The Real Brokerage(US:REAX)2023-08-09 11:50Company Growth and Performance - The Real Brokerage Inc. reported a year-over-year increase of 105% in the number of agents on its platform in 2023, reaching just under 11,500 agents[33]. - Total revenues for the three months ended June 30, 2023, were $185,332,000, a 65% increase from $112,356,000 in the same period of 2022[67]. - Total revenues for the six-month period ended June 30, 2023, reached $293.2 million, a 68.3% increase from $174.0 million in the same period of 2022[71]. - Revenue for Q2 2023 was $185,332 thousand, a significant increase from $112,356 thousand in Q2 2022, representing a year-over-year growth of approximately 65%[107]. - The company experienced momentum in several markets, attributed to influential agents joining and attracting their colleagues[49]. Financial Results - Adjusted EBITDA for the three months ended June 30, 2023, was $2,618,000, compared to a loss of $583,000 in the same period of 2022[67]. - The company reported a loss from continuing operations of $3,972,000 for the three months ended June 30, 2023, slightly improved from a loss of $4,155,000 in the same period of 2022[67]. - The total comprehensive loss attributable to owners of the parent for the six months ended June 30, 2023, was $11,316,000, compared to $8,520,000 for the same period in 2022[67]. - The company reported an EBITDA of $(3,501,000) for the three months ended June 30, 2023, compared to $(3,622,000) in the same period of 2022[70]. - Operating loss for Q2 2023 was $(3,700) thousand, an improvement from $(3,947) thousand in Q2 2022[107]. Revenue Streams - Commissions, the main revenue stream, amounted to $287.0 million for the six months ended June 30, 2023, up from $171.5 million in 2022, reflecting a 67.5% growth[76]. - Commissions for Q2 2023 reached $181.437 million, reflecting a 63% year-over-year growth[127]. - Title revenue for Q2 2023 was $948 thousand, an 87% increase compared to Q2 2022[127]. - Fee income/other revenue for Q2 2023 was $2.585 million, a 204% increase year-over-year[127]. Operational Efficiency and Strategy - The company aims to improve operational efficiency through technology, which is expected to lead to margin expansion and differentiation from other brokerages[34]. - Real acquired a title company in January 2022 and a tech-enabled home loan platform in December 2022, focusing on building a one-stop shop strategy for ancillary services[31]. - The company plans to enhance the home buying experience through a technology-driven platform aimed at improving predictability, organization, and transparency[55]. - The company plans to enhance margins by growing title and mortgage services, alongside additional ancillary services integrated into a consumer-facing platform[78]. Market Conditions and Risks - The company experienced a decline in existing home sales in the U.S. by 21% compared to Q2 2022, but only a 2% decline on a seasonally adjusted basis compared to Q1 2023[23]. - The Federal Reserve increased the federal funds rate by 425 basis points in 2022 and an additional 75 basis points in the first half of 2023, reaching a range of 500 to 525 basis points[23]. - The company faces risks related to its dependence on the North American real estate market, which is cyclical and influenced by macroeconomic conditions[165]. - Real's growth strategy may be hindered by challenges in managing operations and attracting qualified personnel[184][176]. Capital Management and Financial Position - Cash flows generated from operations for the six-month period ended June 30, 2023, were $32,900 thousand, up from $9,400 thousand in the same period of 2022, reflecting a substantial increase in customer deposits[111]. - Total assets as of June 30, 2023, were $75,646 thousand, compared to $43,762 thousand as of December 31, 2022, showing a growth of approximately 73%[110]. - Current liabilities increased to $53,360 thousand as of June 30, 2023, from $21,105 thousand at the end of 2022, indicating a rise in short-term obligations[110]. - The company expects to meet all obligations and commitments as they become due, supported by cash flows from operations and financing sources[109]. - Future capital requirements may necessitate additional funding through equity or debt financing to support growth and market expansion[113]. Shareholder Information - As of August 9, 2023, the Company had 180 million Common Shares issued and outstanding[195]. - The Company announced a voluntary delisting of its common shares from the Toronto Stock Exchange, effective August 11, 2023, while continuing to trade on the Nasdaq under the symbol "REAX"[197]. - The Board has the authority to issue additional Common Shares without shareholder consent, which may lead to dilution of existing shareholders' ownership[191]. Management Compensation - Key management personnel compensation increased from $1,651,000 in June 30, 2022 to $2,777,000 in June 30, 2023, representing a 68% increase[158]. - Salaries and benefits for key management personnel rose from $1,009,000 in June 30, 2022 to $1,046,000 in June 30, 2023, a 4% increase[158]. - Stock-based compensation for key management personnel surged from $642,000 in June 30, 2022 to $1,731,000 in June 30, 2023, marking a 169% increase[158]. Cybersecurity and Internal Controls - The Company has implemented processes to mitigate cyber security risks, including firewalls and antivirus programs[194]. - The company’s internal control over financial reporting was evaluated as effective as of June 30, 2023[153].