Financial Data and Key Metrics Changes - Revenue for the first quarter reached $354 million, a 76% increase compared to $201 million in the prior year, driven by a 77% increase in closed transactions to 33,600 [9][26] - Gross profit was $33.9 million, up 63% year-over-year, while net loss improved to $5.1 million from a loss of $16.1 million in the prior year [9][30] - Adjusted EBITDA increased to $8.3 million, significantly up from $3.6 million in the first quarter of 2024 [9][31] - The company ended the quarter with net unrestricted cash and investments of approximately $35 million, up from $33 million at year-end [31] Business Line Data and Key Metrics Changes - Brokerage revenue reached $352 million, primarily contributing to the overall revenue growth, while ancillary businesses generated $2.2 million, a 50% increase year-over-year [26] - OneReal Mortgage saw a 55% increase, and OneReal Title experienced 30% growth in revenue [26] - RealWallet generated $126,000 in revenue during its first full quarter, with an estimated annualized run rate exceeding $700,000, up from $500,000 previously [13][31] Market Data and Key Metrics Changes - The housing market showed a 2% decline in existing home sale transactions, contrasting with the company's 5% year-over-year increase in average transactions per agent [16][17] - The median sale price was $380,000, reflecting a 2% increase year-over-year [32] 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 [6][8] - The long-term vision includes creating a holistic ecosystem of financial technology products and investment planning tools for agents [6][7] - The company is focusing on enhancing its technology platform and high-margin ancillary businesses to drive margin expansion and operating leverage [10][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain operating environment but expressed confidence in the company's ability to thrive amid technological transformations, particularly with AI [34][35] - The company plans to continue investing in innovation and expanding its service offerings to agents and clients [35] 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][39] - The agent count increased to 26,870, up 61% year-over-year, with over 800 agents added since the start of the second quarter [9][10] Q&A Session Summary Question: How is agent adoption of AI and LEO services? - Management indicated that LEO is focused on improving service to agents, handling inbound calls and thousands of daily interactions, but consumer-facing metrics are still being developed [38][39] Question: Can you discuss 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 ancillary business growth should provide some offset [40] Question: What opportunities do you see with voice AI? - Management highlighted plans to transition the agent support phone line to use AI voice technology, allowing for real-time conversations with potential buyers and sellers [44][45] Question: What is driving agent recruitment success? - Management emphasized a combination of value and cost efficiency as key factors in attracting agents, with no single reason identified for the growth [49] Question: How will the transition of employees in India to full-time affect product development? - Management stated that while there would be no financial impact, the transition is expected to strengthen team commitment and improve time to market for initiatives [51] Question: What is the strategy for expanding ancillary services? - Management clarified that the focus remains on improving operations within current markets rather than expanding to all 50 states at this time [61]
The Real Brokerage(REAX) - 2025 Q1 - Earnings Call Transcript