The Real Brokerage(REAX) - 2024 Q2 - Earnings Call Transcript

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]