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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
Tom White D.A. Davidson
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to The Real Brokerage Fourth Quarter Earnings Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Carbonara. Sir, the floor is yours.

James Carbonara

Thank you. to quarter welcome earnings again, once Real's XXXX fourth call. And Tamir on Financial Executive the me Poleg, Officer. call Chief With Ressler, are Chief Michelle Officer; and This XXXX on management results its morning, quarter SEDAR. its analysis fourth XX, and for and December ended Real filed discussion financial along SEDAR. the found with documents, news release, These be can accompanying on review to like Safe now company's abbreviated Harbor statement. I'd the other positions, I'd statements partnerships revenues, known forward-looking expressed prediction those unknown results of events future conference factors, results or call like and to future actual which concerning construed from materially releases, or uncertainties performance be remind implied statements, to may product are you operations, which may differ cause that by that may markets, involve financial such risks, as statements and other conditions, any made in this economic from a and statements. Non-GAAP will and on the discussed call. be non-IFRS also results non-GAAP believes is data, ongoing the the company's presentation company purposes The non-IFRS informational of supplementary useful information concerning for only. and provides operations and provided

reflect all in Additionally, references currency this in dollars. U.S. call

Now, to Officer Tamir I'd proceed. please Poleg, call over the Real. Tamir, Executive of Chief to turn like

Tamir Poleg

quarter QX was XXX% increase year-over-year. to XXX% increase financials sorry, Ressler, real revenue growth results. agent James. the dive over Driving Thanks, and continue turning increase have an of deeper for as highlighting thanks -- months our few teams Michelle would I results. of agents into XX.XX now to Real, by our today. our the to provide of Then, and financial contributed revenue fourth large growth will some in start the that joined past XXX hundreds it who Real some agents experiencing. the joining Let's operational will by I as start the to to And million, like to thousand. who estate top are I in community updates everyone XXX% was Chief per long Officer, thanking Financial joining agents, in level $XX.X with before we financial

Now, turning to highlights. operating

we of announced And terms In Ontario. quarter, Michigan, Iowa, into into in fourth Oregon. Kentucky announced After Wyoming. launched the we expansion Idaho, Real’s and Mexico we New in Canada, the geographic expansion, quarter ended, expansion during and

of our and District look business state in the of to tally and of states. XX Columbia growing bringing forward Canada. the to states, Canada We in each So operating our

remain Our on will North and states deeper focus the grow in will XXXX and America in we're currently wider serving.

and this of best referrals, Moving agent continues the We important attract growth. believe tools, to incentives, an working our culture, we providing be environment. part agents by to

Red saw model example, Just is Group, opportunity Rock what attracted Broker they as were, in Real XXX an agents an agents October. attracted a platform tech that our to this and and searched. of any earn They enables the was brokerages at Rock Real. plus they to had unavailable in Real Red Estate into stock

proud that Red now say important our an forward are to look them of in role play We the a Real to and part operation. team having Rock is

agents. retain not tier us into equity incentive to but talent our equity team. into majority agents opt retention, has The our only attract It Red like management us also incentive Rock, to groups Moving top attract allowed of to helps continue plan.

a First Officer. his at range Mobley companies. will served sold an first her Real Hill, at First Operating As our Oracle. global as Kat held the Advantage. and from Raj of Raj as known that Marketing senior managed she later position accounts quarter, brings several Uber. many with to our we Marketing joins with recall, at studying joined Advantage, Carolina announced team several team Chief global friends role spirit, technology Also the Officer. Prior led of Fortune during we management brands Chief Katharine Chief at also University management company Chapel leadership at the be the having firms at as his North He XXX to QX, Officer in joining Naik while previously he announced at founded was marketing Workrise, Raj as RigUp. entrepreneurial

focus. Now last turning start with to Instant we product I’ll which Payments, October. launched

You Instant our real way with paying industry. attention agents estate in change to Payments may are remember is the the

option that’s industry executed experienced agents to of assisting will the its build rather agents by transaction There's time new business is grow than getting With be program paid paid faster. first its kind to by a disrupting model, the have the at closing. and and their the no

synergetic journey. to people and we offering agent of beyond creating and needs expanding reinforce by sell homes. transaction, experience constantly keeps emotional who brokerage, an but invest control convenience, enhance resources be large are our a their process, and way to people time digital simplifies assist reducing result that real navigate intensive on realtors, Real paper errors company the the the mobile of a facing of more Expetitle buy consumer into buy called consumer broken is closing of this closing industry. homes the intensive escrow based and their of announced that has on belief Real innovative technology a excited entire will middle experience and The and traditional combined in change technology acquisition Real’s close driven we a gears in to the customers. experience the sell creating quarter online real solution title title In its our that amount experience Title. an guide The can rather hand, considerably search to few to time. and the and and estate both the We the Agents agents Expetitle and the more want can agent to in of understand the after that mission Inc. ended, now I with way to process. Expetitle's evolving to combination estate Instant we using enhanced aims Expetitle to and and from buildout agents to providing way, Expetitle, in saving for transparency, human is for Payments the I'm clicks improve developed more M&A, and welcome software a is are Shifting the one The and speed and increasing family. scenarios. fix to client approach We team able and And the Sean experience app.

convenient, allow expedite transparent us efforts a Joining experience to faster forces our and towards agents' will for creating buying home more our clients.

headcount to transactions estate efficiency on of team, and the moving we real to efficiently. grow continue Finally, our

real impact of well add further technology our Doing expansion, full streams on positive moving a expand agents that will adding through having the are possible. as and focused growth the a our estate we that is advantage. by on the ahead as this mission conclude, of big that as online XX, development, December revenue like right many building on and industry. also we reiterate agent unwavering are addressable at product which committed of retention, time agents estate our as fact, number homebuyers divided referral, In ancillary To We we're so I'd XXXX, to efficiency market efficiency employees our facing remains grow our of X:XX. consumer high team. currently that team, believe and competitive real to is geographical in improves home experience. available services the and ratio, into buying total around We're additional

more also a intend now sheet as in to we operating for flow to Michelle? it Michelle depth this sustainably, point, and the will grow of balance positive. financials. We boasting turn are view our solid At cash I

Michelle Ressler

us. I'll and phenomenal of Thank fourth some you, Tamir. our growth. joining year of full start for XXXX. And quarter by another everyone year experienced for financial quarter We full results thank key you and assessing the

increase agent revenues which full agent by XXXX QX for XXX% look XXX% was XXX% profit, at XXX% which profit platforms was in at million If million as year. expanding growth period continue XXXX gross further gross to and to last for revenue comparison us the an to well. allow $XX.X supported our grew pace. same we to agent, technology year-over-year year year. grew last XXX% Our mostly compared by driven is per up which and full and the This the XXXX growth to geographic QX and proprietary million to $XXX million accelerated footprint in $XX.X year our to $X.X count grew This

the by affected prices, resulting high agents. are agency attract caps increase in as of producing margins number to the and rising and increase pressure, we continue Our of in unit volume downward

pressure increase that services. adding of this previously, introduction such through as and margins touched We Payments to program launched newly ancillary the by and Instant on offset our financial Tamir expect services,

to contributions Real effect second called the have our of can margins added this expect and to first service revenue of now now the We towards with year. see early acquisition our Title, and top-line the half take ancillary Expetitle

to million in as in employee was team management, XXXX. Our building compared million net the for infrastructure. agents, well QX $X.X of investments in loss XXXX $XX.X primarily result compared million XXXX. $X.X loss personnel, to of our Net This in was operating in operating was change $X.X our the quarter of key as million QX, technology

to evaluating to this be In of adjusted performance for results the stock-based in believe into XXX%, those XXXX. talent we identify operational were XXXX this trends expenses $X.X EBITDA customers. performance and allows basis, is that in NASDAQ XXXX, loss accelerated the that believes proven our loss also million service our the We year. and is such who financial Kat, resources. with and last million in exclusion team these markets. related XXXX, On employee could personnel expansion a further were to compared at due versus in $X.X in of better to to last We improvements offer we agents for were to EBITDA add. to Raj, joined in is costs. an along percentage cautious revenue expenses, to operations, key in agents and particular, board million and top expenses ability our on of QX, our XXXX. of and demonstrating one-time masked believe approximately and Overall, With million enormous investments is of $XX.X with full-time year each capital a were supplemental our the expenses of to was this XXXX, increases comparison agents' business on compensation QX of as in XX% have technology $X.X and the and by operating operating other stock-based that's and forward Management in for growth that and in $X.X we and at listing place about to technology, recorded year. hires impact of adjusted us highly total operations. hiring to to so efficient in the our year. headcount, monitor These to this in management our attributable provides and On our annual our $X.X useful those million service The efforts number XX% every prior approach expenses basis, spend provides $X look in exclude operating to infrastructure key compared $XX.X we the The million great as As to in commitment the infrastructure, useful year-over-year revenue, losses management compensation across manner, otherwise $X change transparency importance also an our EBITDA in quarter view primarily Real’s expenses our support in million contributors managing will comparison rest EBITDA. measure on million our to helps a to have $XXX,XXX and on provides all and do the underlying best-in-class to our effective employees minimal and million necessary growth growth expenses better adjusted one of Adjusted compared investments in company. EBITDA quarter was the in Adjusted value our in information pace.

annual scale ratio in being agent basis, expenses were year. general million demonstrating thus is compared That $XX.X in company, increase is related and as million $X.X that of to increased comparison ramp. support to As December Tamir XXXX, December $X.X General and to an G&A administrative to X:XX and the we begin XX, headcount going in to XXXX. driven to million to XXXX $X.X QX increase even X:XX in further million On in to last XXXX of are mostly as as costs continue expected as Real's by rapidly. public full forward administrative mentioned, our in costs QX we a growth. time efficiency, increases in costs employee compared were

as grew monitor due bottom-line. year. $XXX,XXX actively we is well Marketing the and million that That agents stock-based Real as revenue new mentioned, for QX equity program. attractive for our refer to based performance share to equity to in impact Agents agent the to share program and agents change are compensation related criteria. to on paid eligible certain as in they last costs from revenue earn $X.X the and QX spending on of personally However, primarily incentive

QX were in expect and of translate and was to in grew the to supporting development focus QX and all product. goals offshore contributors $XXX,XXX research project comparison also due in see company. costs costs into employees the XXXX an incentive consumer agent $XXX,XXX comparison costs to and The to very development in and the facing basis, believe annual last agent full success building primarily increase team, We a the -- to $X be addition of in with our to of to our in it on XXXX. robust And significant million an Research growth associated to year-over-year time increase in development year. fruitful programs and $XX,XXX long-term on

to technology a the We agent mobile now app, have are real developed transaction build estate an automation beginning for full and journey. consumer the of through

efficiency year, were is of ability were sales, level percentage a they and As last XX% revenue, scale. representative to This administrative year of general our costs of this highly XX%. and and

the able that's QX cash the our from cash mentioned, $XX with we holds sheet XXX,XXX and infrastructure path impact year, strong, with $XX costs. operations year. XXX% agents comparison in company the by no million technology flows last million Cash increase operational of us in and QX investments, our support the on significant to debt. total on a increased to balance to a forward have We As from prior in holding minimal ended balance

bid. X.X repurchased common to but and shares company a This our focus its well concludes continue agents, as I for Q&A. issuer journey terms the year, company not growth. to can demonstrates open up acceleration to well. year-over-year expand now the operator total continues for balance pull The pursuant and for footprint, of as Operator, the During we $XX,XXX,XXX of financial million ramp as its sheet course of significant to from the my strengthen industry lines you This only consumer remarks. the as will our ask please questions? normal

Operator

for and Instructions]. Certainly. Ladies gentlemen, the floor is [Operator open questions. now

Please pose Your first Aftahi. question announce for question. from today your affiliation, then your is coming Darren

Darren Aftahi

Nice follow-ups. with Capital what if Could and transactions were fourth in I quarter. I'm the And couple for the ROTH you XQ? give I've then quarter transactions then agent Partners. may. work two the A got on per

Tamir Poleg

Michelle, do have number? that

Michelle Ressler

got connection sorry. My I'm repeat the Can disconnected. you question?

Darren Aftahi

what -- and hi, implied the then in so the looking the transactions, fourth Yes, per I'm the for Michelle transactions agent were XQ quarter? --

Michelle Ressler

year, the agent. sorry? I'm the XX,XXX agent implied were per for Transaction in per Sure. transaction

Tamir Poleg

the We the transactions with of total in X,XXX. around X,XXX number quarter ended agents. was QX So

roughly X.X transactions the per So for quarter. that's agent

Darren Aftahi

said you XQ. XQ of X,XXX? Tamir mean Sorry, you Did

Tamir Poleg

XQ.

Michelle Ressler

Yes.

Darren Aftahi

Yes, it. got

see X.X Is little And at for worse, sort neutral get you your perfect. transactions your Okay, curious expansion basis? the about agent. like X could that a we agent that the better, think that? on XXXX, then perhaps like in you number were an base, into over color number around I'm as general I go get XXXX, any year, just rapid per annualized are what thoughts with a be just of of

Tamir Poleg

-- a seen in have agents we've throughout or improvement per XXXX. What is per transactions that constant Sure. we the

the see transactions. in per that or same transaction we agents increase I think trend to per not do continue per continuing. We experience will that

transactions number year. So in entire I will the be for X to believe that XXXX X agent per the

Darren Aftahi

you on I And through walk of what could maybe year. Title one as then know, to of just get Are and just about, And Can be like rates I could those XXXX? done? and now talked Thanks. general squeeze going are initial second around I the if called in Great. just Real half through be the then kind done? When guess attach then last integration look it's early we efforts? thoughts Michelle contributory will one the those

Tamir Poleg

Sure. Darren. And thank,

transactions So are pitching technology. welcome the it process. process business we integration a two-step be Florida. understand will go the a as and at that can then through Real we attach same can we drive performing be to operate to actually in We way building thing. of teams Title experience brokerages. three that's them that somewhat into We high as There's is Georgia make immediate the drive think operating side, Texas, One, our where the look technology Expetitle experience in tech partners the of we their in the of traditional where other up would will which their some title itself Real and and our slow just this own integrate one the funnel on how agents of on creating We employees. works. business that And now agents time, side asking sure in the fully At you offering building Title. The transactions mention states things. we JVs Company, ramp and experience, consumer part title into actually automatically solutions the the company. both more will LLCs transactions the I on The operations, more our two to agents to as with we And become are that

$XXX,XXX on first we the for is the up. Real a of kind revenue. year, The to ramp slow monthly a currently basis around that in the we half think will of see So Title contributing XXXX,

acceleration we start will the of second probably attach half, we rates. see an the As

Darren Aftahi

more squeeze in. -- could I I Maybe lied. Great. one I’ll

on experience, consumer verticalization consumer about UI to title food talk the actually, add what seems is an having a So more be going a pin or like Eats you a kind Aspirin, the of of when have revamped if you say, like the versus that Hey, you. get going you Uber Is that store convenience have this forward? of like, I to having talk app, ability you need when where Real what then will, in Gatorade about actually order to let’s and some and services, JVing from some kind like or DoorDash you local

Tamir Poleg

home is ordering a buying simplify obviously, want much same possible. complicated Well, little the we it would to time, as But than at more food. a bit of as

of we majority the not So preference when and it do title a think vast have that home really buyers company. sellers comes any to

I intention the is to every the our itself end same more the as at the to But and they day, either that as into that transaction pay each the integrate much benefits way title long smoother, a consumer will the consumer. in or think the be company So, with favorable is experience less. of

they through through or care, we if the need what believe to them title you more Title understanding process. and as do little to digital title buying to and -- to transparency But really So, through box we soon getting be a part faster imagine of bit in underwrite yes, consumers personal same convenience, comes is which Eats. when app I a just title, will us friction. The experience. company, as are a can they for that consumer will and a next will I we more of so mean, that more time, At simply speed is can it Uber a somewhat the home when and and buyers that's the transparency like and where complicated, a ordering will Real mortgage, can all And not And of exchange, digital to use attach used. company checking a actually you be being are the them would home financial it are in do. commodity think, you try downloading be from you I to again their is information, experience when DoorDash steps saying, and is are experience, provide It it going information, will trying they close with less enable providing the

Operator

for question today question. announce Please from next coming Your Tom is White. pose affiliation, your your then

Tom White

kind or last questions. if consumer a for of agent? Thanks talking home maybe think Thanks. Real Davidson. commissions do of Hey, incentivizing it I I requirement a -- you about working you one like are sort up make on. to for with via incentivizing of to Great. D.A. if know, And couple, them that the things guys buyers way you should like the download facing sort on core discounts home thinking and a about working like of might. are brokerage and as per about follow kind I a and encourage on had kind per the think actually taking attach or or A kind Maybe some we a them about offerings? about higher How technology sellers for them, to of revenue just of how there's then higher of don't way try the guys. kind follow-up. transactions tools like use transaction higher of margin And

Tamir Poleg

Thanks, Tom.

They much or starting you’re actually we end think They minute. is buying no closing creates a to to that is an you acknowledge the They And need how that not of hands the you're the might are that to actually if have you process to broken. talk you will when appraiser, of home first to have close dictates equity They do, It's different money actually as with bring not the like you last buyer, table. And a It's title else, to an of the at talk who somebody journey, have owning a would that have typically then when you end home going there in lender just and is purchase. change agent. company. lot no deal to certainty It will the the up day a you the And anxiety. existing transparency. lender. buyers. There friendly. an to stakeholders. I convenient to inspector. is There

again, this, the transparency there is So understand them control much to and convenience very will experience. better opportunity giving more providing create to that the look buyers when an different, speed something eventually that a back at just and create and control we we and

so and we not economics, The sufficient. experience And interact drive to is homebuyers. I of with able that necessarily thousands hundreds itself -- service process thousands if I are an that have of agents, in value than is to those we and the think mean to thousands more agents of future of tens

inherent an being there's built there. confidence that's relationship So and

as our they're financial download for a coming interaction them initial a and their So home, with the understand the kind exactly technology, will app them of through our agents be to will that consumer with steps, we they and app. from help that as is app our the is our their there. in future be looking will download to guide be understand them situation, will agents, which soon starting to then the But app of what guide asking will few it work with one asked through us will

Tom White

whatever, of that viewed a platform. is that obviously, Is On there, out that the I'm the a and that it that people Is provide share attracting to agent you understood growing it kind like like then of as a models are Curious platform of on, part clearly early it dynamic maybe a yours the agents to curious program? like driver the or attracting helpful. now agents. tools? like of was agents curious there's overall maybe in like splits? by whether guys also, get isn't That’s what's are value also, revenue Is want market, in your by And where is, risky, Okay. there's disproportionate one attraction, like, by once guys ago whether prop what more agents a you five years the as view, the broadly? model maybe ton

Tamir Poleg

I have of us to agents. your comment a about bringing to refer First, ton

So a lot is and every of yes, from are whole lot a world. attention we experiencing a agent growth agents, but of

opportunities, this are mean to the our up people, culture likeminded highly financial attracted they're Agents beyond managed they're is I culture. comes answer, working and who of resonates attracting change I'm is to need what to also that actually seeing I and see producing as of this would agents. culture answer individuals their kind a them by collaborating. joining more agents, little think hard And agents -- to only I bit opportunity I lot we surprising and a what we of engaged more a we values. So conversations of of being just lot agents little build ton, we're a that lot in a of belonging grouping the with high producing a us the as the to why basis, beyond not high the teams a see narrative daily social and a talking and because are are And to a technology, and on with question agents somewhat is like and think and bit. opportunity, that, attracted many they to something

becoming So culture increasingly important. is

only early people in like have they yes, agents is better whether question they enable understand but and the would understand it on on better the on early grows, when to an becoming to that. impact to that known, making about at of this thinking on As of those coming company, and join to will company that model like benefit future to I and that impact the stage be an second this making alternative -- would that move making point there's opportunity think definitely joining. a how an component from impact on do decisions, really part also that comes it others an be financially, will And this this them they an not impact

Tom White

if end kind attraction? market impacts that, this And to of the I maybe do be months, you XX I of cools a bit could think could. the willing put guess count you Curious I weigh you'd on to thanks. the agent Great, by and think one what also kind to relative if last year? of that off of kind also how agent maybe in like if XX Thanks. one to last maybe be try

Tamir Poleg

Yes, good question.

any X,XXX we yes, agent are the started our guidance, the estimates past at we year. growth a counts number, now providing at So measuring we're but or year really certain just in right not agents,

that looking we're XXX% -- that seeing it's So XXX%, we're year-over-year. steadily around XXX%,

So of around be you started math X,XXX. towards do the at if year estimate where we we the end the and can will

Now, And impact real I seeing everyone. has believe we're goes, inventory as tight on a market as very far an now. I the right think, estate that

the a the came of agents that Just end we bit. position a and as home little all, believe cools side. in the be will numbers that sales I market lot this believe There's And buyer great of of market the the capture February day. off, pain on to morning, first needs the more a I out. cool at more down But to

Let's to transactions a assume agents period by time, XX% still certain in need a apathetically then family. sustain of decreasing scenario of their

well So money they of will look amount for just fewer And just I think they alternative Real, be agents is positioned when transactions. think some to downwards market, they same point, the very out that in And the ratio they -- And will welcome at those value be need to there at an are that will shift to point today. looking I for and outstanding. when make to of looking this where at cost that the we be that alternatives. are sort of

Operator

concludes for no joining. at time. questions further see Thank This call. you this today's I everyone

now your You disconnect may lines.