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Real Brokerage (REAX)

Participants
James Carbonara Hayden Investor Relations
Tamir Poleg Chief Executive Officer
Michelle Ressler Chief Financial Officer
Darren Aftahi Roth Capital Partners
Call transcript
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Operator

00:02 Good morning, ladies and gentlemen, and welcome to the Real Brokerage third Quarter Earnings Call. At this time, all participants are on a listen only mode and the floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, James Carbonara with Hayden Investor Relations. Sir, the floor is yours.

James Carbonara

00:23 Thank you. to Quarter welcome earnings twenty again, call. once Real’s twenty third one And the Poleg, are and me call With on Tamir Chief Officer. Michelle Financial Chief Ressler, Officer; Executive and financial This filed twenty one ended results analysis twenty for SEDAR. and September morning thirty, its its management Real on quarter third discussion news with found can on SEDAR. documents along release These the accompanying be documents. its XX:XX with and conjunction The considered entirety reference be by in content of should this to such qualified conference in call is harbor statement. I'll the now looking safe read forward This pursuant in for Private of made statement looking Securities forward five. ninety Act harbor is safe the to Reform statements the described nineteen Litigation act XX:XX facts nineteen Section and one on may this within four. thirty made (a) All forward twenty Securities Exchange of considered thirty with securities looking nineteen statements statements Section the Act of historical be of of the three exception of meaning the call of XXa no forward will in are XX:XX reasonable and assumptions correct. been Although reflected makes that believes expectations the looking statements that to have assurances these such company it prove expectations may due Actual statements implied the or in from expressed those looking materially and various forward risks to differ uncertainties. results files the from For expressed could cause as other report, which differ uncertainties, quarterly time as discussion or filed of time reports, which from factors company XX:XX results to reports please well to in implied the such and actual see statements, company's annual a risks forward with that in SEDAR. risk in looking those detailed contains the subsequent this call. as the this of included XX:XX Any only forward date looking earnings call made in are statements of subsequent any knowledge supplement update otherwise reflect undertake events to maintenance. do any unless not We to statement or obligation or circumstances, forward in call this currency All references U.S. in reflect dollars. Standards, adjusted include Financial will is financial references measure. call IFRS which International EBITDA, conference This to non- Reporting not are recognized measures Non-IFRS measures IFRS. under XX:XX therefore do such and non-cash income deferred non-operating alternative companies, interest have other items as by used presented stock similar considers based to meaning removing EBITDA tax measures not and major and items compensation, nature. adjusted by management unlikely an expenses, to by IFRS, net other standardized be current are to is in comparable prescribed They as amortization, income Adjusted XX:XX no comparable measure. financial IFRS EBITDA has direct measures to insight into performance. added uses real provide solely investors company The non-IFRS financial with Listeners not appropriate purpose. any for measures other may be are non-IFRS such cautioned that not isolation or as in should accordance considered or for IFRS. be performance measures measures Non-IFRS substitute in with a prepared the of XX:XX Officer Real. Now, to to I'd Executive like over Poleg, turn Tamir Chief call Tamir, please proceed.

Tamir Poleg

James, consider I After updates for will Financial before third agents, call Canada to start the will five more Brokerage agent expansion quarter, percent Chief Real’s Alberta. that we five eighty increase operational financial with deeper twenty results. of contributed in Real and what provide number Q eight culture Michelle past mainly more in a that of in to for Thanks, announced hundreds Real agent factors experiencing. joining a two like increase to hundred I have was some During start over joined agents and our results, financial operational now everyone it estate and dive that, our turning of the it and the year thanks growth to real attracts agents the percent on of we today. the geographical few retention, over based expansion. a our team, Now, expansion, XX:XX thirty who revenue supporting launch highlights. one Ressler efficiency with nine would we into then level growth, the in our focus, joining will an Officer, the the product operating as million, of turning top three to thanking by beginning financials. When by was as who community with our are A. strategies, year. months dollars. thirty is up referral, open growth geographical and XX:XX amazing to some to revenue Let's highlighting the and and continue Driving I QX is XX:XX the well thirteen Real, percent agents per thousand XX:XX increase to we of

We Minnesota, and Montana. We in states. of the each we in look to to into thirty Province expanded of Canada. growing XX:XX ended, Alberta our the our Canada, and business announced the and After also quarter Indiana, expansion eight our Dakota, states, North Iowa to bringing Michigan, in of district and operating forward tally Colombia

go than The out closing America. in focus horizontally. and will rather is the year to deeper U.S. the twenty intention expanding for be North Our twenty two

agent been tools more for more always joins company attract more be In existing current referrals, will out the our to XX:XX agents. has terms potential of to that correlated the agent attracting rolling Every agents. and our engines. agents has agent to more We attraction

referral are agents recruit to agents five also are of We people. the is XX:XX also growth reminder, because of As we our that resonates culture agents earned creating story a believe other network through attracting a with incentivized lot agents. other years attracting, agents that The share a effect. revenue Real like-minded

Moreover, and to proud both to Real XX:XX play an in the are agents. role Real, further the operations. and attracted achieved are retention, our maintain Moving Just They provide brokerage, stock forward eighty earn at by discount if can capping in agents commissions. and Agents join and what say Real majority XX:XX more this to production look a and agents agents they team. believe incentive state. join producing integral with team five their benefits incentive their example, and high has that XX:XX us have red joining to They The to equity it and reach more that can allowed retain can tier at agents. talent also and by management to purchase our the equity of attracting technology agents. plan they proud to Agents top momentum has Real as now October. us agents. plan platform our it's an we earn that to both having line elite are incentives we of greater we plan, retain offer and them network is award to other stock can stock to attract saw It opting attract into equity they agent an is huge benchmarks. we specific to We allowed also and attract the part incentive a

week, and to Naik In solutions served has election, and business spent Raj as four award growth, team. at of more with units. global founding Raj nearly business in Workrise, for Mobley Chapel First founded at company positions the we his Uber Chief roles technology he management its is software. made firms is while joins managed range and two friends leadership executives Turning strategic and winning Prior in technology for join will senior that management was holding North accomplished growth right supporting also and the Uber XX:XX fact, team Raj with to XX:XX welcome our safety, rides, an they Fortune added Marketing executive the venture executive important compliance Officer. two provide Carolina vehicle, Katharine and family was skilled and driven leading of We management leadership which and the further weeks we earlier last she industry. estate our a last RigUp. ago. in has several platform will Previously, been to will Kathy Real a conditions. announced culture They've startups marketing the join performance data later in from workforce driven member we first Payments at and this as unit just a bolstered Firstly, enormous of believe is held the XX:XX with previously at company. way focus Hill, executive Kat as studying the Oracle. business a two her brands for Uber, and XX:XX for real as XX:XX team Advantage, our at Her at announced appointments. software, where Marketing to and we XX:XX Payments, Advantage, several Eats in I'll years we and to we entrepreneur team Chief global private accounts and week, Real in his experience. at First Clearly, construction than on prior couple product twenty delivering Kat and of role the strategies known Instant been the as will focus. to over has University at into management value back, years he launched he Officer years. sold Chief with equity start were companies. served change trades Workrise twenty with intended at been agents He weeks, the our Director paid Real Instant Managing an family Officer. our Raj. Raj of team. Secondly, XXX Operating our them are technology fit led

do few that efforts. this every more and has be priority think to to processing program terms are do that agent agents Our country. for of have other months to the they reward I other said do be is experienced than capabilities of or agents. at hard by there faster. the same think I simply getting can we that the is build time for in following them rather assisting agents, we vast disrupting the fair I majority before the the Agents because paid I to very have a for program on cash was this to help fair that, have option support number really actually to With is collect brokerage XX:XX has what’s the without be finance the will actually or Having first new industry country because paid agent their want We process. transaction hope because kind from benefit agents XX:XX no is in brokerage encourage grow this to its executed done execute in XX:XX by work at and it their is and this model, that this brokerages them in a agents, believe data business not will some both like us and want doing for other and what that program. our one because do to the the brokerage and This new ability closing. data payment. I something and not every

excited and real them agent provides to XX:XX that on our more service really includes better into agents. app to some new our focus the are business way. in payments gives their the enable a better We time clients to visibility products to providing Other agents services our items in

agent buy hundred hand software. can a digital to experience one One to have XX:XX agents additional the takeaways solutions and one rely We on scale convenience, their technology be termination transparency the thousand client and system that emotional internal us a transaction, the understand from dramatically agents infrastructure. the and speed that We a allows believe facing cannot to that center for and of that lead program Real experience homes. XX:XX realize is we of I solely investment combination and without providing the journey. on guide in sell and human people will building of way new their able be the software improve you its needs who will by basing consumer a of [ph] meeting to substantial buy on [zero]

few our a yield, real online about with? when or has very but a rather done our in larger be competing will of we full in brokerage, and technology growth transactions. think have that to efficiently. traditional think people led This first team, estate efficiency not positive employees, the correlation I the are to company? about on answer real volume of estate we time to the The to who or continue years, has Finally, number yield moving XX:XX which talk of been

higher high to fact, by that excellent on In sixty. right ratio, of we a fifty future that of of in the remains around twenty our think are twenty than growth I fast divided is agents is a we we as good at very of which phase this and and to hiring full-time more and building number efficiency currently sixty ratio. at work one employees a resources more One one similar our current to lot to of to are is was at where we that though are putting even September because products, which are anticipation thirty XX:XX resources six. pace, team still adding QX, are QX one

to one five. at target term seventy are a long of We

the context, Michelle? through the For is this all margin. in and geographical companies development product the as expansion, up, turn efficiently, positive and and are a in-depth view impact this competitive efficiency having a To of XX:XX on quickly one terms of mission for – Ressler Michelle At can of as a future estate our to agent we point, now most scale XX:XX in of possible. more of agents five. continued to in as our over and benefit our ratio closer how it advantage we Powering to have referral, it provides sum We retention, view real team. financials. our I growth many field will on a benefit homebuyers XX:XX it focused profit twenty

Michelle Ressler

you, XX:XX Thank Tamir.

quarter. the I'll by key some our for results assessing So, start of financial

our proprietary versus hundred by percent three in look nine QX percent nine continue was our platforms, mostly twenty quarter. our gross allows to growth, one per one three to an and at accelerated which three and eight which expanding forty revenue geographic is seven eight pace. eighty XX:XX percent driven grew footprint year agent profit thirty up hundred which revenues was in count technology million, we thirty by last two QX increase Our million profit, year. in compared to the year one agent to and over and five year same further over growth agent, point If supported year gross and twenty million twenty twenty. twenty three percent This This grew hundred thousand five QX forty at us grew

touched by to release as payments attract affected prices, increase pressure XX:XX the as the unit are instant producing offset well and as margins number agency We cap in we products the pressure, focus. help of to the high Our in Tamir previously and volume in of of expect rising agents. which projects increase downward future continue our this on resulting

million our XX:XX every add. top XX:XX and and investments the of one four key otherwise to and in EBITDA loss and to million key the we Overall, to in forty as EBITDA. in in our us hundred hiring The change XX:XX public exclusion related to great to have On look such adjusted to at efforts and identify one net view last to comparison G&A the being our two and each in expenses for headcount, talent employee administrative our quarter a quarter thousand operations. a infrastructure last our effective Expenses four one company, XX:XX was is evaluating measures are hires our to of million thousand year. stock-based and is one-time a dollars support twenty compared two four expenses helps on importance also and provides of to increase sixty point prior prior as this eighty quarter recorded management and our to information useful and excluded adjusted by EBITDA hundred expenses growth. listing believes million the operations primarily particular, across into year. Kat, the three for that building financial expenses rest support We seven were team cost compensation performance by costs mostly Management but team forward we one and business, basis, rapidly. due was and on placed our our enormous one that’s an That increases in and and the and results improvements year. hundred continue In million Our as increase year. approximately accelerated a in loss This comparison on to related technology were those General agents, necessary and management, adjusted all underlying other headcount the joined of stock Raj better about year. our board forward value as who going investments our this compensations infrastructure, increases trends the compared technology the infrastructure. [indiscernible] contributors will EBITDA expenses one change capital driven for to operating provides well and performance point comparison scale one team. useful as XX:XX also We of thousand million result believe based expenses, point of transparency and growth NASDAQ those to for the nine in hundred dollars we is to of this market. personnel, last supplemental Adjusted four primarily our in the was provides thousand two were for operating expected further our

However, to reminder, is of percent revenue, of quarter, to ability were in the our scale. level ten This administrative fruitful representative growth of significant percentage As believe of as agents eight costs due part Marketing to into and incentive to point do year year line. the and on contributor XX:XX we of model. share compared term and to continue actively continue six to our refer can goals be impact we revenue personally associated seven last and thousand a and XX:XX our for the paid spending our a the with primarily touched and XX:XX a they current the our Just general agents share year to bottom as that over revenue costs very and translate on previously they agents as new were percent our highly million revenue Real, efficiency and one is change to to it share sales, also earn monitor expect eighty to twenty company. the costs reminder, Tamir last success were programs long year. see to that

focus technology dollars continue prior eighty balance enables QX a year. XX:XX path nine Cash funding from cash year ended that rapidly no to have agents cash well significant investments, us point and debt. flows We holds to balance we operations We agents, you sheet we company This expand concludes a as QX minimal of as consumer footprint, questions? expect and thousand from strengthen on acceleration not continue operator which operational now will impact percent year one our last as on ask to comparison as XX:XX financial increased one industry company the five this our only our total forty the the significant to increase the q up one well. million can demonstrate year continue to the the in please to ramp for continues poll We I to hundred and Operator, costs. million a. its as infrastructure scaling but with in five growth. forward remarks. journey The from is to and lines by with open for up strong my over

Operator

XX:XX first from Certainly. Instructions] Aftahi Partners. [Operator coming with Your Roth Darren question Capital is

is live. Your line

Darren Aftahi

guys. quarter. questions technical and few my Good maybe that. taking nice have picture I morning on a after Thanks and bigger job for XX:XX the

So, in the concentrated quarter, platform? could price on kind the you home was you guys be what the transactions of average and your

Tamir Poleg

and Darren dollars. Hi, home thanks. thirty price The was average and around three Sure. XX:XX hundred thousand

Darren Aftahi

large I then, appreciate books bringing XX:XX on of Great. levels businesses. And you of fairly

one investors in the maybe on know point metric three a was at quarter. it. right It one over zero I of so, but the agent And That focus second point was twenty looking nine. is lot metric, productivity twenty

denominator and would And maybe So, see ramping like bigger to two agent of is just the that denominator and rate agents as transaction like now, a basis? per what timing be fully your you from question, productivity term that is about yet. a longer getting you run is thing then exploited goal one, the not on really that think of years so

Tamir Poleg

XX:XX question. Sure. Good

The nine of a First it. one typo was point all, correct five. zero figure we and there is was now are point number correcting

our average one than So, three higher that of around XX:XX per We for think that transactions historic two we've in within twelve I what be months – I five thousand term, terms at one we're XX:XX point past long them, improvement within should had productivity, to Longer-term, production. we team an agent are currently, we that typo. five looking average apologize the think three. to we're is goal. actually some it's thousand productivity. are those We're hundred So with agents three getting agents close mean, that about per agents lower seeing historic agents than quarter. that from that there, in That's the us had but a still I that average the there but been long on ways have we lower our than had and attracting point term

Darren Aftahi

for XX:XX thanks Great. That's helpful. that correction. And

capping On in downward the the gross been spoke pressure about to there's of margin, I you've spoken know and past. you Michelle, and kind the

interest So, then about spoke the run a of that positively impact will beginning of Instant couple question, of in margins your kind from a of rate year, a Payments there’s do unique platform that you right but on there I on of, the in you announced kind think and it's on margin now? basis? we that, of given how tick-up questions, gross one, have your agents know since And second a kind how a out resets product just gross payments, instant you’ve seen then

Tamir Poleg

XX:XX Sure.

we've of happen. to gross high to performing previously what that. margin, teams So, we number understand thought had And have what's impacting would higher we the us a compared on first joining

economics agents cap me, So, our with, financial high their performing is have that caps. such lower and teams excuse

Currently, possible. phase. additional to top to requests and would funnel starting flow. an better as downward then does pressure we GMV So, processing involved. services two to gross margin. agent on as the Payments them step through ability our was lower Two, to gross Instant basically monetize there margin trying on actually the some services, do fee visibility in funnel, and soon plan early the estate much and to XX:XX every brokerage or only such remember with we're still actually services. growth an of we grow was better our be and transactions are are cash And provide the next have will monetizing much that this we're We better their Payment, and agents XX:XX ancillary as time One, real designed very things. Instant but benefit add as to

that We group XX:XX just a enable impact about of agents. hundred of twenty positive one us a launched just and will So ago a margins. to weeks couple on initially it have to gross

that We are been starting But took to and at What from now on expand. of what it mean does expand does and hearing it little exactly a work? beginning the we've the it how to education bit leaders there's think it's is we agent definitely attract attracting that their will say great a for positive agents agents impact comes also a when it tool I to XX:XX to company. team teams. to

that enable we that question. think currently, better probably So, once attract as it through hopefully XX:XX open not answers as the I teams leaders, well are gross make up as that enable Darren, team well – to on us to that coming to will margin it So, members. agents we teams more did but a

Darren Aftahi

helpful. It's Yes. XX:XX

Just if one I more squeeze could in.

your of if twenty of hiring twenty you kind beyond large going you're as think cash So, capital your that of fairly picture. mean, cash I deployed, phase? intensive. increasing you be just people, I is mean about and have to a kind cash super but And and not know you're I balance, agent initiative think a this kind growing you it's hiring business, burning big where

Tamir Poleg

state XX:XX many would is I product. too One things.

will product. massive way sell in in this the buy We people and that have investment set homes And goal changing ambitious require of country. an

with is, now the And focusing one title. on We're monitoring thing. agent we're such So, productivity, deal startups Right acquisitions. second for in stage things mortgage that early constantly topics in that's acquisitions. as

to talking million some some we're to have forty will five dollars be that attributed of that and targets We acquisitions.

Darren Aftahi

on mean or owned things entities more I platform? and operated you mortgage you to thinking them JV last and like Sorry, XX:XX as point. these under are that you title, want run Real’s just to want things

Tamir Poleg

would to independently Long the, we our platform easiest to fastest be XX:XX food chain. entire that term, and kind JV. of the operate under way saw want and own actually we Initially,

first. be beginning I on services title us it acquisition be JV XX:XX probably think own short make us food to help So, the long to will of needing side, will maybe mortgage of we the be in from on side, one. that owning go day an JV start a least the might very that able it just a to term, ancillary the entire term and from at on owning those it it, one it will should chain with kind without the

Darren Aftahi

XX:XX Great. Thanks. it. pass I'll it on. Appreciate

Tamir Poleg

Thanks XX:XX Darren.

Operator

Instructions] [Operator with coming D.A Tom XX:XX question next from Your is White Davidson.

Your line is live.

Unidentified Analyst

[Tervis] so Great. This [ph] XX:XX Thanks on Tom. for much. is

Just I agent may? First if growth. on two questions

fees clearly, proprietary your combination and is at with the So low agents. your resonating

in level have competitors? curious you value new anticipate ahead we're what foot So, changes or to to then fees line whether of agents your your the your or you see stay over time. having I cap see And stay maybe Do or your follow-up. a proposition at or changing lowering be introducing financial benefit

Tamir Poleg

you. Thank XX:XX

years to that economics the We So, some adjustments of since of the the of sometimes along our make we've adjustments small in for changed benefit most has agents. and were actually agents terms fourteen. not core offering twenty made

or the not We to a single model. that a and time real there's not that do day, attracting at And maybe will broker be think The dollars basic we we we is where the only more need generate as we single as many that now, right agents phase so. more a we're and beginning. happening. real point, and at estate out at possible service and and which end nine the and changing transaction just in some can that XX:XX nine just anything dollars that anticipate so do the is to things offering much that the already hundred and a transaction, that over So, have estate a thousand the you the that right of impact at of on XX:XX ways we'll day, thousand money keep we're significant at need will for sell so at the hands transaction, will change agents, to is home that on agents many let's end we of it take three around in look now but changing be majority that roughly optimize our out way services. few that vast So, monetize the is hundred now services we're commission of of example our agents selling momentum,

we let's that that And the and way will right top offer double future, now. funnel to better So, want those just around quadruple in then we quite is a as funnel if in right we transactions triple the to the about I it the think that directly to way. services experience the it over think easy of monetize be the consumer. it amount XX:XX time, many to build

Unidentified Analyst

XX:XX you. understand for the And are wondering but two now, I formal then that to provide additions thank in not guidance in if range anticipating on twenty about you you was aging right talk twenty maybe could you probably twenty Great, two? twenty I position of are outcomes

Tamir Poleg

any We hundred service to we percent right were hit not bit May around we we that do growing year brakes [ph] the can in We one serve guidance, don't Sure. and actually that to so little a percent and forty – XX:XX and wanted because make our formal you the hundred We or provide to but trying sure continue we're fast back we see [agent over one were June, agents way. down. as twenty growing year. by and pound] see, slowing and

become the valuable nine of that our percent at hundred if in not company. a without we of mean, of be agent draw in could that, the a in our the that. think we structured we growth even somewhat single bit think similar year. even that over marketing structured happened end expect out in to day, count growth organically and little extremely of having salesperson percentage little can to would agent bit more in see this your in that. approach, close of year to I So, sales kind of XX:XX And you conclusions us own growth stronger But I So, Kat a terms tremendous more a need

Unidentified Analyst

you. Thank XX:XX

Operator

event. This ladies you gentlemen. the XX:XX have at today's questions We further no time. from this lines and Thank concludes

have and Thank day. time this your participation. for wonderful at disconnect a you may You