Core Insights - The Real Brokerage Inc. reported a quarterly loss of $0.03 per share, better than the Zacks Consensus Estimate of a loss of $0.05, and an improvement from a loss of $0.07 per share a year ago, representing a 40% earnings surprise [1] - The company achieved revenues of $350.63 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 16.67% and showing significant growth from $181.34 million in the same quarter last year [2] - The stock has increased approximately 7.6% since the beginning of the year, contrasting with a -0.7% decline in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $301.18 million, and for the current fiscal year, it is -$0.08 on revenues of $1.51 billion [7] - The estimate revisions trend for The Real Brokerage is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market [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]

Company Performance - The Real Brokerage Inc. reported a quarterly loss of $0.01 per share, better than the Zacks Consensus Estimate of a loss of $0.04, and improved from a loss of $0.02 per share a year ago, representing an earnings surprise of 75% [1] - The company posted revenues of $372.49 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 11.32%, and up from $214.64 million in the same quarter last year [2] - Over the last four quarters, The Real Brokerage has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance - The Real Brokerage shares have increased approximately 252.5% since the beginning of the year, significantly outperforming the S&P 500's gain of 24.3% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.05 on revenues of $292.23 million, and for the current fiscal year, it is -$0.18 on revenues of $1.17 billion [7] Industry Outlook - The Technology Services industry, to which The Real Brokerage belongs, is currently ranked in the top 28% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Core Viewpoint - The sustainability of a trend is crucial for successful short-term investing, and confirming fundamental factors is essential to maintain momentum in stocks [1][2]. Group 1: Stock Performance - The Real Brokerage Inc. (REAX) has shown a solid price increase of 19.7% over the past 12 weeks, indicating strong investor interest [4]. - In the last four weeks, REAX has maintained a price increase of 12.7%, suggesting that the upward trend is still intact [5]. - REAX is currently trading at 94.9% of its 52-week high-low range, indicating a potential breakout [5]. Group 2: Fundamental Strength - REAX holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. Group 3: Investment Strategy - The "Recent Price Strength" screen is a useful tool for identifying stocks like REAX that have the fundamental strength to maintain their recent uptrend [3]. - There are additional stocks that meet the criteria of the "Recent Price Strength" screen, providing further investment opportunities [8].

Financial Data and Key Metrics Changes - Revenue for Q2 2024 increased by 84% year-over-year to $341 million, driven by a 73% increase in closed transactions and a 6% increase in average revenue per transaction [6][18] - Gross profit reached a record $31.9 million, up 79% from $17.8 million in Q2 2023, with adjusted EBITDA improving to $14 million from $2.6 million in the prior year [7][22] - Net loss narrowed to $1.2 million in Q2 2024 compared to a net loss of $4.1 million in Q2 2023 [22] Business Line Data and Key Metrics Changes - Ancillary businesses, including mortgage and title services, grew by 68% year-over-year, with One Real Mortgage experiencing a 160% increase [8][18] - The number of agents increased by 70% year-over-year to 19,500, with an additional 1,000 agents added since the start of Q2 2024 [7][24] Market Data and Key Metrics Changes - The total value of homes transacted over the platform increased to $12.6 billion, an 80% year-over-year increase, while the median sales price of properties sold was $384,000, representing a 4% increase [24] - Canada accounted for 12% of commission revenue in Q2 2024, down from 15% in the same quarter of the previous year [24] 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 [4][5] - The long-term vision includes developing a holistic ecosystem of financial technology products and enhancing the consumer experience through the One Real mobile app [5][6] - The company is focused on agent growth and improving agent experience through innovative programs and training initiatives [11][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment, with existing home sales declining year-over-year, but emphasized the company's strong performance in this context [8][9] - The company remains optimistic about growth prospects and is committed to innovation and enhancing agent support [17][30] Other Important Information - The company ended Q2 2024 with approximately $33.6 million in unrestricted cash and investments, maintaining a strong balance sheet with no debt [23] - The company is preparing agents for upcoming NAR rule changes through extensive training programs [16][50] Q&A Session Summary Question: What is the focus on agent churn rate? - Management noted that a significant portion of churn is due to agents doing one or fewer transactions, and they are closely monitoring churn metrics while providing operational support to agents [33][34] Question: What is the strategy to increase attach rates for ancillary services? - Management highlighted the focus on creating joint ventures with large teams and embedding title services into the consumer app to enhance the overall experience [36] Question: Are there opportunities for acquisitions? - Management remains open to acquisitions but believes they currently have the necessary components to build their tech roadmap without significant new investments [40] Question: How does Real Brokerage's value proposition compare to competitors? - Management emphasized their entrepreneurial-centric model, technology platform, and favorable economics as key differentiators that attract agents [52][54] Question: How is the company preparing for the NAR settlement changes? - Management is conducting extensive training to ensure agents are aligned with the new practices required by the settlement [50][51]

Group 1: Earnings Performance - The Real Brokerage Inc. reported a quarterly loss of $0.01 per share, better than the Zacks Consensus Estimate of a loss of $0.02, representing a 50% earnings surprise [1] - The company posted revenues of $340.78 million for the quarter ended June 2024, exceeding the Zacks Consensus Estimate by 29.06%, compared to $185.33 million in the same quarter last year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] Group 2: Stock Performance and Outlook - The Real Brokerage shares have increased approximately 241.3% since the beginning of the year, significantly outperforming the S&P 500's gain of 9.9% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $293.68 million, and for the current fiscal year, it is -$0.17 on revenues of $1.02 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] Group 3: Industry Context - The Technology Services industry, to which The Real Brokerage belongs, is currently in the top 40% of over 250 Zacks industries, suggesting a favorable outlook [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 in Q1 2024 increased to $201 million, an 86% rise compared to Q1 2023, driven by a 74% increase in closed transactions and a 7% increase in average revenue per transaction [19][88] - Gross profit reached $20.8 million, a 92% increase from $10.8 million in Q1 2023, with a gross margin of 10.3%, reflecting a 30 basis point improvement year-over-year [7][88] - Net loss was $16.1 million in Q1 2024, including $9.9 million in litigation expenses, compared to a net loss of $7.4 million in Q1 2023 [23] - Adjusted EBITDA improved to $3.6 million in Q1 2024, a significant improvement from negative $800,000 in Q1 2023 [23][88] Business Line Data and Key Metrics Changes - Brokerage revenue saw an 86% increase, with closed transactions exceeding 19,000 [19][88] - Revenue from ancillary businesses totaled $1.5 million, a 104% increase year-over-year, driven by a 427% growth in One Real Mortgage and a 33% growth in One Real Title [20][89] - Adjusted operating expense per transaction declined 18% year-over-year to $715, down from $870 [24] Market Data and Key Metrics Changes - The total value of homes transacted over the platform increased to $7.5 billion, an 88% year-over-year increase [24] - Canada accounted for 13% of commission revenue in Q1 2024, up from 11% in Q1 2023 [11] 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 [86][87] - The rollout of the One Real consumer-facing mobile app is expected to enhance client experience and increase attachment of higher-margin ancillary services [86][91] - The company anticipates that disruptions within traditional brokerages will drive greater consolidation across the industry, positioning itself as a consolidator [28] Management's Comments on Operating Environment and Future Outlook - The management views the NAR settlement as an opportunity rather than a challenge, expecting to emerge stronger from the changes [26] - The company remains optimistic about the outlook for the year, citing a robust open transaction pipeline that is currently at an all-time high, up over 75% year-over-year [90] - Despite a volatile interest rate environment, the company continues to grow rapidly due to its differentiated business model [90] Other Important Information - The company ended Q1 2024 with unrestricted cash and investments of approximately $34.5 million, an increase of $5.6 million from the end of 2023 [10] - The company is making strategic hires for onboarding and agent experience teams to support the growing agent count [25] Q&A Session Summary Question: Impact of NAR settlement on pipeline of new agents and teams - Management indicated that many brokerages are inquiring about the Private Label and ProTeams offerings, viewing Real as a potential destination for agents seeking better opportunities [31][32] Question: Revenue churn and retention of productive teams - Revenue churn was reported at 1.9%, the lowest in years, with management expressing confidence in retaining high-performing teams [33][34] Question: Timeline for onboarding teams - The onboarding process can take between 45 to 90 days, depending on the team's size and readiness, while the actual activation can occur within 24 hours once a decision is made [41] Question: Percentage of transactions captured by One Real Mortgage - The attach rate for One Real Mortgage is currently below 2%, but the company anticipates growth as they scale responsibly [45] Question: Plans to attract institutional investors - The company aims to attract more institutional investors by delivering exceptional results and sustainably compounding earnings and cash flow per share [82]

Overview of Real Brokerage - Real Brokerage is a software-based real estate brokerage aiming to streamline the home buying process and empower agents [11, 22] - The company focuses on organic agent growth and increasing the use of ancillary services [33] - Real's mission is to empower each agent through innovation, enhancing efficiency, and fostering a culture of shared success and wealth creation [19] Agent Value Proposition - Real offers agents attractive financial incentives, including high commission splits, revenue sharing, and equity opportunities [22] - Agents typically receive 85% of gross commissions before reaching an annual cap [143] - Revenue sharing allows agents to earn income from commissions generated by agents they refer to Real [54] - Real provides a wealth plan with fully-integrated wealth planning tools for agents to envision their future and accomplish their goals [58] Technology and Platform - Real's proprietary software platform, reZEN, offers tools tailored for real estate agents, including transaction management and a production dashboard [60] - Leo AI, an AI-powered personal concierge, provides 24/7 support to agents and brokers [63] - The company launched the One Real app in October 2023 to simplify the mortgage application process [5] Financial Performance and Growth - Real has experienced significant revenue growth, with revenue increasing by over 400% from 2021 to 2023 [9] - The company has grown agent count significantly, reaching 16,680 agents in Q1 2024 [33] - In Q1 2024, Real's quarterly revenue was $200.743 million [174] - The company's headcount efficiency ratio reached 1:143 in Q1 2024 [184]

Revenue share expense was $6.8 million in the fourth quarter of 2023, up from $4 million in the prior year period and improved as a percentage of sales to 3.8%, down 40 basis points from 4.2% in the prior year period. This cost is entirely variable and reflects Real commission shares paid to agents for recruiting new agents to the Brokerage. Revenue shares categorized as a marketing expense as our sponsorship structure aids in attracting and retaining new agents, while also enhancing productivity across our ...

The Real Brokerage Inc. Announces Fourth Quarter and Full Year 2023 Financial Results TORONTO and NEW YORK, March 7, 2024 - (BUSINESS WIRE) - The Real Brokerage Inc. (NASDAQ: REAX) ("Real" or the "Company"), a technology platform reshaping real estate for agents, home buyers, and sellers, announced today financial results for the fourth quarter and year ended December 31, 2023. "Real delivered another record year in 2023, despite a challenging industry backdrop. Our performance both in the quarter and for t ...

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $215 million, a 92% increase year-over-year, driven by an 82% increase in closed transactions, totaling over 20,000, and a 5% increase in average commission revenue per transaction [8][25] - Adjusted EBITDA was positive $3.5 million, a $3 million improvement from Q3 2022, marking the second consecutive quarter of positive adjusted EBITDA [16][30] - Gross profit increased to $18.8 million, a 119% increase year-over-year, with a gross margin of 8.7%, up approximately 100 basis points from the prior year [26][27] Business Line Data and Key Metrics Changes - Fee income and other revenue totaled $3.1 million, a 245% increase year-over-year, reflecting increased agent and transaction counts [26] - Title and mortgage revenue was $1.3 million, a 173% increase year-over-year, with organic growth for these services at approximately 100% excluding contributions from One Real Mortgage [26] Market Data and Key Metrics Changes - The total value of homes transacted over the platform increased to $8.1 billion, a 91% year-over-year increase [31] - The median sale price of properties sold was approximately $370,000, a 2.8% increase compared to the same quarter in 2022 [31] 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 [14][15] - The launch of the One Real mobile app is a significant step towards creating a seamless home buying and selling experience [17] - The company is focusing on expanding its Title and Mortgage businesses, which typically command higher gross margins than traditional brokerage [11][18] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the challenging housing market, with existing home sales down significantly and mortgage rates at multi-decade highs [34] - Despite the challenges, the company believes its unique business model and technology platform position it well to thrive [16][38] - The management expects continued growth in agent count and productivity, with optimism for the spring market despite anticipated seasonal declines in Q4 [59] Other Important Information - The company is now operational in all 50 states and 4 Canadian provinces, representing less than 1% of the total real estate agent population in North America, indicating significant growth potential [19] - The introduction of the Real Wallet and Real Retirement programs aims to enhance agents' financial stability and long-term wealth generation [21][22] Q&A Session Summary Question: Was the agent churn in the quarter all involuntary? - The churn was predominantly from agents who decided to leave the industry, with most being nonproductive agents [40] Question: How does Leo 2.0 impact productivity? - It is early to attribute productivity increases solely to Leo 2.0, but it is expected to help agents close deals faster and improve overall efficiency [41] Question: What adjustments are being made to the Mortgage and Title business? - The company is focusing on fewer markets to create a scalable model and is seeing traction in California for its Title business [43][61] Question: What functionalities will the One Real app have in the future? - The app will evolve to include features for home discovery, mortgage applications, transaction tracking, and more, aiming for a holistic home buying experience [46] Question: How does the company plan to capture smaller independent brokerages? - The company is building tailored products and systems to facilitate smoother transitions for smaller brokerages and is focused on creating conversations to attract them [66]