The Real Brokerage (REAX) FY Conference Transcript

Summary of Real Brokerage Conference Call Company Overview - Company: Real Brokerage - Industry: Real Estate Technology and Brokerage - Founded: 2014 - Agent Count: Approximately 27,000 agents in the US and Canada as of March 2025, representing a 61% year-over-year growth [6][7] Key Financial Metrics - Revenue Growth: Revenue increased by over 80% year-over-year [6] - Adjusted EBITDA: Tripled during the same period [6] - Annual Revenue: Grew from $15 million in 2020 to $1.3 billion in 2024 [12] - Gross Margins: Approximately 9% for brokerage operations; over 80% for title services and over 50% for mortgage services [26] Market Position and Strategy - Market Share: Currently under 2% of the overall market, indicating significant growth potential [8] - Traditional Brokerage Model: The industry is dominated by traditional players like Century 21 and Keller Williams, which rely on office locations and manual processes [7][8] - Value Proposition: Real aims to provide more value at a lower cost by eliminating the need for office space and automating back-office processes [9][8] Technology and Innovation - Technology Platform: Focus on AI and proprietary technology to enhance agent productivity and efficiency [15][20] - AI Assistant: LEO, an AI tool for agents, answers over 2,000 questions daily, improving customer satisfaction and operational efficiency [22] - Real Wallet: A digital wallet for agents that allows for interest on deposits and potential credit lines, currently at a run rate of $1 million [33][36] Agent Recruitment and Retention - Agent Growth: 85% of growth comes from referrals; 15% from inbound inquiries [40] - Churn Rate: Agent churn is around 7.5%, with revenue churn at 2.5%, indicating a focus on retaining high-performing agents [49] - Competitive Landscape: Smaller independent brokerages may struggle to compete with Real's technology and cost structure, leading to potential consolidation in the industry [46] Ancillary Services - Title and Mortgage Services: Currently low attach rates (4% for title, 2% for mortgage) with plans to increase through initiatives like early commission payments [28][52] - Future Plans: Aiming to enhance attach rates by educating agents about the benefits of using Real's title and mortgage services [54] Financial Strategy - Share Repurchase Program: Announced a $150 million share repurchase authorization to support agent equity programs and enhance shareholder value [56] - Path to Profitability: Continuous improvement in profitability metrics, with a focus on balancing growth and investment in technology [58] Conclusion - Real Brokerage is positioned for continued growth in a challenging real estate market, leveraging technology to attract and retain agents while expanding its service offerings and improving profitability [38]