The Real Brokerage(US:REAX)2023-11-11 13:26Financial 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]