Good morning, and welcome to the RE/MAX Holdings First Quarter 2022 Earnings Conference Call and Webcast. My name is Chris, 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, Senior Vice President of Investor Relations. Mr. Schulz?

Thank you, operator. Good morning, everyone, and welcome to RE/MAX Holdings first quarter 2022 earnings conference call. Please visit the Investor Relations section of www.remaxholdings.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 the 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 outlook, brand expansion, competition, technology, housing and mortgage market conditions, capital allocation, dividends, share repurchases, 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 first quarter 2022 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 Steve Joyce, our Chief Executive Officer; Karri Callahan, our Chief Financial Officer; and the Presidents and CEOs of our brands, Ward Morrison and Nick Bailey. With that, I’d like to turn the call over to RE/MAX Holdings CEO, Steve Joyce. Steve?

Thank you, Andy, and thanks to everyone for joining our call today. Looking at Slide 3, we had a nice start to the year. Our solid Q1 performance was driven by strong ongoing contributions from our acquisition of RE/MAX INTEGRA’s North America regions, as well as continued healthy organic growth. Some of our notable quarterly metrics include overall RE/MAX Holdings revenue was $91 million, up 26% driven by our July acquisition of INTEGRA, which comprised 15% of the growth as well as organic revenue growth. Excluding the marketing funds, we had over 10% organic growth aided by increased attendance at our annual RE/MAX convention. We generated adjusted EBITDA of $27.9 million, up 20.5%. And our adjusted EBITDA margin was a robust 30.7%. Adjusted EPS increased 11% to $0.51. Overall RE/MAX agent count grew by more than 2,000 agents to over 142,000 agents in total, a new record and model franchise sales accelerate with the number of open model offices growing by over 27%. Before Ward and Nick provide additional details on their respective business lines, I’d like to spend a moment discussing our strategic operational plans. On our last call, I mentioned one of my two focus areas as CEO is to work with the Board and management team to implement a limited number of initiatives designed to increase our near and long-term growth. During the past quarter, we have made good progress evaluating the opportunities we believe will yield the best results. And we are confident about our ability to shape our growth trajectory. Although, we’re not yet ready to divulge specific details, you can expect to hear more from us soon about these initiatives that are related investments as well as the anticipated results. The ideas under consideration are closely aligned with our current strategy. We believe in the path we’re all. We have two terrific industry-leading franchise brands each with our own compelling growth opportunities. We think we can make a measurable difference through smart strategic movies, essentially accelerating our growth through institutional focus, accountability, and the proper allocation resources. Our focus remains on increasing RE/MAX U.S. agent count and continue to fuel the growth of our expanding mortgage business. Our mortgage business has significant upside. As we said previously, we think its a $100 million annual revenue opportunity with margin and cash flow potential that rivals our RE/MAX business. We believe Motto and Wemlo are each capable of generating $50 million or more in annual revenue. With respect to Motto, we’ve sold over 300 franchises to date and have nearly 200 open Motto offices. We believe we can eventually grow that number to more than 1,000 franchises. Motto’s unique value proposition is fantastic. And we would like to get to a 1,000 open offices much sooner than our current growth trajectory forecast. We think we are up to the challenge. With that, I’ll turn it over to Ward.

Thanks, Steve. Looking at Slide 4, our mortgage business is off to a great start this year as both Motto and Wemlo experienced accelerated growth in this first quarter. We sold 17 Motto franchises in Q1 and March was our best non-December month ever for franchise sales. On a trailing 12-month basis, Q1 sales reaccelerated to over 70 franchises sold. For the full year 2022, we still anticipate selling between 60 and 80 franchises and are trending towards the top half of that range. Encouragingly, franchise sales remain solid into April and we continue to see strong demand across many customer types. We think our franchise sales success is driven by a combination of reasons, including positive word of mouth, increasing market presence and fine tuning our sales and marketing incentives as well as our sales structure to name just a few. Combine that with our counter cyclical aspect of our business model, the increasing importance of ancillary business and our unique position in the purchase market and we are peaking the interest of many real estate professionals. In short, the secret is getting out. Motto is an incredible opportunity for many real estate entrepreneurs. A big part of Motto’s appeal is that many of its franchisees and loan originators or LO’s were closely with productive real estate agents who have an ongoing purchase transaction pipeline. As a result, Motto has a higher percentage of purchase volume than the industry average, which is increasingly important during a rising interest rate environment. For example, during Q1, the purchase versus refi split across the Motto network was almost 80/20. That’s up from approximately 65/35 in fiscal 2021. And in contrast to the roughly 40/60 split, the mortgage industry did as a whole last year. Given our heavily focused on the purchase market,…

Thanks, Ward. Good morning, everyone. Moving to Slide 5, the busy spring housing market got up to another strong start according to the most recent RE/MAX National Housing Report. Many of the themes which have defined the housing market for the past several months remained front and center in March, high demands, strong sales figures, rising prices and tight inventory. March home sales jumped 32.2% over February, while posting a report record median sales price of $360,000. As buyers continued to far outnumber sellers, month supply of inventory reached a record low of one month across the reports 51 metro areas, more than half of the surveyed markets reported a supply of less than one month. Overall, the housing market remains very active right now, especially, on the demand heavy buy side. Buyers are rushing to beat anticipated mortgage rate hikes as well as buyers ready to roll as soon as the right listing appears. Those factors, which drive a solid start of the season. Days on market remains the biggest concern for hopeful buyers. But with sellers watching homes get snapped up in record time, the idea of cashing and on their equity gain continues to have great appeal. As we move deeper into the spring selling season, we expect to see more houses come on the market. Buyers should have even more choice and purchasing power as additional sellers choose to join the action. One other important dynamic is that in many parts of the country, rental rates are increasing faster than mortgage rates, which could push even more people toward buying a home. The higher rates should also partly cool the historically high price gains we’ve seen. That along with an expected increase in new for sale homes coming to the market should help move the housing…

Thank, Nick. Good morning, everyone. Moving to Slide 8. First quarter revenue grew 26% to $91 million. Excluding the marketing funds revenue was just over $68 million also an increase of 26%. Increase was comprised of slightly over 15% acquisitive growth and 10.5% organic growth. FX impact this quarter were negligible. All acquisitive growth came from last July’s acquisition of RE/MAX Integra’s North American operations, which continues to perform well. About half of our double digit organic growth was due to increased dependents at our annual agent convention, which we call R4. Last year’s convention results were muted due to COVID. Nevertheless, excluding R4, we generated mid-single-digit organic revenue growth, acts the marketing funds for the fourth quarter in a row. Outside of our – as mentioned, many drivers contributed to our top line performance during Q1, including rising home prices, more targeted use of agent recruiting incentive, pricing and motto expansion to name the most notable ones. If you exclude the booj’s legacy runoff, our organic growth improved by another 50 basis points. Looking at Slide 9, our Q1 SO&A expenses increased 9.5% to $47.8 million. First quarter 2022, selling, operating and administrative expenses increased primarily due to higher travel and events expenses, largely from our annual agent conventions, higher personnel costs from headcount increases, an increase in acquisition related expenses and the reinstatement of the 401(k) match to pre-pandemic levels, partially offset by lower equity based compensation expense. Recall that during last year’s first quarter, we incurred $5.5 million of stock based compensation expense due to the one-time acceleration of certain equity awards. Before I get to our outlook, there are two items I want to briefly mention. First, a quick update on our share repurchase program, which we announced in January. For compliance reasons, we did not…

Thanks, Karri. Looking at Slide 11, in summary, we are prioritizing our capital to invest in our best growth opportunities and those efforts will be focused on increasing our U.S. agent count and accelerating the growth of our expanding mortgage business. We believe we are well positioned to grow even in a shifting market, and we look forward to sharing more in the near future. With that operator, let’s open it up for questions.

[Operator Instructions] Our first question today is from Rich Hill with Morgan Stanley. Your line is open.

Hey, good morning guys. Thanks for taking the question. I did want to focus on the Motto Mortgage business given that you led with it. I think it’s sort of an interesting strategy diversifying your business away from the traditional brokerage and moving into mortgages. But I also note that some of the maybe mortgage broker peers, I’ve been under a little bit of pressure, reducing head count. So maybe you can just walk us through, why you think you’re in a competitive advantage to take share from maybe some of the traditional mortgage finance companies.

Go ahead, Steve.

I was just going to say, we’re in, I think, a somewhat unique position given the rest of our business that puts us at a competitive advantage in the market that’s evolving. Ward, do you want to give the detail?

Sure. I think one of our biggest advantages is that we’re tied to purchase transactions with a large majority of our Motto franchisees. 70% of our sales are to real estate companies or real estate teams who have the purchase transaction. We call them sort of diamonds in their backyard. And because of that, we – I don’t believe we’ll see as much of a downturn as traditional brokers who have been concentrating more on refinances. Ours is really purchased driven even in the first quarter. We were 80% purchased, 20% refis. And last year, we were 65-35 when the industry was 40-60. So we are always ahead on purchase, because of the sales that we do to those real estate companies, real estate teams. So I think that’s a positive for Motto move forward.

Got it. That’s very helpful. Thank you. Two more questions from me. I did note that the agent count looks like it’s supposed to accelerate over the remainder of the year versus 1Q. Maybe talk through if you could break us down between U.S. agent count, Canada, international, it looks like Canada’s doing really well. So where is that acceleration coming from? And as you think about that I do note that there was some commentary about other strategies to turnaround U.S. agent count. So maybe put that all together and help us unpack that a little bit.

Yes. So we’re in, I think, a good position. Clearly, the Integra acquisition is creating a lot of momentum in Canada and that we expect that to continue. On the U.S. side, we’re looking at several different approaches to increase that count as well. Nick, you want to give more detail?

Sure. As I mentioned in the scripted remarks, we’re looking at the – a couple of initiatives, one of them conversions of independent companies. There is a lot of demand out there currently for independent looking for scale tools systems to be more competitive in the market. And so that pipeline has increased. We’ve already seen some successes thus far. So I believe that that’s going to be a continued trend that helps drive that count. The other thing we announced recently at our R4 conference is a focus on expanding teams. And that has been a component of the industry. We have continued or we have led a number of teams and team initiatives within the industry. But we’re double downing on that. Additionally, we have not closed out the end of the month, so we didn’t publish April. But we can say that in terms of the momentum, it looks really good. And even looking so far this month, we are up over 100. And so we’re going to drive that and continue to ride that momentum and push those couple of initiatives moving forward.

Okay. Thank you. And just maybe one more question from me. The stock has been under pressure. Obviously, the broader market’s been under pressure. Your prepared remarks paint a very optimistic outlook for the company. Can you maybe just talk through the share buyback program and why not target the stock at this point?

Yes. So I don’t want carry to give a little more detail. So we are obviously market now buying stock, because we believe it’s a great investment on our part. And so you’re going to see us apply our capital basically in three areas. One to grow agents primarily into the U.S., one to dramatically expand Motto, and the last will be stock repurchase. And we think that’s the best use of our capital. Karri, you want to talk a little bit about the program?

Sure. So when we look at just return of capital in general, from a capital allocation perspective, it’s been a consistent capital allocation priority for many years. Obviously, the dividend continues to help support the stock from evaluation perspective, but introducing the buyback has been helpful as well. And when we look at overall return of capital, we really benchmark that as a percentage of free cash flow and really looking to differentiate ourselves as a franchise in the space. So kind of looking at that 35% to 45%, they’re being a little bit more aggressive within that range right now. Because as Steve said, we do believe that buying back our shares right now is an excellent allocation of capital given the current valuation.

Thank you guys. That’s it for me.

Our next question is from Anthony Paolone with JP Morgan. Your line is open.

Yes. Thank you, and good morning. First question, it relates to the strategic initiatives that seem to be forthcoming. Can you give a sense as to whether this is all stuff that you want to build and organically invest in. Or are there acquisitions that you see teed up here that could add immediately to either revenue or profits?

Yes. The primary focus is going to be organic. And we believe that we’ve got the opportunity and are well positioned to do that on both the U.S. agent count side and the Motto side. However, we are also a company that has shown that we are – we can be acquisitive and be successful at it. The Integra was just a great acquisition for us and was everything is turned out to be better than we had even hoped. And so we will be looking at inorganic opportunities within those priorities.

Okay. Got it. And then just with regards to U.S. agent count and if I look at the NAR membership in the last year or so, it’s up mid-high single digits, it seems. And you guys have been pretty flattish. Like, what is the greatest competition? Is it a concept? Is it a group of specific competitors? I mean, what do you think is driving this?

Well, I’m going to – I’ll start and then I’ll ask Nick to give the real detail. So a lot of folks moved into the market as agents, because it’s an attractive market. Usually, those folks don’t stay and we tend to focus on highly professional agents. Our agents sell twice as much real estate as the average broker. And that’s where we’re going to continue to focus, but there’s also some nuances to the market that, Nick, you can give more detail to, I’m Sure.

Sure. Yes. I think history is proving itself once again that in a strong real estate market, we do see license count increase. But to Steve’s point, every license is not right for us. When we focus on productivity, and in fact, even what we’re seeing right now is a great opportunity. We’ve seen this historically as well that when there’s pressure on agents with changes in the market, we become a great solution for agents that have maybe been successful or semi-successful, but want to continue even with the changing market. And so we really focus on the productivity and those that want to be productive or more productive. And that’s a sweet spot for us moving into where we see some of the shifts in the market this year.

Yes. And I think also, if you look at where the growth is occurring, a lot of its occurring in teams, which is why you’re seeing a new energized focus for us on team.

Okay. All right. And last one, I guess, then for Karri, can you maybe put any brackets or help us with expenses rolling into 2Q and maybe how to think about it for the rest of the year as well, if there’s anything specific there, especially continuing commented about some of these initiatives to build things add some Motto franchise sales folks and stuff like that.

Sure. So as you look at the Q1 – so as you look at the Q1 expense structure, one of the things to keep in mind is we did have a very successful annual agent conference again this year in about 7,000 attendees from across 45 countries. And so that has increased the expense structure as you look at the kind of SO&A run rate skew for the rest of the year. So as you look at Q2 and then the rest of the year, expecting that to be down in kind of $4 million to $5 million range in terms of total expenses going forward for the rest of the year.

Okay. And is non-cash comp in the 5s, I think in prior quarters you’ve talked about maybe something could be in the 7s, but just wondering what that might look like.

Sure. So specific to the equity based compensation expense, it was a little bit lower this quarter just due to the transition associated with the CEO role, expecting it to be up kind of in the $6 million range in Q2, Q3 and Q4 this year.

Okay. Got it. Thank you.

The next question is from Ryan McKeveny with Zelman & Associates. Your line is open.

Hey, good morning, and thank you. So to also hit on the kind of strategic initiatives, I’m curious, is there any – anything we should be thinking about from a macro perspective converting independence, focusing on teams and seemingly more to come don’t really seem dependent on the market. But just curious if we do enter a period of slower housing market growth, is there any contemplation on how that would or would not kind of alter strategic plans in terms of how you’re kind of looking to reignite the U.S. business?

Yes. We don’t see anything [indiscernible] that we don’t expect that would slow down our plans in terms of where we think we should prioritize. And I think the thing to keep in mind, our model is not bulletproof, but it’s as bulletproof as you can get. Our compensation from our franchisees is only roughly 20% variable. So we don’t vary that much in the scheme of things, if the market slows somewhat, which we’re not seeing yet. And if interest rates go places where it does begin to affect the market, we’re not immune, but we are much more protected from the standpoint of this. RE/MAX is a cash flow machine. It will cash flow in great markets and in good markets. And so our expectation is we’re going to continue operating sort of in this fashion. We’re not looking at changing any forecasts at this point. And while we’re reading a lot about the markets, where they may go. Right now, we’re looking at what we think is still going to be a pretty good year. And we’re in a position, because of our model to last out significantly better than some of the other competitors.

That’s helpful. Thanks, Steve. And Karri one modeling one, just to follow-up on the operating expenses in particular, the personnel costs. So I guess, I noticed in the press release, it mentioned higher personnel costs from headcount increases. But within the slides, it looks like the kind of total personnel expense was down sequentially in year-over-year. So is that Delta just related to that slightly lower stock comp that you mentioned in the quarter. And I know it’s volatile on a quarterly basis with the personnel expenses at least over the last year. It has been – so I guess, any swings within that, that we should be thinking about going forward or should we think that we’re at a pretty decent run rate?

Yes, Ryan, great question. So when you look at the year-over-year variance, one thing to keep in mind is in Q1 of 2021, we did have a one-time $5.5 million dollar equity compensation charge associated with some one-time vesting of some equity that we issued in conjunction with an acquisition and then the recipients left. And so Q1 2021 was overstated kind of if you will on a run rate basis, because of that one time event. So when you look at Q1 2022 from a personnel perspective, that’s probably a more normalized run rate and is in kind of included in that total SO&A run rate for the rest of the year that I was talking about earlier.

Perfect. Okay. Thanks, Karri.

The next question is from Tommy McJoynt with KBW. Your line is open.

Hey, good morning guys. Thanks for taking my questions here. So it looks like the Motto open count actually declined from January to March 31. Are you running into any issues that is causing an increase in the backlog of sold, but not open Motto franchises? And are there any steps you can take to kind speed up the conversion that they start generating revenue a bit quicker?

Sure. Yes. The biggest thing with us is, it tends to be lumpy because we basically sell franchises. Our people have to fill out an application, apply with the state. We are beholden to the states. So sometimes we are slowdown by the states, but right now we have about 60 in licensing of some form or another. I know we have currently like 15 that are already licensed, but not yet open. So we’re pushing them to get open. So it’s a combination of we have a onboarding team that their job is to try and get these people open as quickly as possible. But we are beholden sometimes not only to our franchisee, maybe not doing their homework, but the state not doing theirs. And so I think you’re going to see us progress and do it in chunks this year as we get people through that licensing process. So I still think we can hit a good number this year of opens. It’s just going to be in a very inconsistent fashion.

Thanks. And Karri, can you talk about what the latest expectation is for the mortgage segment specifically to reach breakeven? Is there a certain amount of kind of revenues that would get to that point? And what’s the kind of segment the timeline for that?

Yes. So – give the detail, but the real answer, we want to significantly increase the growth of Motto. And we are less concerned about breakeven, but the answer is it’s – they can both be achieved in the near to mid-term. Karri?

Sure. Thanks. Steve, agreed. As Ward said in the scripted remarks, and as we talked about earlier, we think that we’re building momentum on the Motto side more than 70 franchises sold on a trailing 12-month basis and because of the counter cyclical nature and the proximity that the purchase transaction the Ward was talking about. We think that now is the optimal time to continue to invest in it, to really accelerate that growth. And if that means that we push out profitability, maybe to by a quarter or something by investing in some additional resources to drive those franchise sales opportunities. And then as Ward said get those offices open faster so that we can get people contributing, we think that that’s a great use of capital.

Thanks. And you said that kind of over the long-term both Motto and Wemlo can get to a $50 million annualized run rate. Can you talk about the difference in margin and return profiles of those two businesses?

I think, from the Motto side, organically, we’re going to continue to sell the four different types of customers, whether it’s LO’s, RE/MAX’s, real estate companies, independent teams, things like that. So from organic standpoint, we believe we have legs for there to grow that. And obviously, we do have some level of pricing power within that as well. So we can increase our royalty fees to our people at different times as we see that the value is there. On the Wemlo side, we think the sky’s the limit, we think still finding quality economic loan processing services is very difficult and the broker channel and the broker channel continues to take share because we tend to be more cost effective than some of the other channels. So we believe that our adoption within the Motto network is getting stronger and we believe as we grow Wemlo we can scale that as well on a per unit basis. So there we get a per transaction fee and we believe that’ll scale up as well. And that so the combination of those two things that adds up to that $50 million potential opportunity.

Okay. Thanks, guys.

Our next question is from John Campbell with Stephens. Your line is open.

Hey guys, good morning.

Good morning.

Good morning.

Hey, on the agent growth, I mean that’s always been kind of the core driver of the revenue model for you guys of late, the last couple quarters, I feel like you’ve grown organically at a really good rate, despite a little bit slower agent growth. So I’m hoping first, if you can just maybe unpack or maybe just talk about some of the key areas or strength that you guys saw outside of the core. And then also maybe how you’re feeling about organic growth trends from here.

Nick, why don’t you take that?

Yes. So when we look at growth across all the geographies, we’ve had a strength Canada has been just a great leader for us over this last year, driven a lot by INTEGRA, but the Canada market as a whole. And we look at seeing that as a continued strength this year. Also I think the areas of focus that we put in place at the end of last year moving into this year to focus on the U.S., we’re starting to see that momentum. And we’re doubling down on that to continue to drive that for the rest of the year to really focus on that U.S. agent count primarily is the number one priority. But Canada and still globally, we continue to see some good progress there. We’ve opened some new countries recently, which will add to that growth in 2022 and 2023. So lots of positives across all the geos that we have right now.

Yes. And I agree with everything Nick said especially from an operational perspective. John, you’re right with respect to kind of U.S. agent count trends. As Nick mentioned, the strength in Canada is really helping to offset that. Canadian agents are still contributing kind of $0.75 to $0.80 on the dollar in terms of what we get from a U.S. agent as it relates to top line contribution. And then also the global is starting to have a little bit of an impact as well. And then as we look at overall top line organic pro – revenue growth performance, we really have diversified the company. So we’re getting stronger contributions from Motto, not only in terms of the number of open offices, but the fixed monthly fee is increasing just because we’ve got more cohorts that have been with us for a longer period of time. Wemlo is starting to contribute, Gadberry starting to contribute. We’re realizing the benefits from price increases. And then obviously the strength of the housing market from a pricing perspective on the variable side of the business is helpful as well. And so as we look ahead going forward, we’ve said pretty consistently that we would be kind of a mid-single digit organic revenue growth company kind of 3%, 4%, 5% assuming the housing market hangs in there and that the macro stays strong doesn’t have to be on fire like it wasn’t 2021, but assuming that there’s not anything catastrophic. And we still think that that is achievable just given the different levers we can pull in the diversification we’ve been able to achieve.

Okay. That’s helpful. And then sticking on diversification, Karri, I don’t know if you have this on hand, but if you look at the all the revenue outside of the RE/MAX franchise or just the core revenue, what percent of revenue is that today and how much of that mixed do you think that could be over time?

Yes. I don’t – we don’t disclose that in total with the exception of kind of looking at what it is from the mortgage business just in terms of what that looks like. So for the mortgage business in general, and that’s what we kind of breakout quarter – this quarter was about $3 million. There’s obviously other opportunities as we think about just the product monetization and things. So we haven’t gotten to a point that we’ve disclosed those yet publicly.

Okay. That’s helpful. Thank you, guys.

Our next question is from Jason Stewart with JonesTrading. Your line is open.

Hey, thanks. Quick follow-up on Motto. It sounds like we should be thinking about the breakeven crossover in 2023, rather than the second half fourth quarter of this year. I just want to be clear in the takeaway, is that due to the conversion rate or lower gross demand or fallout. I just want to make sure I’m clear on the takeaway there.

No, it’s because we’re looking at investing more because we’ve had so much success. And so we want to get to breakeven as Karri said, it may shift a quarter or two. But it’s all about investment in what is incredibly successful new franchise for us. And so we’ve reached stability with a number of units we’ve got open. We have great word of mouth from everybody that’s involved. There’s upside because of the way the market’s shifting. A lot of LO’s are going to be looking for work. We can help shift those into our units because we’ve got more as Ward mentioned on the buy side. And so it’s just a really attractive alternative for us. So our – it’s not because of anything, it’s because it’s doing so well that we want to invest more.

Okay. Got it. And then in terms of independent region acquisitions, I’m trying to think about the right cadence, just taking a step back. I mean it’s been about a year since INTEGRA. Should we be thinking about chunkier acquisitions with more time in between or should we be thinking about these where we’re going to see a little bit more activities on a smaller scale?

I guess it everybody’s definition of chunky. We are going to look at – we will look at primarily growing organically as I mentioned. On the inorganic side, we’re not – we don’t believe we’re in the position that we need to swing for the fence. And so the likelihood is you’ll see acquisitions that are more tuck in for us. We like the acquisition of independent franchises obviously work really well with INTEGRA. That would be something you can expect us to continue to try to do. But then on the other side, looking at opportunities that are adjacent, particularly in the mortgage segment, we’ll look at whether or not there’s inorganic transactions that make sense for us, but I would view them more as sort of tuck-in type acquisitions versus swing for the fence.

Okay, great. Thanks for taking the questions.

[Operator Instructions] Our next question is from Justin Ages with Berenberg Capital Markets. Your line is open.

Hi, good morning and thanks for taking the questions.

Good morning.

I was just hoping you could provide us with the update on some of the other tech initiatives outside Wemlo so Gadberry or First.

Yes. Let me give an overview and then Karri, why don’t you jump in and Nick add if you want. So in general, we are continue to work with those technology systems. They are providing rich sources of data for our agents and franchisees. And we continue to believe that we’re in a good position with connectivity that a lot of folks don’t have as complete as we do. And we’re going to continue to work on initiatives that make our agents more productive that give them a better lead. We’ve already got probably the strongest networking system in the business from the standpoint of agents referring new business from internationally as well as domestically. We just had R4 where we had over 6,000 folks there a lot of international players as well, and a lot of that’s around networking. So the technology piece will continue to evolve to make sure that we’ve got sort of best-in-class regeneration as well as tools that allow the agents to be more productive and effective and for the brokerages and the franchisees to be more profitable.

Yes, I agree with everything that.

Go ahead, Karri.

Yes, no, I was going to say, I agree with everything that Steve said and from a financial perspective, we’re continuing to see strength in Gadberry. It continued, it performed well last year and that we’re seeing that you continue this year as well. And then from a First perspective, we’re still con – we’re seeing adoption increase kind of steadily still work to do in terms of driving increased adoption. But we’re very happy with the product, given the feedback we’re getting from our network as Steve mentioned. The feedback on First from the network continues to be very positive.

And Karri, I’ll add one thing on First. That’s been a winner for us with low inventory and it being primarily driven to find listing inventory, the agents that are utilizing it now we’ve had it under our belt for a while. We can confidently say that those agents that are using it are increasing their business by 12%, they are more productive. And they average eight new listings in the first 90 days, they use the product. So we’re able to quantify First product now. And it’s showing that it’s actually driving listings to our network, which is a huge win. So we expect that as the market will continue to be competitive with inventory this year that that product will gain additional adoption.

That’s very helpful. Thanks. And then one more, if I could just maybe it’s a along the same lines, it’s the third-party report that, that says, that RE/MAX agents are more than double productive as the next closest one. Is the technology initiatives driving that, is it the name brand recognition that it’s attracting those agents? Is it – it’s tough to kind of tell what comes first, the chicken or the egg here. So I’m just hoping you could maybe talk about what drives you to achieve such high productivity numbers.

Nick, why don’t you take that?

Sure. I think it’s a combination of things. It’s not one single lever, but I will say that it starts with our economic model that is based on reoccurring and that comes from our foundation and it was the idea of reward top producers and they’re in business for themselves, not by themselves. And the economics really drive it number one. Number two is because of that, it drives culture. And what we know and what we see in our network is top producers like to be around top producers. And so the combination of that combined with what we have invested in and tools and education kind of wrap it into one of what the value of RE/MAX is. But I believe it as you ask about, how do you think about chicken and the egg, I think it started 49 years ago with purely the economics. And 50 years later, it has developed into a combination of the economics, the culture and the tools training and education.

I appreciate the answer. Thanks for taking the questions.

We have no further questions. At this time, I’ll turn it over to Andy Schulz for any closing remarks.

Yes. Thank you, operator. This concludes the call for today. Thank you for joining us. Have a great weekend.

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