The Real Brokerage (REAX) FY Conference Transcript

Summary of The Real Brokerage (REAX) FY Conference Call - August 13, 2025 Company Overview - Company Name: The Real Brokerage (REAX) - Industry: Real Estate Technology - Founded: 2014 - Headquarters: United States - Public Listing: Initially listed on TSX Venture Exchange in 2020, now only on NASDAQ Key Points and Arguments Industry Context - The U.S. real estate industry has approximately 1.5 million agents, with around 160,000 in Canada [6] - The industry generates roughly $100 billion in annual revenue from commissions paid to agents [7] - Traditional brokerages dominate the market, relying on physical office spaces and charging high fees for perceived low value [8] Company Growth and Market Position - The Real Brokerage has grown rapidly, capturing less than 2% of the overall market, indicating significant growth potential [9] - LTM revenue reached $1.6 billion, a 6x increase compared to Q2 2022, despite a 25% decline in the overall housing market [14] - The company continues to attract agents due to its unique value proposition, including freedom, flexibility, and a strong technology platform [15][19] Unique Selling Propositions 1. Agent Freedom and Flexibility: Agents can build their businesses independently while benefiting from Real's resources [15][16] 2. Compensation Model: Agents keep 85% of their commission, with a cap of $12,000 annually, after which they retain 100% of their earnings [19] 3. Technology Platform: The proprietary software, Rezent, enhances productivity, marketing, and community engagement among agents [20][21] 4. Collaborative Culture: A culture of collaboration over competition, with approximately 50% of agents being shareholders [31] Technology and AI Integration - The company has invested tens of millions in its technology platform, with $4 million spent on R&D in Q2 [44] - The AI-driven platform, LEO Copilot, assists agents by managing transactions and improving customer support efficiency [28][29] - The technology allows for significant operational efficiencies, reducing transaction processing time from hours to minutes [25][26] Ancillary Services and Future Growth - The Real Brokerage has expanded into title and mortgage services, which have higher gross margins (title margins over 80%, mortgage margins 40-50%) [34] - Current attachment rates for these services are low, at 4% for title and 1% for mortgage, indicating substantial growth opportunities [35][54] - The company aims to enhance the home buying experience through AI-driven consumer-facing products, such as LEO for clients [36] Financial Performance and Projections - The Real Brokerage is on track to generate over $1 million in annual revenue from its RealWallet product, which offers agents financial services [40] - The company anticipates continued growth regardless of macroeconomic conditions, supported by its technology and high-margin services [41] Market Outlook - The speaker expressed optimism about the real estate market's recovery, suggesting that existing home sales are at historic lows and likely to rise [75] - The company is well-positioned to capitalize on market recovery due to its innovative business model and technology [76] Additional Important Insights - The company has a headcount efficiency ratio of 1 employee for every 87 agents, significantly better than traditional brokerages [33] - The Real Brokerage's revenue share model incentivizes agents to recruit others, creating a scalable growth mechanism [68] - The company is focused on maintaining a disciplined approach to credit extension through its RealWallet product, ensuring only qualified agents receive loans [70] This summary encapsulates the key points discussed during the conference call, highlighting The Real Brokerage's innovative approach, growth potential, and strategic focus on technology and agent support.