, strategic and operational plans, and business models. Forward-looking statements represent management's current estimates. RE/MAX 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 fourth quarter and full-year 2019 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 Adam Contos, our Chief Executive Officer; and Karri Callahan, our Chief Financial Officer. Ward Morrison, President of Motto Mortgage and Nick Bailey, RE/MAX Chief Customer Officer will join us for the Q&A. With that, I'd like to turn the call over to RE/MAX Holdings' CEO, Adam Contos. Adam?

Thank you, Andy, and thanks to everyone for joining our call today. We have many positive topics to discuss. So let's get right to it. Looking at Slide 3, recent RE/MAX recruiting initiatives and model marketing efforts generated positive results almost immediately, leading to a bounce back in our U.S. agent count and a record model franchise sales, two of our key leading indicators. The targeted investments we made early in the fourth quarter alongside the continued positive impact from the many strategic moves we've implemented in the past two years contributed to the quarters encouraging results. Combined with a relatively attractive housing markets in both the U.S. and Canada, we entered 2020 with momentum. Other highlights of the quarter included revenue of $68.2 million, adjusted EBITDA of $22.5 million, adjusted EPS of $0.47, total RE/MAX agent count increased over 5% exceeding 130,000 agents for the first time in our history, and the technology transformation at RE/MAX continued with the ongoing rollout of the powerful booj platform, as well as the exciting acquisition of another tech innovator, First. Let's start with the fourth quarter's headline, improved agent count results. Turning to Slide 4, Q4 of 2019 was the best fourth quarter of total agent net gain since we started tracking this metric on a quarterly basis in 2002. Our U.S. agent count grew by almost 600 agents quarter-over-quarter primarily in company-owned regions. Worldwide we added over 2600 agents quarter-over-quarter and over 6,600 agents year-over-year. The strong fourth quarter performance helped us finish 2019 with more than 130,000 agents in our global network an increase of 5.3% year-over-year. In fact, it also closed out the fifth consecutive decade of increasing agent count growth in the rich history of RE/MAX despite the industry changes, economic downturns, and competitive challenges experienced during that…

Thank you, Adam. Good morning everyone. Fourth quarter results were highlighted by the encouraging performance in our two key leading indicators, improving U.S. agent count and increasing Motto franchise sales. For the full-year 2019, we were pleased with our resilient revenue and margin performance despite the soft housing market that prevailed during the first part of the year. We also continue to invest strategically. As Adam mentioned, the RE/MAX technology transformation is well underway, and we're excited about the recent acquisition of First and its mobile app. Turning to Slide 9, revenue increased to $68.2 million during the fourth quarter due to the acquisition of the Marketing Funds on January 1st. The expansion of Motto and an improving housing market essentially offset lower revenue caused by declining booj legacy customers and reduced average U.S. agent count. Excluding the Marketing Funds, organic growth was virtually flat. Foreign currency movements also had a negligible impact. Continued attrition of booj and legacy customer base adversely affected revenue by about $600,000 in the fourth quarter. Excluding that booj impact, our organic growth increased 1.2% marking our first quarter of organic growth ex-legacy booj customers since Q4 of 2018. This is a welcome development and reflects the growth of Motto, improving agent count results, and the rebounding housing market trends which we expect to continue in 2020. Looking at Slide 10, selling, operating and administrative expenses were $35.2 million in the fourth quarter of 2019, an increase of $5.1 million or 17% compared to the fourth quarter of 2018 and represented 69.3% of revenue, ex the Marketing Funds compared to 59.1% in the prior-year period. SO&A expenses increased primarily due to higher equity-based compensation expense, the unfavorable timing of certain annual regional events, and increased legal expenses. Moving to Slide 11, we acquired First in…

Thanks, Karri. Moving to Slide 13, we concluded 2019 on a high note with a rebound in our U.S. agent count, historic quarterly model franchise sales, and a return to organic revenue growth, excluding booj. Our technology and other investments are yielding encouraging results as we look forward to building on our momentum in 2020. With that operator, let's open it up for questions.

[Operator Instructions]. Our first question comes from Stephen Sheldon from William Blair.

Hi, good morning. First year, you talked about a lot of factors that drove the improvement in U.S. agent count, which was certainly good to see. But just curious, your view of how impactful each of those factors were between the recruiting incentives, the booj rollout, and just broader outreach efforts. And then on the incentives, is that something that you may continue doing and how do you think about the ROI of those incentives?

Good morning, Stephen, it's Adam. First of all, we're really excited about all of these things kind of coming together. We've been working on a lot of different projects over the past call it a year or two, between when we acquired booj to the build out of that, and then a progressive launch of that as well as the acquisition of First, the recruiting incentives, bringing on our Chief Customer Officer, Nick Bailey. So as far as separately impactful, I think everything is stronger as a whole when it comes to all of this, because this is kind of the whole package of what agents are looking for in order to operate their business, moving it forward into the new decade here. So we're excited about that, because we are seeing -- we're seeing things hit the street, we're seeing results. And we're seeing sentiment which ultimately, we're in a business of -- of community and sentiment and the people that they get excited about running their business go out and run it better when they feel like they're confident in the tools and the processes that they have to do so. So ultimately, that's the foundation of what we've been building on and I'll turn it over to our Chief Customer Officer, Nick Bailey, and he can kind of talk a little bit more about the incentives and kind of the mechanics of some of those recruiting aspects.

Yes, thanks Adam. We were super thrilled at the launch of our recruiting system and it wasn't one lever that actually impacted, it was the combination of our direct engagement of creating a recruiting system that had many, many different levers. The best part of it is we have thousands of our brokers engaged in it and recruiting is a contact sport. And so when you put together education, a tech platform, communication, direct engagement from our leadership team, and incentives and you package that together, that was the secret sauce that created so much engagement, that we believe our recruiting results were a direct result of that packaging.

And then, Stephen, this is Karri. Just building on what Adam and Nick had said, you specifically asked about return on investments. We very much look at the lifetime value of our agents and what is the customer acquisition costs to recruit those and really drive top-line growth just given overall strength of our business model. So the incentive programs, they are things that we have done in the past as Nick said, they were part of a much broader initiative, focus really to drive top-line growth. And so we're looking to balance that across all capital allocation decisions.

Got it, okay. And then I guess the follow-up, it sounds like gross additions were better, was there any notable change or improvement in the agent retention side in the U.S. and Canada as well?

Retention remains pretty much flat; we're really focused on the recruiting side of the house, because historically as we entered into 2019, it was the top of the funnel, where we were really focusing our efforts because that's what we really needed to accelerate. So no real material changes to overall retention activity in the -- in the quarter.

I'll add one thing Karri to that. As we look at the continuation of this system that we implemented in Q4 and as it leads into 2020, we look at recruiting retention as both activity drivers here and retention is a key piece as we're moving into Q1, that is -- will become even a bigger part of this system that we launched.

Our next question is from Vikram Malhotra of Morgan Stanley.

Thanks for taking the question. Karri, if you can just outline the margin sort of -- just clarify the margin EBITDA and the margin impact because of the transactions and all the investments in 2020 and sort of when exactly that's supposed to return to be a benefit in 2021?

Yes, good morning, Vikram. It's a great question. So I think the resiliency and the strength of our model is definitely one of our most and strongest competitive advantages. And the leverage in the business, obviously continues to remain and we've really invested for that long-term top-line growth and we're really beginning to see the results show for that in terms of just outstanding Q4 agent count growth in the U.S. that bounced back, not to mention a record quarterly franchise sales performance for Motto. There's definitely some noise in the guidance for 2020 obviously, the impact of legacy booj customer base and increased litigation cost of about $4.5 million, that's a drag on earnings. And then also as we look at a couple of other factors that are impacting guidance for next year, those are really designed to continue to diversify revenue and position us well for earnings growth in the future. So the first is related to the First acquisition, so are expecting that to have a dilutive impact in 2020, about $0.04 to $0.06 to diluted adjusted EPS and about a $1.5 million to $2.5 million to adjusted EBITDA in 2020. And then the fee waivers that that Nick was talking about. I think the thing that's really exciting from our perspective though is that those -- those things that are kind of noisy for 2020 are going to have a more impactful -- impact to kind of Q1 and Q2 of 2020, kind of looking at flattish organic growth in those quarters. But then as we get into the back half of the year, there's definite path for ramping up that organic growth, as we look at a continued narrowing of the net investment in Motto as we look at opportunities to grow adoption of First, not only in terms of the price point but also in terms of increased productivity. And then also just the momentum that Nick was really talking about from a recruiting and a retention perspective around agent count. So there's a lot of opportunities to look -- to really drive the leverage in the business and take advantage of the strength of the business model because of the investments that we've made to drive that top-line growth.

Okay, great. And then just on the agent sort of recapture or now kind of flattish growth in the U.S. specifically after like a couple of years of decline. Just want to understand how all the technology the investments are making -- or could position you better to compete one against the legacy brick-and-mortar, the realities of the world, and two, the zillows of the world like what are you looking when the agents you are recruiting? What's the data telling you, conversations telling you, how are you competing?

Hey, good morning, Vikram, it's Adam. Great question. It was something to take note of here is realistically where does the business for an agent come from. And ultimately, the majority of the opportunity for business for an agent comes from the people that they've had contact with in the past. And this is one of the key aspects of our most recent acquisition and the launch that we're doing here next week of the First platform. What we know is agents want to go where they have the ability to build their business, and that's foundationally what RE/MAX is based upon is giving people a place where they can build their business as great as they wanted to be. And what we know on top of that is that agents potentially are missing up to 70% of the business in their contact list. So with the AI platform, the technology of First as well as rolling it into the foundational, very leading edge technology that booj platform is launching, we're giving agents a place that they can basically go after some of the business that they're looking at as opposed to going out and trying to buy the business out of the marketplace. So we want them to build their business organically. And we know that this works based upon the statistics that we've seen in reviewing how an agent builds their business. So ultimately, this is -- the past year has been a significant ramp-up to this of gaining the confidence, the direction, the focus of the agents in helping them focus on building their business and helping our brokers and the owners of the franchises get the agents focused on this through training and notification release things like that, of these product sets. So essentially that's why we're optimistic about the direction of recruiting agent growth, things like that, because ultimately we're here to help agents do more business and in helping agents do more business, we help our franchises grow. It's a cycle that builds upon itself. And we feel like we've put the appropriate pieces in place in order for that to be positive into the future.

Adam, I'll add do that. There's one thing that I would say when you ask about comparison say to us to competitors, there's a piece of it that we believe we stand in a category of our own because of the productivity of a RE/MAX agent, nearly two to one of the competition. And so when you ask in the industry about the quality of a RE/MAX agent, an agent at RE/MAX makes more money because they sell a lot more houses. And so the foundation of what Adam has referred to with the investment at First fully supports exactly what the foundation of this company is which is our agent sell more real estate and we're having -- we're putting tools in place to allow them to expand and grow that business and sell more real estate. And that is not the same motivation with some of our other competitors because we're not all things to all people we know where our niche is with top producers.

Okay. And just last question this is something that, I guess, we've been -- I've been trying to get more color on in terms of the -- there is a brand, there's a strength the agent base, they're higher producers, the whole mix obviously benefits both RE/MAX and agent. But in terms of just the organic power of the franchise fees and the annual dues, several years ago you talked about in Canada having automatic bumps for franchise use, but you never really instituted it in the U.S. You tried it, I think you increased it once a couple of years ago but I'm just kind of wondering, is this kind of a driver that in this environment we’re in just does not exist now, you cannot push dues in franchise fees anymore for agent?

Hey good morning, Vikram, it's Karri. So from a pricing perspective, we're always looking at evaluating the value that we deliver to our network and we're evaluating that from a pricing perspective. At this point we haven't announced any changes to pricing, but it's absolutely something that we're evaluating. We've talked a lot about the investments that we've made and it's something that we continue to evaluate.

Our next question is from Tom McJoynt of KBW.

Hey guys, thanks for taking my question. I want to go back to the recruiting campaign and just try to get a sense of if you guys see that as kind of a one-time thing or if that could become part of your regular campaign. And then when you think of the markets that you rolled out and was it just the really competitive MSAs or was it more broad-based across the country?

Hey Tommy, it’s Adam. I'll say a couple things and I'll pass it over to Nick because truly he's kind of the captain of the ship with this massive growth push and it's really exciting from our perspective. But ultimately, what we started here was get everybody together, get everybody pointed in the same direction and excited about this and start delivering some significant major value here in order to help people grow their businesses. So that's foundationally what we're talking about, agents want to be someplace that that really is encouraging for them to grow their business because when you walk into a business or have contact with a business, it's a big -- big difference in the consumers eyes to see somebody who's who they recognize as being a full-time professional with a big smile on their face and a positive optimism in order to help them accomplish their goals and overcome their challenges. So what we've done is get everybody together, we've aligned our strategies and tactics and then Nick is taking this and run with it and I'll pass it off to him to get a little deeper.

Without a doubt, this is a long-term permanent play for us that will make adjustments in investments in along the way. Q4 we did broadly to U.S. and Canada to all markets. So it was not just within specific MSAs because we have growth potential with our footprint in all of our markets. What we'll continue to do though is really frame our entire culture around recruiting. So here's a great example. We have our big Annual Conference next week and we have the highest attendance this coming year that we've had in a decade and it includes number of guests that are looking at our company to join us. And so that is one component of how we look at this entire system of a number of 10 to 12 different levers we can pull and use quarter-over-quarter to make adjustments throughout the year to keep this program fresh and enhanced on top of mind. But it will be the foundation of how we think about all of our engagement tools and services for our brokers.

Got it, thanks. And then switching over, I appreciate the Motto slide in the deck on kind of breaking out the revenue and earnings from that. When you guys think about the growth trajectory, obviously it's moving towards break-even. I guess how do you think about the incremental margin on that business relative to traditional RE/MAX franchises?

Yes, good morning, Tommy, it's Karri. So yes the page that you're referring to is in the Appendix of the deck, it's on page 21. And we wanted to provide a little bit more transparency into Motto because it is a great growth driver and a great diversification of revenue for us. As we look at the top-line, I mean it's grown the top-line almost 80% this year, and I think importantly, the net investment continues to narrow on that. And so looking, continue to feel that in kind of the back half of next year, is when we would look at that business unit moving towards break-even. And then over the long-term, the inherent leverage in the Motto business model is exactly the same, if not better than it is on the RE/MAX side. So from a long-term growth potential, the margin upside there is significant.

Our next question is from John Campbell from Stephens.

Hey, guys, good morning. Great work on the agent growth rebound and congrats on the consumer app launch and the website rehaul. On the First acquisition that seems like a nice strategic play for you guys. I'm curious about the revenue synergy opportunities kind of over the long haul. It sounds like, Karri; I think you said you guys are subsidizing the cost agents. I think you said $49 a month. So first how much of a discount is that to the prior market rate? And then secondly any sense for how many agents are used First as your base?

Yes, so great question, John. I think the thing about First that we're really excited about is it is a way that we can look to diversify our revenue and at the same time providing exclusive value to our network of highly productive agents in terms of really enabling them to increase their productivity. The discount is about a 50% discount 5-0 compared to the list price. And then there's kind of been hundreds of agents that have been on the platform, I think most notably though we have very much been engaging our network. So not only the booj process that we're very with Adam, and Nick's leadership, very engaged with the network trying to understand what are the tools in the market that are impactful. And we have heard, very, very positive results of some of the RE/MAX users who are already on the First platform. And so it's something that we're extremely excited about from a strategic perspective, from a revenue diversification perspective, but also from a talent perspective, just as we look at really building the bench strength of technologists within the organization.

Okay. And then as a follow-up to that, I think there was a question asked earlier about the agent fees, is there ever a potential where you garnered enough adoption where you can just basically give it out "for free" and then basically use that as a basis to raise agent fees?

Those are all things from a fee perspective that we're constantly evaluating and we look to balance, so it's part of the comprehensive view that we take in terms of evaluating the value proposition and then what the associated costs and investments are from our agents and from our network to be able to put them in a position to grow their business in the most efficient manner.

Okay. And then one little quick tack on here, on the consumer app and the rehaul Remax.com. What are the kind of internal KPIs you guys look at that kind of gauge success for you guys?

I mean, right now, we're definitely focused on looking at adoption. But right now we've had a lot of people who have accessed the system. But it's really -- it's really new. And so we've got internal metrics on that, we will continue to monitor those. And as it's been up and running and operational for a longer period of time, we'll continue to evaluate disclosing stuff externally.

Our next question is from Ryan McKeveny of Zelman & Associates.

Hey, thanks so much guys. Good morning. So big picture question on the comment around just alignment of interests and some of the strategies between you guys at corporate and the franchise owners and maybe this is for Nick. But I think on one hand people can on the surface look at the new recruiting efforts and say, okay, well that's just kind of competing on the economics. And end of the day, surely there's a lot more going under the hood on competing on the true value proposition, both to the franchise owners and the agent. So Nick, I'm curious just from your perspective on this, how should we be thinking about that that balance between kind of the economic side of things versus the value prop side of things? And then in your field work in your discussions with franchise owners, maybe just walk us through, I mean what are the biggest pain points of the franchise owner base today? I know it's not necessarily just specific to you guys, but kind of industry dynamics, what keeps them up at naïve? What are they most focused on? And how can you leverage that to provide better value, better solutions, better partnership, et cetera?

Great, great question and we love this one. Because what we have found and this is something that has been for a number of years in the industry that when you ask agents why they joined, why they leave, why they move, price is never at the top of the list. It is driven by culture and productivity. Bottom line is if you don't sell houses, it doesn't matter what the economics are. And so what we try to look at is what are those things that are important to an agent to consider in making that move to increase the productivity. And when we talk about your question specifically around incentives, we also look at what are the barriers for an agent specifically to change affiliation. And if we can directly go back and help the broker and the agent solve those barriers to changing affiliation that becomes a win over purely the economics in price. It is more about culture and value and productivity. When we look at brokers and what keeps them up at night, we know this that we have brokers across our system that are new, we have some that have hundreds of agents in multiple locations and so those items will vary based on our affiliates. Our field team then focuses very specifically within how we categorize our ownership within four different categories of what the needs are and we then turn back and deliver in a service model based on where they fit in each one of those categories. So easier said is it's not all things to the same audience. We cater those services to make sure that we're focusing and helping them -- helping them grow. As far as what keeps them up at night, I don't know if I could answer that for every single one of our brokers. But we go back to foundationally they want to grow their business, they want their agents to be more productive, and move into making sure that they have a profitable company. And so we design all of this around supporting those three pillars and the investments we talked about with technology and education and training, all support those efforts.

That's very helpful. Thank you. And one on the international side of things. So obviously, we've all seen the very, very strong agent count growth. Can you just update us on kind of the longer-term broader thesis for the international markets? Is there incremental monetization opportunity, just the kind of technology investments you're making in the U.S. presents longer-term opportunity there? Maybe just give us the big picture because obviously the growth is very compelling. But I think we're all kind of wondering if someday that translates to much more meaningfully monetizing that side of things?

Hey, good morning. It's Adam. The answer is yes. I mean it's, we're laying the foundation in the United States and spreading through North America and globally I see attention with these different pieces of the value puzzle in the real estate sales place as well as in the mortgage space as well. So we are looking at long-term we're excited about the opportunity and that's why when you see these different additions to RE/MAX Holdings, you'll notice that a great deal of it is our pursuit of talent, so that we can continue to build upon the value not just in the U.S. but also globally with giving other people the opportunity to utilize these tools and services that are really forward-looking and cutting edge in our space.

Adam, I'll add one thing to that specific on the technology and global, yes, we're looking at that as how we can launch in Canada specifically is the next step, and then how we can then support global within that roadmap. And so we are looking at this as global solutions for sure within our entire network, and it's a matter how we prioritize and time them.

Our next question is from Anthony Paolone of JPMorgan.

Thank you. All right. My first question relates to First, can you tell us how many subs you need in 2021 for you all to consider the product a success and also the $600 a year like are there any other apps or things that agents are currently using that you think, they stop using to spend money on this or other competing things that this replaces?

The first part of your question, Tony, its Karri. We're launching First here on Monday at our Annual Agent Convention that Nick was talking about, we're really excited about it. And we do believe that it will be accretive in 2021. As we go through the year and we get through the launch, we will have more visibility into providing additional metrics from that perspective. And then in terms of additional features and functionality, whether that's First or other things. I mean we think that this is a really compelling opportunity because it's really driving the heart of regeneration for our agents which is repeat and referral business. And we think that it will really position our already highly productive network to be even more productive. The return on investment for our agents to be spending roughly $49 a month is much higher based on how we've looked at it compared to other products that might be in the marketplace.

Yes, Karri, I will add one thing. When you look at the question you asked about what maybe will they not spend on. I think that there is within the industry agents are losing patients on "just buying leads" in general. And to Karri’s point, we know top producers that the repeat referral business is where the vast majority of their income comes from, and that's why we're solving for that. If you look at according to realtor.com, the number of leads in the U.S. in 2011 were around $4.5 million, seven years later, it's 90 million, but the number of home sales has not changed in that same respective fashion. And so there are more leads flying around our industry that can be purchased. But yet agents are now questioning what is that return versus solving for the fact that they generally in many cases have the leads that they need, it's just how do they best engage with them within their own sphere and then turn them into business. And that's where we're getting very focused because it has the greatest potential of lift.

Okay. And then just my follow-up question is your EBITDA, obviously includes things spend on technology and so forth. But can you talk about just below the line for CapEx spending in 2020 and the potential for other acquisitions as it sounds like you're still going to be focused on that as well?

Sure. So from a capital allocation perspective specific to CapEx, so to CapEx from a technology perspective in 2020, will look pretty similar to what it has looked like in 2019, to call it, kind of $11 million to $13 million. We are going to have a little bit of an increase in CapEx in 2020, as we mentioned on the scripted remarks, because of some refresh that we're doing to our corporate headquarters, really with the long-term guys of looking to really optimize our cost structure and focus on profit improvements in kind of 2021 and 2022. So that it's -- so CapEx will go up a little bit because of that. And then in terms of more broadly capital allocation decisions, I mean we continue to be disciplined from a capital allocation perspective. And those priorities remain unchanged. However obviously with Nick and Ward in place now, there's a lot of ideas in terms of how do we accelerate growth, what are the different growth opportunities and we continue to evaluate different acquisition opportunities that will drive the most value while at the same time having that commitment to returning capital.

Our next question comes from Chris Gamaitoni from Compass Point.

On the First acquisition, I was hoping to better understand moving to accretion in 2021. Is that assumption on a unit level pricing that you make money on the actual units? Or is there an underlying assumption of it accelerating kind of agent recruitment and sales per agent were all in that's -- that's accretive. I'm just trying to understand what’s implied by that statement?

Yes, so I mean a lot of it is driven by the monthly subscription. But yes, there are other factors especially with regards to productivity. So from a historical perspective, we believe that there are opportunities for productivity increases and then from a recruiting and retention perspective, a little bit of an impact from that as well.

Okay. And then maybe could you help us understand how you view your customer acquisition costs, maybe multiple on forgiving on the incentives, the greater investment in tech from an outside there's a lot of investment spending to get agents and just understanding how you view kind of those multiples of agent gathering over the life of an agent?

Hi, good morning, it's Adam. This is really kind of a holistic approach to creating a directional shift in the marketplace of hey agents; this is the place where you can find the greatest value to build the business the best for yourself. So you do have to stimulate some movement and in doing so make some investment in the marketplace in order to get attention and demonstrate that value as well as to as you've seen, make the appropriate acquisitions to build upon that value and actually see a good return for those agents. So it's a holistic approach. We feel that making the sentiment changes, as well as the mechanical changes to help the agents business is proving itself. When you look at just the number of attendees at our convention next week, we didn't expect that. I mean we're super excited about it, but the excitement is building begets other excitement in our industry and people start to look at our agents to go okay, why are you doing more business? Well, we have these different opportunities between booj and First and the new marketing campaigns and the growth within our brokerages, so it all kind of plays together. Ultimately our goal is to deliver greater value to our agents. And as we -- we're doing that. I can assure you that based upon the recent launches that we've been involved in over the past call it six to 12 months and other people are starting to take notice of that and it creates a movement. So I'll throw it to Nick, if you have anything else to add.

No, I don't think I do. I agree with you, Adam.

We got it.

Our next question is from Vikram Malhotra of Morgan Stanley.

Thanks for indulging me, just wanted to clarify two things. Can you give us what the embedded or clarify what the embedded agent growth guidance is for the U.S. specifically in 2020?

Yes. So we do expect the U.S. agent count growth kind of in the hundreds of agents. We think that there was solid momentum and that bounce back for Q4. And obviously we are positioned well for growth. The magnitude of that will obviously continue to monitor as we get through the year.

Okay, so positive increase. And then just bigger picture any update on the Merrill or sort of the DOJ investigation that was into -- or on request for data from another company I'm forgetting the name, but any update on the legal issues?

We can't comment on any of the industry specific litigation. I mean, obviously, the one thing I would say is just given the strength of the business model, the productivity of the agents and the diversification of our revenue, we think we're well-positioned regardless of what happens.

And we have no further questions at this time.

Thank you, operator, and thanks to everyone for joining call today. That concludes the call. Have a great weekend.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.