REMAX RMAX Q4 2025 Earnings Call Transcript

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DATE

Feb. 20, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Erik Carlson
• Chief Financial Officer — Karri R. Callahan
• Senior Vice President, Finance and Investor Relations — Joe Schwartz

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TAKEAWAYS

• Total Revenue -- $71.1 million reported, described as "solid despite a challenging housing market."
• Adjusted EBITDA -- $22.4 million, resulting in a margin of 31.5%.
• Adjusted Diluted EPS -- $0.30 for the quarter.
• Worldwide Agent Count -- Surpassed 148,500 agents, marking an all-time high.
• Agent Count Outside U.S. and Canada -- Exceeded 75,000, representing continued growth internationally.
• Largest Ever Brokerage Conversion -- Nearly 1,200 agents from a 17-office Toronto operation joined RE/MAX Canada in January.
• Revenue Excluding Marketing Funds -- $53.6 million, decreased 0.4% due to lower U.S. agent count and incentives; partially offset by higher broker fees and digital initiatives.
• Selling, Operating, and Administrative Expenses -- Increased $1.6 million, or 4.4%, to $37.3 million; primary drivers were losses on sale/disposal of assets and other event timing, partially offset by lower personnel expenses.
• Total Leverage Ratio -- Improved to 3.12x and remains below 3.5x, with guidance for continued compliance.
• Aspire Program Adoption -- Over 2,000 agents adopted less than a year after launch, contributing to higher retention and recruitment rates.
• Marketing Platform Impact -- Promoted listings generated 3x more views and 6x more active users, compared to non-promoted listings on remax.com.
• First quarter 2026 guidance -- Agent count expected to increase 1.5%-2.5%, revenue projected at $69-$74 million, marketing fund revenue of $16-$18 million, and adjusted EBITDA targeted at $14-$17 million.
• Fiscal 2026 guidance (period ending Dec. 31, 2026) -- Agent count forecast to grow 1.5%-3.5%, total revenue expected at $285-$305 million, marketing funds revenue $66-$70 million, and adjusted EBITDA of $90-$100 million.
• Motto Franchise Fee Model -- Newly introduced, optional royalty fee model reduces fixed costs with transaction-based variability for new and existing locations.
• RE/MAX Media Network Revenue -- Tracking ahead of internal forecast, indicating potential for significant advertising revenue increase.
• Recent Franchise Terminations -- Proactively exited select Motto Mortgage franchisees in pursuit of improved network quality standards.

SUMMARY

RE/MAX Holdings (NYSE:RMAX) expects its leverage ratio to remain below the 3.5x target throughout 2026, providing greater flexibility for capital allocation. Digital investments, including AI tools and personalization features on remax.com and remax.ca, have been launched to enhance engagement and monetization. The Aspire, Ascend, and Appreciate programs have expanded the recruiter toolkit for brokerages, and early evidence from the Aspire program points to reduced agent churn and improved onboarding outcomes. The company highlighted advancement in its marketing-as-a-service platform, which has driven increased listing exposure and user activity. Management stated that additional conversion and M&A opportunities are in the pipeline, with anticipated announcements in the coming months.

• The largest-ever RE/MAX brokerage conversion, completed in Ontario, was partly attributed to the company’s global network and technology platforms attracting established industry leaders.
• Adjusted broker fee seasonality is expected to diminish as Aspire and other new fee programs gain traction.
• The Chief Financial Officer stated, "capital allocation is definitely more back on the table than it has been" due to improved leverage, balancing share repurchases and reinvestment.
• Erik Carlson confirmed that new AI-driven tools, such as MaxAI and integrations from partners like Boldtrail, aim to help agents "win listings and win more business, do it in less time, and make more money."
• 2025 profits for the quarter were at the high end of internal expectations despite reference to a third consecutive year of a historically slow housing market.

INDUSTRY GLOSSARY

• Agent Count: The total number of real estate agents affiliated with the company's franchise and corporate networks globally.
• Motto Franchise: The company's mortgage brokerage franchising business operating under the "Motto Mortgage" brand.
• Marketing-as-a-Service: Digital platform offering paid promotional tools and marketing resources for real estate listings on company-owned websites.
• Broker Fee: A recurring revenue stream collected from franchisees, often per transaction or per agent, as stipulated in franchise agreements.
• Aspire / Ascend / Appreciate Programs: Newly launched economic/compensation models providing franchisees and agents with flexible fee and commission structures for recruitment and retention.

Full Conference Call Transcript

Erik Carlson: Thank you, Joe, and thanks to all of you who have joined us today. In 2025, we built a strong strategic foundation and we are beginning to see the payoff. We have made great progress in enhancing our brand, our overall value proposition, and we view 2026 a year of tremendous opportunity for our company, our franchisees, our agents, and our loan originators. We accomplished all of this despite 2025 being the third consecutive year of a historically slow housing market.

We entered the new year with strong momentum across both of our networks, driven by growing the RE/MAX network to an all-time high, our best fourth quarter of U.S. agent count performance since 2021, and a renewed excitement for the RE/MAX brand. What is more, 2026 began with a major win, as in January, we had the largest brokerage conversion in RE/MAX history. An Ontario family of visionary entrepreneurs and their nearly 1,200 agents joined RE/MAX Canada, adding to the market-leading presence enjoyed from coast to coast. Engagement throughout the RE/MAX network reflects growing enthusiasm for our strategic investments in the brand, reaffirming the strength of our overall direction.

At the same time, we continue to operate the business with discipline, as evidenced by our fourth quarter profit and margin performance, which came in at the high end of our expectations. Given the productivity and professionalism of our network and the resilience of our model, we believe we are well-positioned to capitalize on a recovering market. We are continuing to support our affiliates in growing their business and increasing their profitability.

In terms of housing data and consumer insights, despite a typically slow start of the year in January, we continue to see the housing market normalizing in various ways, and that is a healthy development. According to our latest RE/MAX National Housing Report, inventory and new listings remain higher than a year ago, and the overall fundamentals suggest we will have a more balanced market this year. Across many markets, we are seeing early signs of a more even playing field. Seller concessions are becoming more common, negotiations are more thoughtful, and interest rates are trending downward, which helps support buyer activity.

We also believe some recent policy proposals could prove to be constructive to housing if effectively implemented, including those aimed at increasing the inventory of single-family homes available to individual homebuyers, as well as those that aim to lower the 30-year mortgage rate. Over time, we should also see the lock-in effect of low mortgage rates continue to ease. And the results of a recently published consumer survey show that despite delays caused by affordability and broader economic uncertainty, 88% of prospective buyers still say they are likely to purchase a home in 2026. Market conditions have slowed timelines, but not the underlying demand. Also, buyers said they are looking for more than a house.

They want a sense of community too. That plays directly to our strengths as the most trusted real estate brand in the United States and Canada. RE/MAX agents are local experts who skillfully help consumers navigate complexity, evaluate trade-offs, and make confident long-term decisions.

Turning to our operational performance. As of December 31, our overall worldwide agent count hit another all-time high at over 148,500 agents. The growth of RE/MAX agent base outside the U.S. and Canada continues to fuel new records, and it now tops 75,000 agents, a major milestone of its own. That growth says a lot about the appeal of our modernized value proposition that we are expanding around the globe. Now in the U.S., we continue to make progress stabilizing agent count, as evidenced by our best fourth quarter performance since 2021. In a difficult market, Canadian agent count finished the year relatively flat to 2024. We started the year with tremendous momentum.

It is also worth noting that the reach of our global network enables us to serve an unparalleled number of consumers. In this decade alone, since 01/01/2020, RE/MAX agents have closed over 10,000,000 transaction sides worldwide. It is an incredible achievement. And as we continue to evolve our strategies, we are exploring new ways to lean into the tremendous opportunity global sales power presents.

As I mentioned earlier, in mid-January, we announced the largest conversion in the history of our company. A family of visionary entrepreneurial real estate leaders, Vivien Riese, and her children, Michelle and Justin, chose RE/MAX for their 17-office Toronto-based operation, largely to deliver a wider range of tools and opportunities to their nearly 1,200 agents, both for now and into the future. We are thrilled to welcome the Rieses and their talented agents to our network. The Rieses also chose RE/MAX for our global footprint, robust referral network, and powerful marketing and technology platforms. These advantages should reinforce their agents’ productivity and growth potential in a dynamic real estate landscape.

This conversion demonstrates that the enhancements to our overall value proposition are working, as brokers both in and beyond our network recognize the power of our current competitive advantages and the momentum that we are building. This landmark conversion is just the beginning. We are increasingly encouraged by our pipeline of conversion, merger, and acquisition candidates across the U.S. and Canada. We have a strong slate of sizable opportunities we plan to close and announce in the months ahead.

We believe much of the excitement surrounding the RE/MAX brand is driven by the tremendous team effort that has reinvigorated our value proposition. Our innovations are centered on enhancing our competitive advantages and helping agents win more business, save time, and make more money, which in turn helps increase broker profitability. The new economic models we launched last year—Aspire, Ascend, and Appreciate—continue to provide brokers with greater flexibility and a wider framework for recruiting and retention. While Q4 is always seasonally challenging, our Q4 recruitment rate outpaced last year’s, building on the positive trends from late Q2 and Q3. The benefits of developing and launching these new options last year should continue to emerge over time.

Notably, adoption of Aspire is already over 2,000 agents, and the program’s educational and technology elements position these newly recruited agents for sustained careers with the network. Announced several months later, Ascend and Appreciate continue to see increasing adoption as word grows about the value they offer. Less than a year after launch, both are still trending upward.

We also continue to invest in our digital marketing assets. Our six-month-old marketing-as-a-service platform continues to gain traction, and the results are very encouraging. For example, listings that are promoted through our platform are delivering 3 times more views, 6 times more active users, and 5 times more compared to similar listings that have not been promoted on remax.com. These are just some of the initial findings, but they underscore the product’s ROI and value to RE/MAX agents. Overall, the platform is scaling in line with expectations, showing resilient demand, rising paid adoption, and strong effectiveness, all of which positions us for continued growth throughout the year ahead.

And we have launched a newly designed remax.com and are launching a redesigned remax.ca in Canada. They both incorporate personalized content and AI capabilities that deliver better consumer engagement, making stronger connections to agents while also furthering our monetization strategies. For example, agents can now turn listings into AI-generated videos at a click of a button. Additionally, consumers can leverage AI to redesign home exteriors and interiors of property photos on our website, improving engagement and extending the amount of time they spend on-site.

Our RE/MAX Media Network continues to build meaningful momentum with a healthy mix of programmatic and direct sourcing. Revenue this year is pacing ahead of forecast, which is an encouraging sign. Brands are clearly interested in taking part, so there is ample reason to expect advertising revenue from the RE/MAX Media Network to increase significantly this year. Additionally, our lead concierge curation program continues to deliver a better agent-consumer experience, as conversion rates and corresponding revenue contributions are exceeding our initial expectations. Also, from a lead source perspective, we are introducing a golf lifestyles designation.

The program will enable RE/MAX agents to be certified as golf real estate professionals and understand club, course, and real estate dynamics unique to golf properties. Our new program will include training, certification, and real estate leads that position participating RE/MAX agents as trusted advisers for golfers looking to find new homes and new communities.

Let me now spend a moment on important developments within our mortgage business. As we look across the broader housing and mortgage landscape, one of the consistent themes we see is the need for flexibility, particularly in how independent operators structure their business in these changing market conditions. With that in mind, we rolled out a new franchise royalty fee model earlier this year across the Motto network. The goal here is simple: to better align our economic structure with the realities of today’s market while supporting long-term growth with our franchisees and the Motto brand. This new model reduces fixed cost through a lower flat fee and introduces a transaction-based component that scales with performance. It is designed to provide more flexibility, encourage operational excellence, and support sustainable growth over time. This is not a forced transition. Existing offices can opt into the new model if they believe it benefits their business, while new franchisees will follow the updated structure moving forward. That optionality is intentional. Different operators are at different stages, and we want to meet them where they are.

From a strategic standpoint, this approach mirrors the thinking behind our RE/MAX fee model options. Aspire, Ascend, and Appreciate were designed to give RE/MAX affiliates more choice, more control, and better alignment with how they choose to grow their business.

As part of our continued focus on strengthening the long-term health and competitiveness of the Motto brand, we deliberately chose to terminate a number of franchisees during the fourth quarter. These decisions were rooted in our responsibility to maintain a high-quality system that reflects the standards and expectations required to deliver a consistent borrower experience. We continue to see significant opportunities within our mortgage business. These include leveraging the new fee model to grow the Motto base, driving greater adoption of wemlo processing both from inside and beyond our Motto network, as well as exploring additional ways to capitalize on the hundreds of thousands of transactions RE/MAX agents close annually in the United States and Canada.

We are also exploring possibilities around the thousands of leads that flow through our digital platforms. Applying both to real estate and mortgage, our fourth quarter achievements and enhancements reflect a concerted focus on strategic growth, network strength, and a differentiated value for franchisees, agents, and loan originators alike. As we look across both industries, the pace of change requires brands to offer scale without sacrificing local expertise, all while providing that constant support and value to our customers. And we continue to lean into our RE/MAX and Motto networks, and the enthusiasm we see is very real. That enthusiasm has been fueled by the energy of new leaders who have recently joined the team.

One of those inspirational leaders is Chris Lim, whom we just promoted to President and Chief Growth Officer of RE/MAX. Over the past thirteen months, Chris has helped to modernize operations, increase support services, expand our value proposition, and elevate the way consumers perceive this global brand, especially on our digital platforms. He brings a creative, upscale mindset to every project and played a direct role in several major brokerage conversions, most notably in Hawaii and Ontario. Chris, congratulations. As we look toward the rest of 2026, we remain focused on executing our comprehensive growth and revenue strategy.

Last year, we brought in new leadership, launched new products and services, developed new economic models, and strengthened the foundation for our future. This year, we are focused on driving adoption, managing outcomes, and ensuring that our company and networks continue to win. With that, I will hand it over to Karri.

Karri R. Callahan: Thank you, Erik. Good morning, everyone. As Erik said, we are encouraged by our fourth quarter operating results and overall financial performance. Profits for the quarter landed at the high end of our expectations, and our revenue performance was solid despite a challenging housing market. Some of our notable quarterly financial highlights included total revenue of $71.1 million, adjusted EBITDA of $22.4 million, adjusted EBITDA margin of 31.5%, and adjusted diluted EPS of $0.30. Looking closer at revenue, excluding the marketing funds, revenue was $53.6 million, a decrease of 0.4% compared to the same period last year, driven by a decline in organic revenue of 0.4% and flat foreign currency movements.

The decline in organic revenue was driven mainly by a reduction in U.S. agent count and the impact of recently introduced incentives, including the Aspire program, partially offset by an increase in broker fees and revenue contributions from our new initiatives, including marketing-as-a-service, and from the monetization strategies from our flagship website. Fourth quarter selling, operating, and administrative expenses increased $1.6 million, or 4.4%, to $37.3 million. This increase was primarily due to losses on sale and disposal of assets and an increase in expenses from the timing of other events, partially offset by a reduction in certain personnel-related expenses.

The resilience of our franchise economic model and our ongoing evaluation of every aspect of our business has resulted in our ability to continue to delever despite a challenging macro and housing environment.

Our total leverage ratio decreased to 3.12 times as of December 31. A continuation from last quarter, our total leverage ratio remains below the 3.5 times level, affording us greater flexibility from a capital allocation perspective. And importantly, we currently expect to remain below that 3.5 times level throughout the year. From a capital allocation perspective, our priorities remain unchanged. We are strategically reinvesting in the business and will continue to build our cash reserves. Now on to our guidance. Our first quarter and full year 2026 outlook assumes no further currency movements, acquisitions, or divestitures.

For the first quarter of 2026, we expect agent count to increase 1.5% to 2.5% over first quarter 2025, revenue in a range of $69 million to $74 million, including revenue from the marketing fund in a range of $16 million to $18 million, and adjusted EBITDA in a range of $14 million to $17 million. And for the full year 2026, we expect agent count to increase 1.5% to 3.5% over full year 2025, revenue in a range of $285 million to $305 million, including revenue from the marketing funds in a range of $66 million to $70 million, and adjusted EBITDA in a range of $90 million to $100 million.

With that, operator, let us open it up for questions.

Operator: We will now begin the question and answer session. Analysts, if you have not yet, please complete the registration through the link provided to you and call in. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by now while we compile the Q&A roster. Your first question comes from the line of Nick McAndrew with Zelman and Associates. Your line is open. Please go ahead.

Nick McAndrew: Thanks. Maybe just to start, I think as we see earlier Aspire cohorts move beyond the onboarding phase, can you just talk about what you are seeing with those earlier cohorts in terms of agent development or productivity as some of those agents move through the program?

Karri R. Callahan: Sure. Good morning, Nick. We continue to be really excited about the Aspire program. We know that we see significant reduction in the churn of our agents as we move them up the productivity cohort. And as we have seen, it is really early, that cohort is very small, but as those agents have gone through, we are seeing some upticks in productivity. As they go through and they do the training, they get engaged with our tools, we are seeing some improvement in productivity. And we are also seeing improvement in retention within that cohort.

I think importantly, as Erik said in the scripted remarks, in addition, the Aspire program in and of itself is really spurring recruiting activity for our brokerages. So the optionality that the program offers, I think, is another thing that has really been beneficial as we have seen the continued stabilization from a U.S. agent count perspective here in the fourth quarter, best fourth quarter since 2021, and a continued trend from Q2 and Q3.

Nick McAndrew: Got it. That makes sense. Thank you. And I guess second, just to follow up, congrats on the 1,200 agent Canadian addition. And I am just curious on whether it is the new comp structure, its brand positioning, tech offerings—anything to call out on just what is resonating with that agent base that is coming to RE/MAX and just any factors that might have led them to end up choosing RE/MAX.

Erik Carlson: Yeah, Nick. This is Erik. And I appreciate you saying choosing RE/MAX because that is actually the way we look at it. And I think it is a combination of all the above, to be quite frank. I mean, about a year ago, obviously, we launched the brand modernization. We have done a lot of really hard work on our value proposition. We showed up with different people from a leadership perspective. We are really leaning into the network. And as we are talking to prospective clients about the RE/MAX opportunity, it is not only just about tech and our education and the community. It is our global footprint. Right? So 148,000-plus agents in 120 countries.

Real estate today, although it is still very local, it is worldwide. And so we are really proud of the footprint that we have, but the tools and processes that we are putting in place to help agents and consumers find great agents around the world. Right? So our MAX Refer program is continuing to see improvements and additional transactions, which is very healthy. So I think the Rieses are just such a tremendous family and well respected, obviously, in real estate. We are super excited that they chose RE/MAX as the next partner for today and tomorrow.

They are simply an outstanding group, and we are seeing very high retention rates right now with agents, which tells us one is Vivien and her team have a lot of respect, but also agents see value in our brand and what it represents today and in the future.

Nick McAndrew: Thanks, guys.

Operator: Your next question comes from the line of Dae Lee with JPMorgan. Your line is open. Please go ahead.

Dae Lee: Great. Thanks for taking my questions. I guess my first one is on—there is a lot of talk about potential for AI-driven automation to change the industry. I am curious, what are franchises saying, and are agents feeling optimistic about AI, and how are they responding to the whole automation narrative?

Erik Carlson: Yeah. Hi, Dae. It is Erik. I will give you a little bit of context on how we think about it and some of the feedback that we are getting from our network. I think AI for the sake of AI is a mistake, and I think that we are trying to be very purposeful on how we deploy automation technology—obviously, some of that is AI. Our network, and I think just real estate agents and brokerages in the industry, are very curious about it. There is a sense of, “Hey, I need to lean in.” There is a sense of “I am scared of it.” What we try to do here at RE/MAX is be purposeful in our approach.

And so you are seeing us deploy tools and services like MaxAI, which resides on remax.com and remax.ca, which helps nurture leads and helps consumers find the right real estate agent within the RE/MAX network. You are seeing us use tools from our partners at Boldtrail, like Folio, which helps to really automate workflow within the email system. You would be surprised how many agents still use email as a primary method to correspond with consumers, whether on the buy side or the sell side, and get business done. So automate some of that work.

At a very high level, Dae, our purpose here is to help agents win listings and win more business, do it in less time, and make more money. And so when we think about AI, we think about how we can deploy AI to help achieve those three goals. So you are seeing us deploy whether it is through our CRM and helping folks nurture their contacts, whether it is in back-office type operations to help automate and take cost out of the business, or whether it is with consumers to help engage and find the right property, the right listing, the right agent for them to be successful.

So I would chalk it up as we are taking a very purposeful approach here, but really leaning into our north star: help agents be more successful in the market.

Dae Lee: Got it. Helpful. And then as a follow-up, encouraged to see momentum in 2026. I am just curious, what are the key swing factors in the high versus the low end of your guide, your 2026 revenue guide, and which KPI should we be tracking to see revenue tilt to the high end that is just positive growth for the year? And does that include U.S. agents returning to positive growth as well? Thank you.

Karri R. Callahan: Yeah. Good morning, Dae. Great question. It is Karri. I think we have been—as Erik said, we try to take a purposeful approach to everything. I think that there is definitely some opportunity to push to the higher end. Obviously, we just finished the third straight year of a pretty depressed housing cycle. Anything from a macro perspective would definitely be a tailwind in pushing us up to the higher end of that guide. We obviously cannot control what is happening from a macro perspective, but I think we have done a great job really reinforcing the value proposition and really focusing on what we can control.

So further stabilization and growth from a U.S. agent count perspective—you know, Erik mentioned in the scripted remarks some momentum in the pipeline on the coming months in terms of additional conversions, mergers and acquisition activity. That would be a tailwind in terms of acceleration beyond what we see today. And then with respect to some of our new monetization initiatives, marketing-as-a-service as well as our digital channels monetization opportunities, we are seeing significant growth year-over-year. But if that outpaces our current forecast, which we are already pleased with the growth that we have included, those are other levers that could push us to the high end of the range.

Dae Lee: Thank you.

Operator: Your next question comes from the line of Thomas Patrick McJoynt-Griffith with KBW. Your line is open. Please go ahead.

Thomas Patrick McJoynt-Griffith: Hey. Good morning, guys. A question on the Aspire program and the impact on the broker fee revenue line. Just want to get a sense of the magnitude of how much it impacted it this quarter. And then secondly, it seems like you are going to recognize that ratably throughout the year. So is there a chance for a major kind of true-up at year-end if volumes end up drastically different than you are expecting, or how could that impact that?

Karri R. Callahan: Yeah. Tommy, good morning. It is a great question. As Erik mentioned in the scripted remarks, we do have about 2,000 agents now that are on that program, and so we are seeing good adoption. And as I mentioned earlier, I think importantly, more than anything, we are also just seeing the program offer optionality. In terms of the broker fee impact to Q4, it was not that significant, kind of a couple hundred thousand dollars, maybe half a million. With respect to just how the activity will get recognized, it is just going to smooth things out a little bit over time.

So we are going to start to see a little bit less seasonality in the broker fee line, to the extent that the participation in that program grows. So as there is more participation, we can provide more guidance. So there was a little bit of impact in Q4, but it really was not that pronounced.

Thomas Patrick McJoynt-Griffith: Okay. Got it. And given RE/MAX’s sort of vast network and number of agents, has you guys—

Operator: Your next question comes from the line of Valentin Alvar with Jones Trading. Your line is open. Please go ahead.

Valentin Alvar: Hey, good morning, everyone. So just regarding your disclosure on the earnings release relating to selling, operating, and admin expenses, can you give us some idea of ongoing versus one-time cost pressures just to gather an idea of the run rate? Thanks.

Karri R. Callahan: Sure. Good morning, Valentin. It is Karri. So with respect to what was in the Q4 information, there were a couple of things that were a little bit unusual and one-time in nature. We did have about a $1 million charge with respect to some sale and disposal of assets. That will not continue into the future. And so as we think about what that looks like going forward, the year-end Q4 run rate of SO&A looks actually to be pretty consistent into Q2, Q3, and Q4 of this year once you normalize for that. Keep in mind that Q1 is always a little bit higher for us.

We are really excited for next week, which is our annual agent convention in Las Vegas. We have over 60 countries represented and a lot of agents coming from all over the world to really experience the momentum that we are building from a RE/MAX perspective. But that does result in a little bit of increased investment in Q1, and that should look pretty consistent to 2024 and 2025.

Valentin Alvar: Got it. Thank you for the additional info there. Switching gears a little bit, with where the stock is at today and the mortgage rates remaining near the 7% mark, are you more likely to engage in share repurchases versus Q4 also? Thanks.

Karri R. Callahan: Yeah. Valentin, it is a great question. I think when you look at our model from a recurring fee perspective as well as the significant earnings-to-free-cash-flow generation that the franchise model is able to generate, we are really pleased with the fact that we are, from a leverage perspective, below that 3.5 times level for a couple of quarters now. So we do have some increased flexibility now as it relates to return of capital. So I think we are taking—just given what is happening from a macro perspective—we are taking a prudent approach to capital allocation.

But given where we are from a leverage perspective, I think capital allocation is definitely more back on the table than it has been, and we are looking to balance that with reinvesting back into the business and making sure that we can allocate capital to growing the business in a smart way that will generate the highest return.

Valentin Alvar: Perfect. Thank you so much. I appreciate it.

Operator: Just a reminder, if you have any follow-up questions, to withdraw any questions, please press 1 again. Remember, when you are asking a question to please pick up your handset to ask the question and unmute yourself locally.

Erik Carlson: Operator, if I may, this is Erik. And Tommy, I know you got cut off on your question. I think we heard a little bit about private listings. Happy to address. With the private listing discussion, our view really has not changed. We feel like transparency and broadest distribution for listings give buyers and sellers the best outcome. As we have talked about a little bit before, obviously, we do have a vast network around the world. If there was a case where we had to participate in a broader private listing type network, the consumer comes first. We would be well prepared to do that.

But philosophically, we think the MLS is the ultimate north star, not only for our brand, but for our agents and our brokers serving buyers and sellers. And so we like the idea of transparency and the broadest distribution of listings. So sorry you got cut off, Tommy. Hope that helps.

Operator: There are no further questions at this time. We will now hand the call back to Joe Schwartz, Senior Vice President of Finance and Investor Relations. Mr. Schwartz, please go ahead.

Joe Schwartz: Thank you, operator, and thank you, everyone, for joining the call today. We hope everyone has a great weekend.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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