Summary of The Real Brokerage (REAX) FY Conference Call - August 13, 2025 Company Overview - **Company Name**: The Real Brokerage (REAX) - **Industry**: Real Estate Technology - **Founded**: 2014 - **Headquarters**: United States - **Public Listing**: Initially listed on TSX Venture Exchange in 2020, now only on NASDAQ Key Points and Arguments Industry Context - The U.S. real estate industry has approximately **1.5 million agents**, with around **160,000 in Canada** [6] - The industry generates roughly **$100 billion** in annual revenue from commissions paid to agents [7] - Traditional brokerages dominate the market, relying on physical office spaces and charging high fees for perceived low value [8] Company Growth and Market Position - The Real Brokerage has grown rapidly, capturing less than **2%** of the overall market, indicating significant growth potential [9] - LTM revenue reached **$1.6 billion**, a **6x increase** compared to Q2 2022, despite a **25% decline** in the overall housing market [14] - The company continues to attract agents due to its unique value proposition, including freedom, flexibility, and a strong technology platform [15][19] Unique Selling Propositions 1. **Agent Freedom and Flexibility**: Agents can build their businesses independently while benefiting from Real's resources [15][16] 2. **Compensation Model**: Agents keep **85%** of their commission, with a cap of **$12,000** annually, after which they retain **100%** of their earnings [19] 3. **Technology Platform**: The proprietary software, **Rezent**, enhances productivity, marketing, and community engagement among agents [20][21] 4. **Collaborative Culture**: A culture of collaboration over competition, with approximately **50%** of agents being shareholders [31] Technology and AI Integration - The company has invested **tens of millions** in its technology platform, with **$4 million** spent on R&D in Q2 [44] - The AI-driven platform, **LEO Copilot**, assists agents by managing transactions and improving customer support efficiency [28][29] - The technology allows for significant operational efficiencies, reducing transaction processing time from **hours to minutes** [25][26] Ancillary Services and Future Growth - The Real Brokerage has expanded into title and mortgage services, which have higher gross margins (title margins over **80%**, mortgage margins **40-50%**) [34] - Current attachment rates for these services are low, at **4%** for title and **1%** for mortgage, indicating substantial growth opportunities [35][54] - The company aims to enhance the home buying experience through AI-driven consumer-facing products, such as **LEO for clients** [36] Financial Performance and Projections - The Real Brokerage is on track to generate over **$1 million** in annual revenue from its RealWallet product, which offers agents financial services [40] - The company anticipates continued growth regardless of macroeconomic conditions, supported by its technology and high-margin services [41] Market Outlook - The speaker expressed optimism about the real estate market's recovery, suggesting that existing home sales are at historic lows and likely to rise [75] - The company is well-positioned to capitalize on market recovery due to its innovative business model and technology [76] Additional Important Insights - The company has a **headcount efficiency ratio** of **1 employee for every 87 agents**, significantly better than traditional brokerages [33] - The Real Brokerage's revenue share model incentivizes agents to recruit others, creating a scalable growth mechanism [68] - The company is focused on maintaining a disciplined approach to credit extension through its RealWallet product, ensuring only qualified agents receive loans [70] This summary encapsulates the key points discussed during the conference call, highlighting The Real Brokerage's innovative approach, growth potential, and strategic focus on technology and agent support.