Company Overview - The Real Brokerage Inc (NASDAQ: REAX) is a real estate company founded in 2014, operating across almost all of the United States and four Canadian provinces [1] Analyst Background - The author of the article is a financial journalist with over 10 years of experience in communications and has worked for various economic institutions [1] - The author also runs a podcast called Storiopolis, focusing on the history of finance [1] Market Position - The company is positioned not just as a real estate entity but also as a personal investment opportunity, indicating a broader perspective on its market role [1]

Core Viewpoint - The Real Brokerage Inc. (REAX) has received a Zacks Rank 2 (Buy) upgrade due to an upward trend in earnings estimates, indicating a positive outlook for the company's stock price [1][3]. Earnings Estimates and Stock Price Movement - Changes in a company's future earnings potential, as reflected in earnings estimate revisions, are strongly correlated with near-term stock price movements [4]. - Institutional investors utilize earnings estimates to determine the fair value of a company's shares, influencing their buying or selling actions, which subsequently affects stock prices [4]. Recent Performance and Outlook - The Real Brokerage has seen a 66.7% increase in the Zacks Consensus Estimate over the past three months, indicating a positive trend in earnings estimates [8]. - For the fiscal year ending December 2025, the company is expected to earn -$0.03 per share, unchanged from the previous year [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - The upgrade to Zacks Rank 2 places The Real Brokerage in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Summary of Real Brokerage Conference Call Company Overview - **Company**: Real Brokerage - **Industry**: Real Estate Technology and Brokerage - **Founded**: 2014 - **Agent Count**: Approximately 27,000 agents in the US and Canada as of March 2025, representing a 61% year-over-year growth [6][7] Key Financial Metrics - **Revenue Growth**: Revenue increased by over 80% year-over-year [6] - **Adjusted EBITDA**: Tripled during the same period [6] - **Annual Revenue**: Grew from $15 million in 2020 to $1.3 billion in 2024 [12] - **Gross Margins**: Approximately 9% for brokerage operations; over 80% for title services and over 50% for mortgage services [26] Market Position and Strategy - **Market Share**: Currently under 2% of the overall market, indicating significant growth potential [8] - **Traditional Brokerage Model**: The industry is dominated by traditional players like Century 21 and Keller Williams, which rely on office locations and manual processes [7][8] - **Value Proposition**: Real aims to provide more value at a lower cost by eliminating the need for office space and automating back-office processes [9][8] Technology and Innovation - **Technology Platform**: Focus on AI and proprietary technology to enhance agent productivity and efficiency [15][20] - **AI Assistant**: LEO, an AI tool for agents, answers over 2,000 questions daily, improving customer satisfaction and operational efficiency [22] - **Real Wallet**: A digital wallet for agents that allows for interest on deposits and potential credit lines, currently at a run rate of $1 million [33][36] Agent Recruitment and Retention - **Agent Growth**: 85% of growth comes from referrals; 15% from inbound inquiries [40] - **Churn Rate**: Agent churn is around 7.5%, with revenue churn at 2.5%, indicating a focus on retaining high-performing agents [49] - **Competitive Landscape**: Smaller independent brokerages may struggle to compete with Real's technology and cost structure, leading to potential consolidation in the industry [46] Ancillary Services - **Title and Mortgage Services**: Currently low attach rates (4% for title, 2% for mortgage) with plans to increase through initiatives like early commission payments [28][52] - **Future Plans**: Aiming to enhance attach rates by educating agents about the benefits of using Real's title and mortgage services [54] Financial Strategy - **Share Repurchase Program**: Announced a $150 million share repurchase authorization to support agent equity programs and enhance shareholder value [56] - **Path to Profitability**: Continuous improvement in profitability metrics, with a focus on balancing growth and investment in technology [58] Conclusion - Real Brokerage is positioned for continued growth in a challenging real estate market, leveraging technology to attract and retain agents while expanding its service offerings and improving profitability [38]

Company Performance - The Real Brokerage Inc. reported a quarterly loss of $0.02 per share, better than the Zacks Consensus Estimate of a loss of $0.05, and improved from a loss of $0.04 per share a year ago, representing an earnings surprise of 60% [1] - The company posted revenues of $353.98 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 7.65%, and up from $200.74 million in the same quarter last year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates four times and topped consensus revenue estimates four times [2] Stock Outlook - The Real Brokerage shares have declined approximately 2.8% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $444.15 million, and for the current fiscal year, it is -$0.10 on revenues of $1.67 billion [7] - The estimate revisions trend for The Real Brokerage is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Technology Services industry, to which The Real Brokerage belongs, is currently ranked in the top 27% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Revenue for the first quarter reached $354 million, a 76% increase compared to $201 million in the prior year, driven by a 77% increase in closed transactions to 33,600 [9][26] - Gross profit was $33.9 million, up 63% year-over-year, while net loss improved to $5.1 million from a loss of $16.1 million in the prior year [9][30] - Adjusted EBITDA increased to $8.3 million, significantly up from $3.6 million in the first quarter of 2024 [9][31] - The company ended the quarter with net unrestricted cash and investments of approximately $35 million, up from $33 million at year-end [31] Business Line Data and Key Metrics Changes - Brokerage revenue reached $352 million, contributing to a 77% increase, while ancillary businesses generated $2.2 million, a 50% increase year-over-year [26] - RealWallet generated $126,000 in revenue during its first full quarter, with an annualized run rate exceeding $700,000, up from $500,000 previously [13][31] - OneReal Mortgage and OneReal Title saw revenue growth of 55% and 30% respectively [26] Market Data and Key Metrics Changes - The housing market experienced a 2% decline in existing home sales, contrasting with the company's 5% year-over-year increase in average transactions per agent [16][17] - The gross transaction value was $13.5 billion, an 80% increase year-over-year, with a median sale price of $380,000, up 2% year-over-year [32] Company Strategy and Development Direction - The company aims to redefine the role of real estate brokerage by providing agents with financial incentives, a proprietary technology platform, and a collaborative culture [6][8] - The long-term vision includes creating a holistic ecosystem of financial technology products and investment planning tools for agents [6][7] - The company is focusing on enhancing its technology platform and high-margin ancillary businesses to drive margin expansion and operating leverage [10][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the uncertain operating environment but believes the company is well-positioned to thrive amid technological transformations, particularly with AI [36][37] - The company remains committed to investing in innovation and expanding its service offerings to deliver long-term value for agents and shareholders [37] Other Important Information - The company transitioned all inbound agent support calls to LEO, its AI-powered assistant, which now handles thousands of interactions daily [10][41] - The agent count increased to 26,870, up 61% year-over-year, with over 800 agents added since the start of the second quarter [9][10] Q&A Session Summary Question: How is agent adoption of AI and LEO services? - Management indicated that LEO is focused on improving service to agents, handling inbound calls and thousands of daily interactions, but consumer-facing metrics are still being developed [40][41] Question: Can you discuss trends in gross margins and capping? - Management noted that a higher mix of capped agents is expected to continue impacting gross margins, but fee changes and ancillary business growth should help offset this [42] Question: What opportunities do you see with voice AI? - Management highlighted plans to transition the agent support phone line to use AI voice technology, allowing for real-time conversations with potential buyers and sellers [46][47] Question: What is driving agent recruitment success? - Management emphasized a combination of value and cost efficiency as key factors in attracting agents, with no single initiative standing out [49][50] Question: How will the transition of employees in India to full-time affect product development? - Management believes this transition will strengthen team commitment and improve time to market for initiatives [52] Question: What is the strategy for expanding ancillary services? - Management stated that the focus remains on improving operations within current markets rather than expanding to all 50 states at this time [62]

Financial Data and Key Metrics Changes - Revenue for the first quarter reached $354 million, a 76% increase compared to $201 million in the prior year, driven by a 77% increase in closed transactions to 33,600 [9][26] - Gross profit was $33.9 million, up 63% year-over-year, while net loss improved to $5.1 million from a loss of $16.1 million in the prior year [9][30] - Adjusted EBITDA increased to $8.3 million, significantly up from $3.6 million in the first quarter of 2024 [9][31] - The company ended the quarter with net unrestricted cash and investments of approximately $35 million, up from $33 million at year-end [31] Business Line Data and Key Metrics Changes - Brokerage revenue reached $352 million, primarily contributing to the overall revenue growth, while ancillary businesses generated $2.2 million, a 50% increase year-over-year [26] - OneReal Mortgage saw a 55% increase, and OneReal Title experienced 30% growth in revenue [26] - RealWallet generated $126,000 in revenue during its first full quarter, with an estimated annualized run rate exceeding $700,000, up from $500,000 previously [13][31] Market Data and Key Metrics Changes - The housing market showed a 2% decline in existing home sale transactions, contrasting with the company's 5% year-over-year increase in average transactions per agent [16][17] - The median sale price was $380,000, reflecting a 2% increase year-over-year [32] Company Strategy and Development Direction - The company aims to redefine the role of real estate brokerage by providing agents with financial incentives, a proprietary technology platform, and a collaborative culture [6][8] - The long-term vision includes creating a holistic ecosystem of financial technology products and investment planning tools for agents [6][7] - The company is focusing on enhancing its technology platform and high-margin ancillary businesses to drive margin expansion and operating leverage [10][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain operating environment but expressed confidence in the company's ability to thrive amid technological transformations, particularly with AI [34][35] - The company plans to continue investing in innovation and expanding its service offerings to agents and clients [35] Other Important Information - The company transitioned all inbound agent support calls to LEO, its AI-powered assistant, which now handles thousands of interactions daily [10][39] - The agent count increased to 26,870, up 61% year-over-year, with over 800 agents added since the start of the second quarter [9][10] Q&A Session Summary Question: How is agent adoption of AI and LEO services? - Management indicated that LEO is focused on improving service to agents, handling inbound calls and thousands of daily interactions, but consumer-facing metrics are still being developed [38][39] Question: Can you discuss trends in gross margins and capping? - Management noted that a higher mix of capped agents is expected to continue impacting gross margins, but fee changes and ancillary business growth should provide some offset [40] Question: What opportunities do you see with voice AI? - Management highlighted plans to transition the agent support phone line to use AI voice technology, allowing for real-time conversations with potential buyers and sellers [44][45] Question: What is driving agent recruitment success? - Management emphasized a combination of value and cost efficiency as key factors in attracting agents, with no single reason identified for the growth [49] Question: How will the transition of employees in India to full-time affect product development? - Management stated that while there would be no financial impact, the transition is expected to strengthen team commitment and improve time to market for initiatives [51] Question: What is the strategy for expanding ancillary services? - Management clarified that the focus remains on improving operations within current markets rather than expanding to all 50 states at this time [61]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $354 million, a 76% increase compared to $201 million in Q1 2024, driven by a 77% increase in closed transactions to 33,600 [8][27] - Gross profit increased to $33.9 million, up 63% from $20.8 million in the prior year, while net loss improved to $5.1 million from a loss of $16.1 million [8][32] - Adjusted EBITDA rose to $8.3 million, more than doubling from $3.6 million in Q1 2024 [9][33] - The company ended the quarter with net unrestricted cash and investments of approximately $35 million, up from $33 million at year-end [33] Business Line Data and Key Metrics Changes - Brokerage revenue reached $352 million, contributing significantly to overall revenue growth, while ancillary businesses generated $2.2 million, a 50% year-over-year increase [27][28] - OneReal Mortgage saw a 55% increase in revenue, and OneReal Title grew by 30% [28] - RealWallet generated $126,000 in revenue during its first full quarter, with an annualized run rate exceeding $700,000, up from $500,000 previously [13][29] Market Data and Key Metrics Changes - The existing home sale industry experienced a 2% decline in transactions, contrasting with the company's 77% increase in closed transactions [8][16] - The median sale price was $380,000, reflecting a 2% year-over-year increase [34] Company Strategy and Development Direction - The company aims to redefine the role of real estate brokerage by providing agents with financial incentives, a technology platform, and a collaborative culture [6][7] - The long-term vision includes creating a holistic ecosystem of financial technology products and investment planning tools for agents [6] - The company is focusing on enhancing its technology platform and high-margin ancillary businesses to drive margin expansion and operating leverage [10][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain operating environment but expressed confidence in the company's model designed to thrive in any market condition [37][38] - The rise of AI is seen as a transformative opportunity, with the company actively investing in innovation and technology to enhance agent productivity [37][39] Other Important Information - The company transitioned all inbound agent support calls to LEO, its AI-powered assistant, which now handles thousands of interactions daily [10][41] - The agent count increased to 26,870, a 61% rise year-over-year, with over 800 agents added since the start of Q2 [9][10] Q&A Session Summary Question: Agent adoption of AI and LEO services - Management indicated that LEO is currently focused on improving service to agents, handling inbound calls and providing support for compliance and tech-related questions [41][42] Question: Trends in gross margins and capping - Management noted that a higher mix of capped agents is expected to continue impacting gross margins, but fee changes and growth in ancillary services will help offset this [43][44] Question: Opportunities with voice AI - Management discussed plans to leverage voice AI for agent support and consumer interactions, enhancing the value proposition for agents [48][49] Question: Agent recruiting and value proposition - Management emphasized the importance of providing value and maintaining a balance between cost and service to attract agents, with no single factor driving recruitment [51][52] Question: Impact of converting contractors to full-time employees - Management stated that this transition would strengthen team commitment and potentially improve time to market for product initiatives [54] Question: Growth pipeline and onboarding - Management confirmed a strong pipeline with no significant changes in onboarding times, despite challenging market conditions [58][61] Question: Expansion to all 50 states for ancillary services - Management clarified that the focus remains on improving operations within current markets rather than expanding to all states at this time [62]

Company Overview - The Real Brokerage Inc was founded in 2014 and aims to disrupt the traditional real estate brokerage model by offering agents higher value at a lower cost[11] - The company's vision is to redefine the home buying and selling process and enable agents to build long-term wealth[11] Financial Performance - The company's last twelve months revenue as of Q1 2025 was $1418 million[13] - The company's last twelve months Adjusted EBITDA as of Q1 2025 was $446 million[15] - As of Q1 2025, the company had 26870 agents[13] - The company's gross profit for the three months ended March 31, 2025, was $33936 thousand[164] Agent Value Proposition - The company offers a competitive 85%/15% commission split, favoring agents, with agents keeping all gross commission income after reaching a $12000 annual cap[40] - The company provides a revenue sharing model where agents can earn additional income by receiving a percentage of commissions generated by agents they attract to Real[40] Technology and Innovation - The company's proprietary software platform, reZEN, offers a comprehensive range of tools for real estate agents[54] - The company launched Real Wallet in Q4 2024, offering a Real-branded debit card for U S agents and a business line of credit for Canadian agents, generating $126K in revenue in Q1 2025[60,62] Market Position and Growth - Since 2021, Real has grown agent count by over 6x, even as the Existing Home Sales market has declined by over 30% during that time[24] - The company represents less than 2% of the US agent market share[72]

Group 1 - Real Brokerage (NASDAQ: REAX) is recognized as an impressive disruptor in the market, although it is currently trading at an expensive valuation due to its superior long-term growth prospects [1] - The stock has experienced a decline since the last analysis, indicating potential volatility in its market performance [1] Group 2 - The author expresses a focus on value investing, particularly in emerging markets, and admires renowned investors like Li Lu and Peter Lynch [1] - The investment philosophy emphasizes an owner-mindset while largely ignoring macroeconomic noise, suggesting a long-term investment strategy [1] - The author has been influenced by Austrian economic thinkers and highlights the importance of clear and logical economic reasoning in investment decisions [1]

Financial Data and Key Metrics Changes - The company reported record fourth quarter and full year 2024 results, with total transaction value reaching $49 billion, up 90% year over year, while revenue grew to $1.3 billion, marking an increase of 84% from $689 million in 2023 [12][13] - Gross profit in 2024 grew 82% year over year to $115 million, while adjusted EBITDA reached a record $40 million, up 188% from the prior year [13][49] - The company ended the year with a net loss attributable to owners of $26.5 million, compared to a net loss of $27.5 million in 2023 [48] Business Line Data and Key Metrics Changes - For the full year 2024, mortgage and title services grew by a combined 105%, with over 200% growth at One Real Mortgage and 60% growth at One Real Title [20][23] - Revenue from ancillary businesses totaled $2.5 million during the fourth quarter of 2024, an increase of 176% versus the fourth quarter of 2023 [50] Market Data and Key Metrics Changes - The total value of homes transacted over the platform increased to $14.6 billion in the fourth quarter of 2024, a 115% year over year increase [62] - The median sale price of properties sold by agents was $380,000 in the fourth quarter of 2024, representing a 7% year over year increase [62] Company Strategy and Development Direction - The company aims to redefine the role of a real estate brokerage by providing agents with a technology platform that eliminates the need for physical office space and enhances their ability to grow their businesses [8][11] - The long-term vision includes creating a holistic ecosystem of financial technology products and investment planning tools for agents [10] Management's Comments on Operating Environment and Future Outlook - Management noted that many in the broader real estate sector are waiting for a market recovery, but the company is focused on building for the future despite existing home sales remaining near historic lows [14] - The company expects to deliver significant year over year improvement in revenue, gross profit, and adjusted EBITDA in 2025, although the first quarter is expected to be the lowest of the year for revenue [45][49] Other Important Information - The company transitioned its financials to U.S. GAAP, which had no notable impact from prior periods [46] - The company has made changes to its business model, including increasing transaction fees and adjusting commission caps to better reflect operational costs [24][25] Q&A Session Summary Question: What contributed to the strong performance in Q4 despite seasonal trends? - Management attributed the strong performance to significant growth and market share gains, particularly in December [76] Question: What are the expectations for the ancillary business growth? - Management expressed confidence in the growth of the ancillary services, particularly with the new leadership in place for One Real Title [79][80] Question: What is the outlook for agent recruitment and team expansion? - Management indicated that the agent recruitment pipeline is strong, with expectations of continued momentum into 2025 [88] Question: How does the company plan to scale the Real Wallet product? - Management noted that they are in the process of hiring a general manager for Real Wallet and expect to see rapid adoption and revenue growth [104] Question: What are the unit economics of Title and Mortgage transactions? - Management highlighted that combining Title and Mortgage transactions with brokerage transactions significantly increases revenue and gross profit [114][116]