The Real Brokerage(US:REAX)2023-05-12 15:58Financial Data and Key Metrics Changes - Revenue for Q1 2023 was $108 million, representing a 75% year-over-year increase and a 12% sequential growth from the prior quarter [4][45] - The total value of homes transacted over the platform reached $4 billion, a 66% increase compared to Q1 2022 [16] - Adjusted EBITDA loss for the quarter was $792,000, compared to a $577,000 loss in Q1 2022 [26] - The company had $11 million in unrestricted cash and $8.5 million in short-term investments, totaling $19.5 million in liquidity as of March 31, 2023 [27] Business Line Data and Key Metrics Changes - The total number of transactions on the platform increased to 10,963, a 75% year-over-year increase [16] - The median sale price of properties sold was $350,000, reflecting a 1.4% increase compared to Q1 2022 [16] - Commission revenue per productive agent moderated to $26,000 in Q1 from $27,200 in Q4 2022 [20] - The number of agents grew to over 10,000, a 120% year-over-year increase, with a net addition of nearly 1,800 agents [37] Market Data and Key Metrics Changes - U.S. existing home sales were down 26% year-over-year and 16% quarter-over-quarter, indicating a challenging market environment [8] - Canadian residential sales activity in Q1 was 38% lower year-over-year, with average sale prices down 17% [18] - Canada represented 9% of the agent base and 11% of commission revenue in Q1, a decline from 14% in Q4 2022 [47] Company Strategy and Development Direction - The company is focused on becoming a tech-powered brokerage, enhancing agent attraction and retention through innovative tools and services [5][12] - Plans to launch a consumer-facing app and a program called Fast14 to streamline the mortgage application process [40] - The company aims to reach adjusted EBITDA profitability in Q2 2023, earlier than previously expected [43][78] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment has stabilized, with expectations for a strong Spring season in real estate [81] - The company is optimistic about its growth trajectory, citing strong demand in many markets despite broader industry challenges [81] - Management emphasized the importance of operational efficiencies and the impact of new fee structures on financial performance [43][78] Other Important Information - The company launched Real Signature, an electronic signature tool, to enhance transaction efficiency for agents [41] - The headcount efficiency ratio improved to around 1 to 114, indicating better operational efficiency [24] - Revenue churn increased to 4.3%, attributed to fee increases and seasonal factors [51] Q&A Session Summary Question: How does the company view productivity per agent as it scales from 10,000 to 50,000 agents? - Management believes that productivity metrics are sustainable and will continue to improve as the agent base grows [29] Question: Has the banking sector pulled back on lending? - Management indicated that there has been no significant pullback from major lenders, and the mortgage side remains stable [68] Question: Were there any nonrecurring items in SG&A for the quarter? - Management confirmed that there were no nonrecurring items reported in SG&A [66] Question: What is the expectation for capital expenditures for the remainder of the year? - Management expects capital expenditures to remain low, primarily reflecting capitalized R&D expenses [69] Question: How does the company plan to attract struggling independent brokerages? - Management is engaged in conversations with small and medium-sized brokerages, emphasizing the value proposition of joining Real [75]