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RE/MAX Holdings, inc (RMAX) Q3 2021 Earnings Call Transcript

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RE/MAX Holdings, inc (NYSE: RMAX)
Q3 2021 Earnings Call
Nov 23, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the RE/MAX Holdings Preliminary Third Quarter 2021 Earnings Conference Call and Webcast. My name is Julianne, 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?

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Andy Schulz -- Senior Vice President, Investor Relations

Thank you, operator. Good morning, everyone, and welcome to RE/MAX Holdings preliminary third quarter 2021 earnings conference call. Please visit the Investor Relations section of 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 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, 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 preliminary third quarter 2021 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.

Please note that our third quarter 2021 financial results and other related information discussed on this call are preliminary. Our final results and financial information for the third quarter 2021 may vary materially from the preliminary financial information discussed on this call.

Joining me on our call today are Adam Contos, our Chief Executive Officer; Karri Callahan, our Chief Financial Officer; Nick Bailey, President of RE/MAX; and Ward Morrison, President of Motto Franchising.

With that, I'd like to turn the call over to RE/MAX Holdings' CEO, Adam Contos. Adam?

Adam Contos -- Chief Executive Officer and Board Director

Thank you, Andy, and thanks to everyone for joining our call today. Looking at Slide 3, we again posted record financial results in the third quarter. Our strong performance was driven by better-than-anticipated results from our recent acquisition of RE/MAX INTEGRA's North American regions, broad-based contributions from our core operations, and a healthy housing market in both the U.S. and Canada.

We believe the third quarter was a strong affirmation of our strategy. Over the past few years, we've been investing to diversify and expand our revenue and growth opportunities. Our third quarter results illustrate how those efforts are paying off.

Motto is perhaps the best example of that expansion and diversification. Motto recently celebrated its fifth birthday and the brand is truly coming of age. Franchise sales remain brisk and the open office count was up more than 30% year-over-year during the third quarter. We expect Motto to start generating a profit beginning next year, which is a notable achievement for a start-up franchise.

Overall, RE/MAX Holdings' revenue for the third quarter was $91 million, an all-time high, with much of the year-over-year increase driven by our recent INTEGRA acquisition, which so far has exceeded our expectations. More on that in a moment.

Among our other recent acquisitions, Gadberry Group, now called G73, was another outperformer, posting a quarterly profit. First and wemlo, our two tech start-ups, are both showing steady progress and we expect to see more meaningful revenue contributions from them in 2022.

Excluding the marketing funds, our core business generated almost 7% organic revenue growth in the third quarter, with contributions from multiple facets across the Company. As our acquisitions lap their respective first year anniversaries and start to feel more of the organic bucket, we're confident we'll see continued organic growth, which we expect to be in the mid-single digits.

We will continue to drive additional organic revenue growth, leveraging the strength of our business model as much of each incremental dollar of revenue tends to translate into profit. We saw that dynamic play out in Q3 as we generated a record adjusted EBITDA of $35 million and record adjusted diluted EPS of $0.71. These strong results enabled us to again increase our profit guidance for 2021. Karri will update our outlook in just a few minutes.

As I noted earlier, our INTEGRA acquisition is off to a great start. This is a large, complicated and important investment. Tremendous progress has been made to date with significant portions of the integration already completed, primarily where we have prioritized transitioning the customer-facing elements of the business. The teams involved are doing a terrific job and are focused on ensuring that our franchisees and agents continue to receive the outstanding support, services and products they need to help them grow their businesses. For the immediate future, at least the remainder of this year and the first part of 2022, we will focus largely on facilitating a smooth transition and enhancing the future growth trajectory of the significant investment.

Moving to Slide 4. On the heels of the second-most active September in the 14-year history of the RE/MAX National Housing Report, October home sales in 51 surveyed metros, dropped 6.4% from September, almost double the typical seasonal decline. In many markets, home sales are getting pinched by new record prices and record low inventory.

We're seeing the effects of a long, sustained run-up in prices and month-over-month home sales, and the days of immediate sales, multiple offers and bidding wars on virtually every property are beginning to wane. This cool down is somewhat overdue and the October dip in sales could be a step toward a more balanced housing market. Overall, the market remains relatively robust even as it trends toward more seasonal norms.

Sales are still happening quickly but at a slightly slower pace than earlier this year. October's average days on market of 27 was one day more than September and reflected sales that were 11 days faster on average than in October 2020. Inventory remains an issue. The 1.3-month supply of inventory in October was down from September's 1.5-month supply and having more homes on the market would be welcomed news.

Homebuilders are trying to fill the gap, especially with multifamily home construction, but many of them are being delayed by shortages in labor and materials, as well as general supply chain challenges. Home buyers may see some relief in price appreciation during the coming months, even as sales level stay high.

Sellers remain in a very strong position. But with price stabilization and the continuation of competitive interest rates, buyers should find the coming months to be more advantageous than any time earlier this year. In any event, 2021 has been a strong year for sales and should continue to be. The value of a skilled full-time real estate professional will be even more evident as the market rebalances a bit.

With that, I'll turn it over to Nick for some greater detail on RE/MAX.

Nick Bailey -- President

Thanks, Adam. Good morning, everyone. Looking at Slide 5, overall agent count increased nearly 5% year-over-year to a new record of almost 141,000 agents. We got it over 6,000 agents worldwide since September 2020, highlighted by exceptional growth in Canada. In fact, our combined U.S. agent count is approaching levels we haven't seen in over a dozen years despite the competitive marketplace and the unusual circumstances of the past year.

U.S. agent count held steady year-over-year, highlighting the resiliency and attractiveness of our brand. Because of their productivity, RE/MAX agents tend to be recruited aggressively and consistently, especially by brands with an agent-to-agent recruiting model. Productive agents stay with our network, however, because they value its many benefits and advantages.

Our focus continues to be on providing the best services so that our agents can focus on increasing their productivity and helping consumers close more sales. The industry is filled with discount options and complex compensation structures, but we continue to build our market presence by appealing to full-time professionals who would rather work with buyers and sellers than recruit other agents. We believe it's a sound strategy that will spur new growth -- productive growth over time.

It's happening in Canada right now where our growth is accelerating. We've added over 2,000 agents, a significant 10% gain year-over-year. In Canada, where being a real estate agent is widely viewed as a full-time profession, RE/MAX is the market leader and the best choice for those who want to work among other strong like-minded professionals. Adding the Canadian portion associated with the INTEGRA transaction positions us for even greater things across the country.

Bringing the RE/MAX Ontario-Atlantic Canada region and our Company-owned Western Canada region together as a unified force is enabling us to scale our efforts in technology, marketing and other services. The alignment will create a more seamless experience for franchisees, agents and even consumers. And shifting 12,000 Canadian agents from an independent region to a company-owned will open up even more opportunities in the future. When you factor in our longtime market leadership in Quebec, the prospects across all of Canada become even more exciting. It is also one of the many reasons we continue to invest in our Canada operations. To this point, we officially announced earlier this month that booj was launched in Canada. The introduction of our proprietary technology suite greatly enhances our value proposition and further differentiates us from the competition.

Speaking to[Phonetic] the global arena, our international agent count increased over 8.5% to more than 55,000 agents. Recall when that will surpass 50,000 agents outside the U.S. and Canada in the summer of 2020, so increasing more than 10% in a little over a year during the pandemic has been an impressive growth. And despite already being in over 110 countries and territories, we continue to move into new geographies due to the strong desire to be affiliated with the RE/MAX brand. During the past 90 days, we've announced the sales of master franchise rights into three additional countries, Pakistan, Guyana and Uzbekistan, very exciting news and with these sales come additional opportunities to grow.

Turning to Slide 6. We continue to invest in our business and enhance our overall value proposition. We recently announced a complete reinvention of our RE/MAX University platform, an exclusive to RE/MAX learning hub designed to help agents level up their professional expertise. Built on intuitive lead technology, RE/MAX University puts agents in control of when, where, what, and how they learn. It's a modern mobile-based user experience and it will help our affiliates develop new skills. And that's a good point because we believe the more you learn, the more you earn.

In fact, RE/MAX has found that agents who engaged with RE/MAX University on average closed more transactions and earned more commission. Having been a leader for decades, RE/MAX understands that markets change over time. When that shift comes and education becomes a more immediate priority, the new RE/MAX University will already be in place. It's another example of us working ahead of the curve and being prepared for whatever the future may bring.

With that, I will turn it over to Ward.

Ward Morrison -- President of Motto Franchising, LLC and wemlo

Thanks, Nick. Looking at Slide 7, the last 90 days have been a very exciting time for our mortgage segment. On the Motto side, we continued to sell franchises at a near record rate through September 30 and we expect to sell 60 or more franchises this year. Lifetime to date, we have now sold almost 300 franchises. We expect to eclipse that significant milestone before year-end.

Notably, office openings continue to accelerate as expected. We are seeing the echo effect of last year's inflection in franchise sales and are experiencing a similar uptick in office openings which grew more than 30% year-over-year in Q3. In fact, year-to-date, we have opened more offices than we have sold, a first in our history. We now have over 175 open Motto franchises in almost 40 states and we're aiming to have 200 open offices by year-end.

A big area of organizational focus for our Motto Mortgage business year -- this year has been the continued development of wemlo. We acquired wemlo last year to solve one of our Motto franchisees' primary pain points, finding steady, dependable and economic loan processing services. With the addition of wemlo, Motto offices now have access to an operationally ingrained third-party loan processing team which is held to the same high standards of customer service that have come to define the Motto Mortgage brand.

The exciting news we announced last month was the introduction of wemlo's loan brokering system or LBS. We believe our LBS is a revolutionary technology, a software suite purpose-built to address the exacting needs of the professional loan originator operating in the mortgage broker channel. And importantly, the streamlined wemlo LBS doesn't require brokers to navigate through relevant system task designed for other lending channels.

We have spent the past five years gathering real world experiences from hundreds of Motto loan originators so we could understand precisely where traditional origination systems fall short for the broker channel. In developing the wemlo LBS, we have been assessed about how to better leverage our mortgage brokers most valuable resource time. Our team knows that loan originators often spend precious time navigating through unneeded components in antiquated loan system. That lost time could be better spent developing value-add solutions for our franchisees and a high-quality service to their consumers.

Our Motto affiliates deserve the efficiencies of a purpose-built platform, and the broker channel is more than ready for modern technology that simplifies their unique workflow. The wemlo LBS will officially launch to the mortgage brokerage industry in January 2022, but Motto offices will be granted first access and begin onboarding this year. Motto affiliates are receiving the LBS platform at no additional fee as well as initial discounts on the integrated wemlo loan processing offerings and exclusive LBS product features.

With that, I'd like to turn the call over to Karri.

Karri Callahan -- Chief Financial Officer

Thank you, Ward. Good morning, everyone. Moving to Slide 8. Total revenue grew 28% to a record $91 million. Excluding the marketing funds, revenue was almost $68 million. Acquisitions increased overall revenue by 18%, primarily due to incremental revenue from the RE/MAX INTEGRA North American regions acquisition. However, we are also seeing year-over-year growth for both wemlo and Gadberry. FX impacted revenue by a negligible amount.

Notably, our organic revenue growth was up almost 7%. Even after setting aside broker fees, this is the second quarter in a row we generated mid-single-digit organic growth. Many organic growth drivers contributed to our strong top-line performance during Q3, including agent count growth, pricing, Motto, and more targeted use of agent recruiting incentives, to name the most notable ones. If you exclude the booj legacy runoff, our organic growth improved by almost another 60 basis points. We believe we'll see continued mid-single-digit organic growth for the foreseeable future, which should drive further margin expansion.

Looking at Slide 9. Selling, operating and administrative expenses were $51.1 million in the third quarter of 2021, up significantly over the prior year. The year-over-year comparisons for SO&A are not particularly meaningful due to one-time items in 2020 related to the pandemic and our reduced spend in Q3 of last year. Additionally, our 2021 third quarter SO&A included expenses related to the acquisition of RE/MAX INTEGRA's North American operations.

While our staff travel is picking up in response to the importance of in-person events and training that our customers are now eager to participate in, our spending levels remain well behind our pre-pandemic level in 2019.

In terms of our newer businesses, we continue to see margins from our recent acquisitions trending in the right direction. While Gadberry has already started to generate a monthly profit ahead of our expectations, First and wemlo are ramping a bit slower. We have plans in place to boost each offering [Technical Issues] revenue in 2022. Motto continues to perform well, bolstered by the accelerated office openings. Along with wemlo, we expect our mortgage business to generate a profit in 2022 and thereafter.

Moving to Slide 10. The Company's fourth quarter and full-year 2021 outlook assumes no further currency movements, acquisitions or divestitures. For the fourth quarter of 2021, we expect agent count to increase 2.5% to 3.5% over fourth quarter 2020; revenue in a range of $86 million to $90 million, including revenue from the marketing funds in a range of $22 million to $24 million; and adjusted EBITDA in a range of $27.5 million to $30.5 million.

For the full-year 2021, we're decreasing our agent count guidance due to slower-than-expected global growth, tightening our revenue range and increasing our adjusted EBITDA guidance due to better-than-expected third quarter results. We expect agent count to increase 2.5% to 3.5% over full-year 2020, down from 5% to 6%, revenue in a range of $326.5 million to $330.5 million including revenue from the marketing funds in a range of $81.5 million to $83.5 million changed from $321 million to $336 million, and adjusted EBITDA in a range of $116 million to $119 million, up from $113 million to $118 million.

Now, I'll turn it back to Adam.

Adam Contos -- Chief Executive Officer and Board Director

Thanks, Karri. Looking at Slide 11. We had a record third quarter in many respects. Our recent acquisition of RE/MAX INTEGRA's North American regions is off to a terrific start. We're seeing our many investments really begin to pay off. We are a more diversified business with plentiful growth opportunities. We believe we have good momentum right now and we're looking forward to finishing 2021 with strength and having set a strong foundation to build upon for 2022.

With that, operator, let's open it up for questions.

Questions and Answers:

Operator

Certainly. [Operator Instructions] Your first question comes from Richard Hill from Morgan Stanley. Please go ahead. Your line is open.

Richard Hill -- Morgan Stanley -- Analyst

Hey. Good morning, guys. Thanks for the prepared remarks and the additional color. I just want to talk maybe a little bit more about your revenue per agent. What does that look like? Has that decreased? How do you think about that relative to where home valuations are going? And maybe some of the trends that you're seeing in your agent count?

Karri Callahan -- Chief Financial Officer

Sure. Good morning, Rich. Great question. If we think about revenue per agent, I think it really highlights the differences in the RE/MAX model with over 60% of our revenue being recurring in nature. That revenue per agent, especially in our owned regions here in North America, has been pretty consistent kind of in that $2,600 to $2,700 per agent.

Obviously, with broker fee and home price appreciation moving upward, that's continuing to increase our revenue per agent, but just the difference in our business model and the recurring fee nature really helps protect us in any kind of macro environment and we've seen that pretty consistent with the upward trajectories and contributions from broker fee as well as continuing franchise fee increase we did earlier this year.

Richard Hill -- Morgan Stanley -- Analyst

Okay. Great, guys. And then you made a pretty interesting comment, and hopefully I'm not putting words in your mouth, but that you're keeping the most productive brokers. How do you guys measure that? And I'm not pushing back on it. I'd just like to maybe get a little bit more transparency on how you think through that.

Nick Bailey -- President

Yeah. Thanks, Rich. Hi. It's Nick. Good question on that, and that's something that's actually been on our radar. As we look across the system with footprint as large as ours, we have a number of ways that we look at each and every franchisee to make sure that they're performing at the required levels. And so we have taken, as we do on a regular basis, an analysis of all of our franchisees and we have to look at those that are underperforming and unfortunately may not be part of the system. And so we have had some terminations for underperformance that has been part of just our regular course of business. But we've had a few of those recently in the third quarter.

Richard Hill -- Morgan Stanley -- Analyst

Great. Thanks, guys. I'll jump back in the queue in the interest of time.

Operator

Your next question comes from Ryan McKeveny from Zelman & Associates. Please go ahead. Your line is open.

Ryan McKeveny -- Zelman & Associates -- Analyst

Hey, good morning. Thanks for taking the question. So in terms of the acquisitions over the past few years, so G73 was one you called out in particular mentioning the quarterly profit. I was hoping maybe you can remind us on kind of the revenue model there or the economic model there. And then also when you think about First, it sounds like that one's still in investment mode, but the outlook is -- 2022 maybe that flips. So curious if you can just again hit on the G73 kind of the economic model there, how we should think about that.

And then for all of these ancillaries, I guess, is this flowing through, I believe, within the franchise sales and other? And there was some better growth there than at least I was modeling. So is that a reflection of some of these new businesses starting to ramp up there on the revenue side? And then I have a second question, I'll come back to you. Thank you.

Karri Callahan -- Chief Financial Officer

Sure. Good morning, Ryan. It's Karri. It's a great question. If we look at just the holistic investments that we've made in the business, it's been part of a broad effort over the last couple of years from a diversification perspective, and we're starting to see some momentum across all of the investments.

So from a Gadberry perspective, it's more of a subscription-based revenue stream, just based on the products that are sold. It is running through franchise sales and other revenue, and so some of that performance was contributing to the overall top line. I think that's what we're so excited about. We said if we can get the top line going, given the strength of our franchise model, that would translate into profit.

And so as we look ahead to 2022 and beyond, a little bit slower ramp in '21, but positioning ourselves well for future adoption across First, wemlo and continued profitable growth on Gadberry in the future.

Adam Contos -- Chief Executive Officer and Board Director

And I'll -- it's Adam. Good morning. I'll add a little bit. This is just really kind of the results of what we've been talking about over the past couple of years of our efforts to ensure that we provide a deeper knowledge base and capability in our data and technology for our agents and our franchisees, obviously, with the efforts of helping the consumer so much better.

So what you're starting to see with these results is what we've been saying, hey, we're going to see some results from this and we're seeing that occur now from these different technology acquisitions and the integrations going on in the network, but also our lack of dependence. We're pretty data and technology independent now in the industry and that's a good thing for our network and our system because it allows us to provide effort in the areas that we see the agents desiring better value out of that. So it -- we're pretty proud of the direction it's headed and anticipating continued progress in this.

Ryan McKeveny -- Zelman & Associates -- Analyst

Thanks, Adam. That's helpful. And then one follow-up question for Ward on the mortgage side. So with wemlo and the LBS system, just to clarify your comments. So it sounds like the Motto brokers will get either free or discounted access to that. So I guess my question is in terms of that LBS system, is there -- should we think about that as an area of incremental revenue profit potential for RE/MAX and through its Motto brokers or with the Motto brokers effectively "pay for that " through their kind of franchise fees?

And then it sounds like you're suggesting the opportunity maybe at least revenue wise might be even greater outside of the Motto network of loan brokers or broker -- mortgage brokers that might want to use this product. So maybe just clarify there around the comments you made about that either free access or discounted access on the Motto side and kind of what the potential there is. Thank you.

Ward Morrison -- President of Motto Franchising, LLC and wemlo

Yeah, great question. So on the Motto side, we used to provide [Technical Issues] Encompass and we will be [Technical Issues] all of our people off of that platform on to the wemlo LBS. Therefore, it will be no cost to our Motto owners to be on that platform because it was no cost to be on the Encompass platform prior. However, because they're in the platform now, we believe it will drive the processing service of wemlo that side of the house because now obviously hit a button that says process now with wemlo. So we believe that's going to start to move a needle on the wemlo processing.

But you are right. As of January, we will roll out the wemlo LBS to the mortgage broker channel as a software-as-a-service. So we believe there is incremental upside there as we start to roll the program out and offer to the industry. And we do believe that will be additional revenue that we can gain share on as we move forward.

Ryan McKeveny -- Zelman & Associates -- Analyst

Got it. That makes sense. Thank you, Ward.

Operator

Your next question comes from Anthony Paolone from JP Morgan. Please go ahead. Your line is open.

Anthony Paolone -- JP Morgan -- Analyst

Great. Thank you, and good morning. My first question is with regards to the reduced agent count growth. Can you talk about where -- what regions perhaps are driving that and also maybe what's changed or why more specifically the reduced outlook?

Nick Bailey -- President

Absolutely. So coming into '21 and especially coming into the quarter, we had begun to see obviously the investments that we've made and the attention around just overall recruiting and have a lot of bright spots from around the areas globally. Canada is doing terrific. We have states within the U.S. that are performing just as we had indicated early in the year that we expected to add hundreds of agents throughout the year.

Something that we looked at that I mentioned on the earlier question that impacted us coming into Q3 is as we look around the U.S. specifically and we have three states, California, Indiana and Ohio -- or I'm sorry, New Jersey, that when we were looking at some of the franchisees in those areas, we had some significant underperformers that actually were terminated from our system in Q3 and that did somewhat interrupts that momentum that we had coming into Q3.

So still looking at continuing on with the momentum of the gross adds and the top line, but we had some unexpected terminations coming into Q3 that we don't expect as much moving forward. And then as far as global, that's one thing to mention. Unlike the U.S. and Canada, the one thing that we're seeing globally is the pandemic continues because of the severity of some of the lockdowns in specific countries completely hinder business growth. I mean even as recent as yesterday the news around Europe and the amount of restriction that's happening is just much more significant than what we're seeing here in North America, and we believe that that continues to affect what we had originally forecasted.

Anthony Paolone -- JP Morgan -- Analyst

Okay. Got it. And then you had called out the strength in Canada and the growth that you're achieving there. Can you talk about or put some brackets around where you see your market share now? Where you think that could go? Just trying to understand the runway you might have there still.

Nick Bailey -- President

Yeah. I think that market share has always been a great contributor to our strength all across Canada, which we average approximately 30%-plus all across Canada and even in, say, the Quebec region upwards of 40%. So very, very strong market position throughout the country.

And I think you couple that with a strong real estate market, it even enhances our ability to grow and we see that across the U.S. as well. In the cities and the markets where we have the strongest amount of market share, we have the greatest strength in franchise sales, we have the greatest strength in agent count growth. And so just Canada as a whole, we believe market share is a major driver in helping us grow organically.

Anthony Paolone -- JP Morgan -- Analyst

Okay. And then just last one, if I might, for Karri. Can you maybe just help us with anything we should keep in mind in normalizing SOA and also like non-cash comp on a go-forward basis because it sound like -- it looked like maybe those were kind of noisier in the quarter?

Karri Callahan -- Chief Financial Officer

Yeah. So there's a little bit of noise in the quarter with regards to some of the equity-based compensation. It was up a little bit due to some one-time charges for INTEGRA on a prospective basis in Q4 and beyond, looking to get back to kind of what we thought at the beginning of the year in terms of kind of a $7 million per quarter run rate. A couple of other things non-cash wise related to amortization expense, so we are expecting this incremental amortization expense coming from the INTEGRA acquisition quarterly run rate kind of in that $2 million to $3 million of incremental amortization expense as a result of INTEGRA.

Anthony Paolone -- JP Morgan -- Analyst

Okay. And so that will be in -- that would be an adjusted EPS hit or...

Karri Callahan -- Chief Financial Officer

It won't -- yeah, that won't affect adjusted EPS.

Anthony Paolone -- JP Morgan -- Analyst

Yeah. I'm sorry, it will or will not?

Karri Callahan -- Chief Financial Officer

Will not.

Anthony Paolone -- JP Morgan -- Analyst

Okay. Got it. Thank you.

Operator

[Operator Instructions] Your next question comes from James Hawley from Stephens. Please go ahead. Your line is open.

James Hawley -- Stephens Inc. -- Analyst

Hey, good morning. Thanks for taking my question. So first here, I just -- in the earnings release, you cited that a revenue driver was fewer recruiting initiatives. Could you briefly shine some light on the initiatives that you may have dropped and then some that you also kept that are working well?

Karri Callahan -- Chief Financial Officer

Sure. Good morning. So when we look at recruiting initiatives, it's really a holistic view across the value proposition and then other incentives that we might pull from a financial perspective. That's nothing new that we've done. It's been a holistic view really over the last several years. We had placed a little bit heavier focus on some of the financial incentives previously while we were really focusing on enhancing the value proposition. And really as we've transitioned into 2021, really much more of a focus on delivery of the value proposition and less utilization of fee waivers. And so that's what you're seeing in terms of the year-over-year comp from a financial perspective.

James Hawley -- Stephens Inc. -- Analyst

Okay, understood. Thanks. And then just one more quick here. Could you also share pre-acquisition with INTEGRA its agent count and how it's been trending across the U.S. and Canada relative to RE/MAX owned?

Karri Callahan -- Chief Financial Officer

Yeah. So as we look at the INTEGRA regions holistically, they have been on the forefront of growth from an agent count perspective. So both the U.S. and Canada have been outsized growers in terms of comparisons against the rest of our operations. That's part of the reason why we were so excited about the opportunity. And as we noted on the scripted remarks, in the third quarter the asset even performed better than our expectation. And so, continuing to see that outsized performance both in terms of agent count growth as well as that leading to revenue and earnings contributions as well.

James Hawley -- Stephens Inc. -- Analyst

Great. Very helpful. Thank you. Appreciate it.

Operator

We have no further questions in queue. I'd like to turn the call back over to Andy Schulz for any closing remarks.

Andy Schulz -- Senior Vice President, Investor Relations

Thank you, operator, and thanks to everyone joining us on the call today. Have a great holiday week for those in the U.S. This concludes the call.

Operator

[Operator Closing Remarks]

Duration: 35 minutes

Call participants:

Andy Schulz -- Senior Vice President, Investor Relations

Adam Contos -- Chief Executive Officer and Board Director

Nick Bailey -- President

Ward Morrison -- President of Motto Franchising, LLC and wemlo

Karri Callahan -- Chief Financial Officer

Richard Hill -- Morgan Stanley -- Analyst

Ryan McKeveny -- Zelman & Associates -- Analyst

Anthony Paolone -- JP Morgan -- Analyst

James Hawley -- Stephens Inc. -- Analyst

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