RE/MAX Holdings, Inc.
Q4 2020 Earnings Call Transcript

Published: 26 Feb 2021

[Operator:]

Good morning and welcome to RE/MAX Holdings, Inc.’s fourth quarter and full year 2020 earnings conference call and webcast. My name is Brandy and I will be facilitating the audio portion of today's call. At this time. We'd like to turn the call over to Andy Schultz, senior vice president of Investor Relations. Mr. Schulz.

[Andy Schulz:]

Thank you, operator. Good morning, everyone, and welcome to RE/MAX Holdings, fourth quarter and full year 2020 earnings conference call. Please visit the investor relations page of RE/MAX dot 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 to our prepared remarks and answers to your questions on today's call may contain forward looking statements. Forward looking statements include those related to aging 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 fourth quarter and full year 2020 financial results, press release and other FCC filings. Also, we will refer to certain non-debt measures on today's call. Please see the definitions and reconciliations of non-debt measures contained. Please see the definitions and reconciliations of non-GAAP measures contained in our most recent quarterly financial results press release, which is available on our website. Joining me on our call today are Adam Contos, our Chief Executive Officer; Karri Callahan, our Chief Financial Officer; Nick Bailey, RE/MAX Chief Customer Officer; and Ward Morrison, President of Motto Mortgage. With that, I'd like to turn the call over to RE/MAX Holdings CEO, Adam Contos. Adam?

[Adam Contos:]

Thank you, Andy, and thanks to everyone for joining our call today. Looking at slide three, a surging housing market underpinned our strong fourth quarter results and provided a fitting capstone to what was an unforgettable year. Our employees are supporting our affiliates while working largely from home, and they will continue to do so until it is safe to return to the office on a larger scale. Hopefully sometime later this year. I'm proud of our team and a terrific work they did in 2020. We remain encouraged by the trends we are seeing in our business with a buoyant housing backdrop, expected contributions from our recent acquisitions and an upward progress in our legacy business. We think we're poised for meaningful growth in twenty, twenty-one and beyond. Highlights of the fourth quarter included revenue of seventy-two point four million, adjusted EBITDA of twenty-three point eight million, adjusted diluted EPS of forty-seven cents. Total RE/MAX agent count increased up over five percent year over year and finished at almost one hundred thirty-eight thousand. Agents and model franchise sales finished on a high note, capping a record year. Turning to slide four on our third quarter call, I spent some time discussing our overall M&A strategy and our exciting acquisitions if we won't get a better group. Since then, many people have asked us to frame up our future market opportunity. And in summary, we think it is sizable, excluding the marketing funds.

[Nick Bailey:]

Thanks, Adam. Good morning, everyone. Looking at Slide six, overall, Agent Count grew at a nice clip, up more than five percent year over year. We added almost 7000 agents worldwide during 2020, an especially impressive feat during a global pandemic. Our aging count performance outside the U.S. and Canada grew at a robust 16 percent during the year. We saw widespread growth globally with certain countries in Europe, South America and Africa. Among the standout performers. We also added agents are in the fourth quarter throughout Canada, finishing up almost two percent for the year. Again, another notable performance given our leading market share, as well as the events of 2020 after a very solid third quarter Agent Count. The U.S. held steady during Q4. Looking ahead, we remain focused on recruiting and retention and creating more opportunities for our affiliates. We expect the macro housing environment will remain robust in the coming year. With strong demand outpacing supply, the battle for listings will stay highly competitive, and agents who are experienced, productive and armed with seller focused tools such as our first app should enjoy an edge in that regard. We believe our efforts will pay dividends in twenty, twenty-one and we expect to grow our agent count, including the USA and Canada. This year we've made significant investments over the past few years to enhance and improve our value proposition and we continue to invest heavily to ensure we're delivering the tools, resources and competitive advantages that help reenacts. Agents continue to outpace their competitors. We've looked at our fee structure and decided to make a small adjustment effective April 1st, 2021 and July 1st in New York State, the monthly continuing franchise fee in the U.S. company-owned regions will increase by five dollars per agent. This investment will ensure continued expansion of the systems and services that help RE/MAX affiliates stand out in their market. Turning to slide seven over the past couple of years, we've added powerful technology and talented colleagues via our acquisitions of Booze First and Cadbury Group alongside our experience RE/MAX technology team, our substantial organizational realignment last year to create a single unified tech team is now complete. This team of over 200 members maximizes collaboration, focuses on user experience and operates with purpose, passion and excellence. The goal is to harness our tremendous capabilities to deliver the best unified agent consumer experience possible as we build out our platform simultaneously simplified the user experience with expanding its capabilities that we solicit and receive valuable feedback from our network.

[Ward Morrison:]

Thanks, Nick. Moving to Slide eight, as Adam mentioned, model had a terrific year, our best year yet in our short history. In 2020, the model network generated almost two point five dollars billion in loan volume and helped 10000 families finally realize their dreams of home ownership, effectively doubling time results. We had three core areas of focus in 2020 franchise sales, unit profitability and technology, and we achieved major milestones in each of them. We also continue to improve, innovate and mature in virtually all facets of the business during this past year.

[Karri Callahan:]

Good morning, everyone. In addition to reviewing our fourth quarter performance, I want to expand on Adams earlier comments about our growth trajectory and then outline our Q1 and FY 21 outlook. Moving to slide nine. Increasing existing home sales and moderate growth drove strong organic revenue performance during the fourth quarter, with much of that revenue flowing through to the profit line. Our key leading indicator, Remak agent count and model franchise sales continued to grow. Fourth quarter revenue, profit and margins all exceeded our expectations, and our cash flow generation remains solid as we converted 70 percent of adjusted EBITDA into free cash flow during 2020. Total revenue was seventy-two point four million, an increase of approximately four point three million- or six-point two percent compared to the fourth quarter of 2000, nineteen organic revenue rose four percent, primarily used to increase broker fees from higher existing home sales, rising home prices and modest growth, partially offset by reduced event income due to covid-19 restrictions and previously announced agent recruiting initiatives. Acquisitions contributed to increased overall revenue by two-point one percent and at best with negligible recurring revenue stream, which consists of continuing franchise fees and annual dues, were virtually flat for the fourth quarter of 2019 and excluding the marketing funds, accounted for sixty-one-point eight percent of revenue in the fourth quarter of 2020, compared to sixty-six-point six percent in the same period in 2019. Looking ahead, we are excited to be holding our annual Asian conference next month due to the fact that the majority of agents will participate virtually. We anticipate that our Q1 revenue will be approximately one point five million less than our historical run rate and should be largely offset by associated cost savings also for the full year 2021. We believe the runoff of legacy BU's revenue should decrease both revenue and adjusted EBITDA by about two million this year. Looking at five, 10, selling, operating and administrative expenses, we're forty point eight million in the fourth quarter of 2020, an increase of five point six million-, or fifteen-point nine percent compared to the fourth quarter of 2019. And excluding the marketing funds represented seventy-four-point six percent of revenue, compared to sixty-nine-point four percent in the prior year period selling. Compared to sixty-nine-point two percent in the prior year period, selling, operating and administrative expenses increased primarily due to higher equity-based compensation funds and personnel costs, largely from acquisitions and discretionary bonuses. These increases were partially offset by cost savings measures implemented in 2020, as well as lower bad debt expense due to strong collection. Our Cost Savings Initiative enacted last year has largely ended. The notable exception is that our travel and events related expenses are expected to be muted, at least initially in 2021. Also, we anticipate legal expenses will run about a million dollars higher this year due to ongoing industry litigation. Moving to slide 11, we have been meaningfully reinvesting in our business for future growth over the past few years. We believe those investments will start making a positive difference in our financials beginning this year and then even more so in 2022. As Adam mentioned earlier, we believe we are poised for meaningful growth in 2021, even normalizing for the COVID-19 related fee waivers we extended to our affiliates during the second quarter of last year. We expect to grow organically in the mid-single digits in 2021. In addition to expected top contribution from our WILLO and the very group acquisitions. From a profit perspective, our business model has significant leverage. As we ramp up the top line, we expect margin expansion to resume likely next year. Also, as we mentioned last quarter, margins will be adversely impacted initially in 2021 due to our first Venlo and Padbury acquisitions. But that impact should lessen as the year unfolds and each acquisition gets closer to breakeven, despite an estimated net investment in First Willow and Cadbury of between two and a half and three and a half million this year and other ongoing investments in our business, we expect to grow absolute dollars of adjusted EBITDA in 2021. We expect our new businesses from the past four years motto First we and Cadbury group individually and collectively flip from a net investment to positively impacting earnings over the next year alongside the expected improvement in our RE/MAX business, we would be disappointed if we didn't generate at least 10 million more and adjusted that in 2022 and we anticipate for 2021. This assumes no additional acquisitions and of course. But the housing market remains as healthy next year as we expect it to be this year. Our business continues to generate a healthy amount of cash flow. We will remain disciplined and allocate capital to the best potential value, creating opportunities. Our capital allocation priorities remain unchanged. We plan to allocate capital to acquiring independent regions, reinvesting to drive future organic growth, exploring other strategic acquisitions and partnerships, and returning capital to shareholders. Turning to Slide 12, the company's first quarter and full year, 2021 outlook assumes no further currency movements, acquisitions or divestitures for the first quarter of 2021. We expect Asian counts to increase four and a half to five and a half percent over first quarter. 2020 revenue in a range of seventy-one to seventy-five million, including revenue from the marketing funds in the range of 18 to 19 million and adjusted EBITDA in a range of twenty-one and a half to twenty-four and a half million for the full year. 2021. We expect Agent Count to increase four to five percent over a full year. 2020 revenue in a range of three hundred to three hundred and ten million, including revenue from the marketing funds and the range of seventy-one to seventy-four million and adjusted EBITDA in a range of one hundred and three to one hundred and seven million. Now I'll turn it back to Adam.

[Adam Contos:]

Thanks, Karri. Moving to slide 13, we honor 2021 with positive momentum, our end markets are enjoying a nice tailwind right now. We have made some targeted strategic moves to capitalize on those dynamics over the past few years, which we believe will increasingly show up in our financial results starting this year. We believe we are poised for meaningful growth in twenty, twenty-one and beyond. With that operator, let's open it up for questions.

[Operator:]

At this time, if you would like to ask a question, please, for a start, something number one on your telephone keypad, again, that is stars and the number one, we will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Anthony Paolone with JPM Securities, LLC.

[Anthony Paolone:]

Thanks. Good morning. My first question revolves around just U.S. agent count, can you maybe give a little more color as to just more broadly, given the strength in housing, whether you're seeing just more agents move into the market and just the general opportunities out there? And as you try to reinvigorate growth, I guess, into 2021 on that?

[Nick Bailey:]

Thanks for the question. You know, when you look at total realtor count in the U.S., the national Association of Realtors just several months ago announced that they hit an all-time high in membership. So, we have seen an increase of licensees coming into the market in general. And that does affect some companies. It affects us slightly. But at the same time, we are not the destination for every single agent. We focus on more of the top producing full-time associates. So, a lot of those new agents are not our primary targets. That being said, though, obviously the pool is large and the investments that we've made in recruiting over the last year are bearing fruit and we expect those to show good results for the upcoming year.

[Anthony Paolone:]

Okay, and then the decision to increase the continuing franchise fees, these refreshes on where they stand today on a monthly basis. And then I guess if you do the math here, right, it would seem to add maybe four million bucks a year to revenue is getting sort of the order magnitude, right.

[Karri Callahan:]

Hey, good morning, Tony, it's Karri. So, you know, with regards to the increase on average and the company owned regions before the increase, average is about one hundred and twenty-eight dollars per agent per month. That increase is going into effect on April 1st. So, the impact to twenty, twenty-one is actually closer to the two-million-dollar range.

[Anthony Paolone:]

Okay, got it, and then you saw someone sticking with you, Carrie, can you just give us some sense as to run rate stock comp, whether the fourth quarter is an indication or whether that was just outsized?

[Karri Callahan:]

Yes, the fourth quarter was a little bit outsized, you know, on a go forward basis, kind of looking in that seven million, a quarter range, a lot of that really is tied to the incremental stock comp from the two acquisitions that we did in the third quarter of 2020, where we use some equity as a part of that. So, I think about seven million dollars per quarter run rate for twenty-one is a good estimate.

[Anthony Paolone:]

Okay, great. Thanks for your help.

[Operator:]

Your next question comes from the line of Ryan McKie McAvaney with Zelman & Associates.

[Ryan McKeveny:]

Good morning. Nice job on the quarter. I'm curious on the mortgage side of things with Motto's. So, has there been any shift in the last year, maybe even more recently, the last six months in terms of kind of the interest list of who's showing up for you guys? And obviously very nice to see the progress with both kind of RE/MAX franchise owners as well as other players within kind of brokerage space with other brands. But I guess there's a lot of discussion about the potential of just the wholesale broker channel in the mortgage market more generally and, you know, potentially getting to a point where there's some movement of mortgage professionals out of the retail channel to the wholesale broker channel more directly to the broker side. So, just curious, maybe forward. Are you seeing that movement, you know, thus far? Do you expect that movement? Any thoughts you could share there would be helpful. Thank you.

[Adam Contos:]

Yet we're still very bullish on Broadbridge, you know, up 74 percent of our sales continue to be real estate of about 61 percent of the overall total are still RE/MAX. But we're continuing to grow the other brands, the national brands, whether it's, you know, Quest teams or teams, C21, So, the byes, Compass, we pretty much have started to expand across. And as soon as we get into a company or an entity, for instance, they just start to refer us out to their other people. So, we've got an additional Kiwi team, additional U.S. teams recently. What we're really, you know, seeing now or hope to see is that movement. As the 10 year goes up, we tend to have more purchase money transactions in our particular models because we're tied to a lot of real estate companies. So, as the 10 year goes up and the market changes a little bit and there5 slow down, we think that's only bullish for brokerage and models in general that are tied to real estate companies. So, I think we're going to see some good movement out of retail into gropers this year, particularly, you know, the 10 year continues on this trend up that we all think it might this year a little bit more because models continue to emphasize that purchase money. So, that's the key for particularly our network and brokerage.

[Ryan McKeveny:]

That's very helpful. Thank you. And Adam and Nick on the Canadian side of things. So, you called out in the in their lease, you know, some nice growth in the quarter and Agent Count. I'm just curious, can you can you give us an update on kind of the general macro side of things within Canada and, you know, sort of what's driving that, the lift that you had had this quarter?

[Nick Bailey:]

Sure. Would you look at Canada as a whole, we definitely look at it, you know, across the country and with the Toronto Greater Toronto area and the Ontario area just economically has seen just incredible boom with no sign of slowing down. And so just that has worked in the favor of a tremendous growth in the markets and the opportunity, which I think in turn has helped our growth as well.

[Adam Contos:]

And I'll add a little bit to that, Ryan, and great question. Thank you. You know, when you look at the covid response to the covid tailwind that's been given to the housing market, we do see that just as much throughout Canada as we have in the United States. You know, kind of the flight to suburbs as well as, you know, the emergence of larger home buying sectors with the, you know, the wealthy millennial things of that nature. And that has been extremely prolific in Canada as well. It's a great housing market throughout North America. I guess you could say, you know, when it when it comes to looking at the tailwinds and they seem to be consistent throughout the continent.

[Ryan McKeveny:]

That's great. Thanks, Adam.

[Operator:]

Your next question comes from the line of Vikram Malhotra with Morgan Stanley.

[Vikram Malhotra:]

Thanks for taking the questions and nice quarter. I just was hoping you could expand a little bit more on the future revenue opportunity you talked about to the various businesses. Maybe if you could break it out a little bit more, talk about potential timing and just related to that, as the revenue grows. Can you give us a sense of how the EBITDA margin is likely to trend versus sort of the prior few years?

[Adam Contos:]

Hey, good morning, Vikram. Thank you. And we're excited about the future revenue opportunities and the diversification that we're building into the business model, particularly through the data technology, as well as the expansion of a model and how all of those things led to tailwind to potential RE/MAX growth and opportunity, as well as the global expansion so that we can continue to, you know, infuse these different opportunities globally as they become available. So, you know, the we 've been relatively understated in in our excitement so that we could start building upon the data monetization opportunities. So, you know, we have started pulling back the curtain a little bit more on that in our growth of that infrastructure, given, you know, the acquisitions that we've made and particularly one that that we're encouraged by is the commercialization capabilities of the very experienced Cadbury group that we've acquired recently when it comes to our data and monetization skills. So, with that, I'll hand it over to Kerry to dove a little bit deeper.

[Karri Callahan:]

Yeah. Thanks, Adam. So, Vikram, you know, we really tried to frame up what we think the opportunity is just of us with our existing with our existing assets and really looking at the business now kind of across two segments between real estate and mortgage on the mortgage side of the house, as word was talking about, we've got a lot of momentum with motto. So, you know, really trying to frame this up as aspirational and over time what could be achieved. And so, you know, we've talked historically about, you know, scaling motto to be a thousand open offices, if we could do that over time. And we think there is momentum to do so. That's a 50 million dollar plus revenue opportunity. Then you layer on top of that. We MLO Ward previously was talking about just momentum coming into the mortgage brokerage channel. If we can capture even a portion of loans that are coming through sausen model office footprint, again, we think that that opportunity is, you know, as sarsen significant as it would be from our legacy motto, royalty fees and then flipping onto the real estate side of the house. You know, for the last several years since the IPO, we've talked about allocating capital to independent regions. You know, over time, if those catalysts can come to fruition, albeit opportunistic, you know, that's about a 50-million-dollar topline revenue contribution. And then Adam was talking about other r levers in terms of data monetization, looking at how we monetize our global footprint, where we've had tremendous growth, continuing to leverage all of the recruiting and retention initiatives that Nick is working on, pulling on pricing, looking at just continued tailwinds from a macro perspective, you know, that's what we're really bullish about over time as we think about our existing footprint. But I think there's even opportunities on top of that because of the leverage in the business, the cash flow generation that we have in terms of expanding into other adjacencies. And so that's what we're excited about. You mentioned the margin as well. And I think that that's an inherent strength to our business model. There is inherent leverage there. If we get the top line going, which we're definitely seeing some confidence in, that in 21, you know, we think the margin can follow over time.

[Adam Contos:]

And I'll just close up with just one kind of final bow on this whole thought, Vikram. And that's that. You know, ultimately our goal is to make the real estate agent, the franchisee and the loan originator and loan mortgage broker smarter and better, capable of helping the consumer in this whole process. So, when it comes to all of these things making each other or better, we feel that that entire process works to benefit each other r in this. And that's how we create a greater tailwind in that that holistic growth go to.

[Vikram Malhotra:]

That makes sense. Just on the on the going back to the franchise, can you remind us sort of is this seems like the biggest increase in the U.S. after a long time. Can you remind us sort of the thinking more broadly on both franchise fees? And I you sort of a more a systematic increase like you have, I think, in Canada, if I'm not wrong. And how do you think about the, you know, how much to increase that number by?

[Karri Callahan:]

Yes, I think things like, erm, good question, you're right now we're really focused on the continuing franchise fees increase, we're always looking at and evaluating the value proposition, the tools and services that we're providing to the network. And, you know, we'll make decisions, you know, with respect to pricing going forward. But right now, what we've committed to is the increase in the continuing franchises.

[Adam Contos:]

Yeah, the one thing I would just add to that is it's been approximately five years since we've made an adjustment to that particular category. And given the investments that we've made and where we are, it seemed to make sense on timing.

[Vikram Malhotra:]

That makes sense and then just last one from a branding standpoint, this may be down the road, but even though you have sort of multiple blogs or multiple line, I'm wondering sort of is there a you are part to there be a benefit by unifying it all under one brand? I know its modern mortgage and book and others, but I'm just wondering, is this from a branding perspective, you envision sort of having these business lying under different brands or, you know, they actually could just be one Democrat?

[Adam Contos:]

Yeah, that’s a question that we've been kicking around and analyzing very, very carefully. However, you know, there are benefits to having multiple brands and there are benefits to being known as the particular and very succinct focus leader in your space. So, definitely considerations that we've taken a look at. But we’re not necessarily willing to, you know, strip away some brands that we've been building as very strong at this point to combine the m. And, you know, we want to we want to make sure when people hear a name, they know what that name refers to and that's, you know, brand matters. Ward you want to add a little to that?

[Ward Morrison:]

I also think something like motto, you know, gives you the example where if we would have called it RE/MAX mortgage, we wouldn't have to sell outside of our network. So, by calling a model mortgage, it creates an independent nature that allows us to expand across the whole real estate ecosphere and sell to other brands. So, I think as we look at adding brands, it's trying to figure out is the only real estate specific where we're going to sell within just RE/MAX base versus whether we're going to sell outside. And if we're going to sell outside, we may keep branding separate so that we can still attract those people who may not be attracted to RE/MAX name at the onset. So, that's sort of where we're looking at.

[Vikram Malhotra:]

That's a good point. Thanks so much for the time.

[Operator:]

Your next question comes from the line of Stephen Sheldon with William Blair.

[Stephen Sheldon:]

Hi, thanks. Good morning. When you think about the 200 million top line opportunity, it's how much of that could come from better monetization of the agent base outside of the US and Canada, Canada. And any other thoughts on how you could drive better monetization there over time?

[Karri Callahan:]

Yeah, so, I mean, I think it's really a two-pronged approach, because I think if you think about overall our competitive advantages, our global footprint and the 50000 plus agents that we have and over one hundred and ten countries and territories is absolutely a competitive advantage. You know, we think over time, you know, we could double that base and that's an incremental 10 million dollars. Just that the existing. We could double that base, and that's an incremental 10 million dollars, just that the existing revenue per agent. But I think the true opportunities that there lies with enhanced value proposition and really looking at how we leverage our data and technology infrastructure. And that's a huge focus of ours right now. Obviously, starting in the US, a deliberate focus on Canada in the near term here in twenty-one, but already proactively thinking about how we expand on that over time and increase that revenue per agent to that base outside of the US and Canada.

[Stephen Sheldon:]

Got it. Helpful. And then within the 21 guidance and apologies for any detail on how much of a drag would just be included from the recent tech acquisitions, when Loganberry first I know you said the drag should moderate with any detail on the rough full year drag you'd expect.

[Karri Callahan:]

Yeah. So, looking at the rough full year drag, it's kind of in the two and a half to three and a half million-dollar range, and that’s embedded in the guidance. I think the thing that's really exciting, though, and want to make sure that was captured was included in the scripted remarks, is we do think that, you know, the foundation is being laid here in 2001 and you're seeing that in the top line. But we would be disappointed if that kind of collective group of acquisitions didn't contribute, you know, at least, you know, call it 10 million more in earnings in 2022. So, it's kind of a three million dollar drag next year. And then we're expecting, you know, we believe that we could see some nice earnings tailwind in 20 to.

[Stephen Sheldon:]

Great, thank you.

[Operator:]

Your next question comes from the line of Mathew Gaudioso with Compass Point.

[Mathew Gaudioso:]

Hey, good morning. Maybe just a question for Nick. You talked about kind of the age and consumer experience in your script. I was wondering if you could just kind of talk a little bit more about how Bush and your technology team is really evolving that and we've had some kind of increased acquisition activity in the tech space between showing time home snap. So, just wondering if you view any competitive implications there.

[Nick Bailey:]

Yeah, so first off, in terms of the Asian consumer experience, that is twofold, one, that we're looking at kind of the buyer seller experience, how they utilize our assets that are public in search and how they interact with agents, how we tie consumers to agents via the toolset. And that's part of the reason that now we've been, gosh, just about a year since launch, we've increased leads by over 50 percent year over year to the network, partly due to how we're engaging consumers in the platform. The other piece of it, as we look at pulling the platform together r for a better age and experience to serve the consumer is creating essentially a single type of ecosystem. One of the biggest challenges we have in the real estate industry or an agent has is disparate systems with multiple agents that agents do the IR business. So, as we look to solve this, if we make the agent experience more seamless, that allows the m to connect and stay tied to their database. And you can see that with the example on leads that I mentioned and also with the testimonials and some of the results that we're seeing out of our first app, which is all tied to how agents are staying connected to their consumers, this is really showing a or shining a light on the fact that we have such low, low inventory and agents being connected. The EHI machine learning and a single ecosystem is really driving overall efficiency for top producers.

[Mathew Gaudioso:]

Got it. Appreciate the thought there. And then switching gears, maybe one for Ward just on the Wimoweh acquisition, wondering what work there is to do on the integration side and how quickly do you think the motto model franchises can ramp up on the Wimoweh platform?

[Ward Morrison:]

Yeah, I think they can ramp up pretty quickly. One is Leisinger, we have to make sure relicense and all the states that the models are so trying to get up in all 38 states, that model is currently up and then getting some level of compliance around disclosure's in those states as well. Fairly simple process. So, it's really just taking it. We're looking at we've ranked all the states that matter and which ones we have the most motto's, the easiest motto's, the easiest states. And we've already ranked all that and started making calls and getting those particular models up and running. You know, I think our intent moving forward will be a new model. We probably will put onto the We emote platform quicker than even existing. You know, as we sell, they won't know any difference. So, we can get the m using that platform fairly quickly. But then the existing models, I think we can roll out during the course of this year and have the opportunity for Animoto in. If we can roll out during the course of this year and have the opportunity for Animoto in any state that we're licensing ready to go, remember, I think the other thing is, is that we know is going to sell outside of Marto and, you know, the mortgage broker channel probably. Did you know on average on an average year they do about one point two million loans within the broker channel. You know, our total addressable market, if we could just pick up, you know, five percent of that, that's the kind of number that Kerry was talking about. You know, we're talking about 250 million dollars and, you know, eight, nine hundred dollars a file. So, the upside is very, very possible there. And that's what we're excited about, not only motto's, but, you know, outside the industry as well, because we think the technology that we purchased through the acquisition is does outstanding when it comes to processing and can be manipulated to be more like a loan brokering system in the future as well.

[Mathew Gaudioso:]

Great, thanks.

[Operator:]

Your next question comes from the line of Tom McJoynt with KBW.

[Tom McJoynt:]

Hey, good morning, guys. Thanks for taking my questions. So, just to clarify, did the 10 million dollars change from 21 to 22, the three million dollars drag to a seven million contribution to that include motto, or is that just the more kind of the other tech enabled solution?

[Karri Callahan:]

Yes, so I guess a couple of things to keep in mind there, right? If you look at the what were really saying with that 10 million is kind of if you look at the point estimate for the earnings guidance this year, as you move ahead to 2022, we'd be disappointed if that earnings didn't grow by 10 million dollars. So, just wanted to make sure to point that out and clarify it. And the outlook we are looking. We are we did include motto in that basket of, of companies as well just because it's historically been a net investment. And so, we're kind of just packaging everything together because we're excited that we think that the net investments across all of those businesses this year are going to turn in 2022.

[Tom McJoynt:]

Okay, thanks. And then as we kind of think about big businesses, do you guys have planned or targeted kind of long-term organic growth rate for those businesses and not looking at, you know, modest remake, looking at these kinds of these new solutions that you've acquired?

[Karri Callahan:]

Yeah. So, we haven't really broken it out that way. Right. We're really looking at what initiatives and what levers can we pull to just drive overall top line organic growth? You know, we are expecting for 20, 21, even excluding the fee waivers that were granted in in 2020, you know, kind of that mid-single digit range of organic growth. And I think as we're starting to see momentum here on the top line, you know, we really look at it more in aggregate.

[Tom McJoynt:]

It makes sense. Thank you.

[Operator:]

There are no further questions at this time. I would now like to turn the call back over to the speakers for any closing remarks.

[Adam Contos:]

Thank you, operator, and thank you to everyone joining the call today. That concludes today's session. Have a great weekend.

[Operator:]

This concludes today's conference call. You may now disconnect.