The Real Brokerage(US:REAX)2024-11-09 13:21Financial Data and Key Metrics Changes - The company reported record third quarter results with revenue increasing by 74% year-over-year to $372.5 million, driven by a 76% increase in closed transactions [11][32] - Gross profit for Q3 2024 was $32.1 million, up from $18.8 million in Q3 2023, contributing to adjusted EBITDA of $13.3 million, a significant improvement from $3.5 million in the prior year [12][43] - The net loss narrowed to $2.6 million in Q3 2024 from a net loss of $4 million in Q3 2023, reflecting improved operational efficiency [42] Business Line Data and Key Metrics Changes - The mortgage and title business lines grew by a combined 97% year-over-year, with mortgage revenue increasing over 200% [13] - Revenue from ancillary businesses totaled $2.6 million, a 97% increase compared to Q3 2023, driven by 236% growth in One Real Mortgage [33] Market Data and Key Metrics Changes - The total value of homes transacted over the platform increased to $14.4 billion in Q3 2024, a 78% year-over-year increase [46] - The median sale price of properties sold by agents was $383,000, representing a 4% year-over-year increase [46] Company Strategy and Development Direction - The company aims to redefine the role of real estate brokerage by providing agents with a technology platform that eliminates the need for physical office space and enhances agent productivity through AI tools like Leo Copilot [7][52] - Future plans include rolling out a consumer-facing product to streamline client experiences and enhance the attachment of higher-margin ancillary services [9] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding a meaningful recovery in the housing market until mortgage rates stabilize in the mid-5% range, but remains focused on delivering exceptional value to agents and clients [14][15] - The company believes it is well-prepared to succeed regardless of broader market conditions, as demonstrated by the success of its recent RISE Conference [15] Other Important Information - The company ended Q3 with 21,770 agents, a 79% increase year-over-year, and has added over 700 agents since the start of Q4 2024 [13] - The headcount efficiency ratio improved significantly, with one full-time employee supporting 140 agents, up from 101 a year ago [48] Q&A Session Summary Question: Sustainability of Operating Leverage - Management confirmed that the operating leverage is sustainable, with a focus on efficiency and automation despite additional regulatory requirements [58][59] Question: Revenue Churn - Management noted that revenue churn has remained low due to the value created on the platform for high-producing agents [62] Question: Agent Recruiting Pipeline - Management indicated that Q4 typically sees stronger agent additions and is optimistic about the pipeline for 2025 [66] Question: Real Wallet Usage - Early feedback on Real Wallet has been positive, with over $100,000 spent on debit cards shortly after launch [69] Question: Ancillary Services Growth Target - Management aims to increase attach rates for ancillary services to double digits, leveraging technology to enhance integration [73] Question: NAR Settlement Impact - Management believes that any potential commission rate drops could accelerate growth as agents seek better brokerage options [80] Question: Future Expansion Plans - The company plans to focus on maximizing growth in the U.S. and Canada before considering international expansion [89]