The Real Brokerage(US:REAX)2025-05-08 13:00Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $354 million, a 76% increase compared to $201 million in Q1 2024, driven by a 77% increase in closed transactions to 33,600 [8][27] - Gross profit increased to $33.9 million, up 63% from $20.8 million in the prior year, while net loss improved to $5.1 million from a loss of $16.1 million [8][32] - Adjusted EBITDA rose to $8.3 million, more than doubling from $3.6 million in Q1 2024 [9][33] - The company ended the quarter with net unrestricted cash and investments of approximately $35 million, up from $33 million at year-end [33] Business Line Data and Key Metrics Changes - Brokerage revenue reached $352 million, contributing significantly to overall revenue growth, while ancillary businesses generated $2.2 million, a 50% year-over-year increase [27][28] - OneReal Mortgage saw a 55% increase in revenue, and OneReal Title grew by 30% [28] - RealWallet generated $126,000 in revenue during its first full quarter, with an annualized run rate exceeding $700,000, up from $500,000 previously [13][29] Market Data and Key Metrics Changes - The existing home sale industry experienced a 2% decline in transactions, contrasting with the company's 77% increase in closed transactions [8][16] - The median sale price was $380,000, reflecting a 2% year-over-year increase [34] Company Strategy and Development Direction - The company aims to redefine the role of real estate brokerage by providing agents with financial incentives, a technology platform, and a collaborative culture [6][7] - The long-term vision includes creating a holistic ecosystem of financial technology products and investment planning tools for agents [6] - The company is focusing on enhancing its technology platform and high-margin ancillary businesses to drive margin expansion and operating leverage [10][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain operating environment but expressed confidence in the company's model designed to thrive in any market condition [37][38] - The rise of AI is seen as a transformative opportunity, with the company actively investing in innovation and technology to enhance agent productivity [37][39] Other Important Information - The company transitioned all inbound agent support calls to LEO, its AI-powered assistant, which now handles thousands of interactions daily [10][41] - The agent count increased to 26,870, a 61% rise year-over-year, with over 800 agents added since the start of Q2 [9][10] Q&A Session Summary Question: Agent adoption of AI and LEO services - Management indicated that LEO is currently focused on improving service to agents, handling inbound calls and providing support for compliance and tech-related questions [41][42] Question: Trends in gross margins and capping - Management noted that a higher mix of capped agents is expected to continue impacting gross margins, but fee changes and growth in ancillary services will help offset this [43][44] Question: Opportunities with voice AI - Management discussed plans to leverage voice AI for agent support and consumer interactions, enhancing the value proposition for agents [48][49] Question: Agent recruiting and value proposition - Management emphasized the importance of providing value and maintaining a balance between cost and service to attract agents, with no single factor driving recruitment [51][52] Question: Impact of converting contractors to full-time employees - Management stated that this transition would strengthen team commitment and potentially improve time to market for product initiatives [54] Question: Growth pipeline and onboarding - Management confirmed a strong pipeline with no significant changes in onboarding times, despite challenging market conditions [58][61] Question: Expansion to all 50 states for ancillary services - Management clarified that the focus remains on improving operations within current markets rather than expanding to all states at this time [62]