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Real Brokerage (REAX)

Participants
Jason Lee Vice President, Capital Markets and Investor Relations
Tamir Poleg Chairman and 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 Brokerages First Quarter 202 Earnings Call [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Jason Lee. Sir, the floor is yours.

Jason Lee

Good morning, everyone, and thank you for joining us today for Real's First Quarter 2022 Earnings Call. call Officer; Tamir Chief and the and our Financial on Executive Chief Michelle me today Poleg, are Chairman Officer. With Ressler, our well and we its XXXX quarter on morning, will EDGAR. its XX, results This and filed ended March management for analysis as discussion SEDAR the first financial as the press can be documents, on both These accompanying along found with EDGAR. release, SEDAR and

facts, that to may statements the turn like I'd I are Tamir, not forward-looking. call which be over historical this in remind Before earnings call, everyone to

Our these as from or by law. the intent reports. actual expressly required continuous these forward-looking risk factors SEC may differ except any results materially detailed obligation Canadian statements, to that differences our and disclaims and could in update documents cause these disclosure Real statements, are forward-looking

I'd the please Tamir, to Now call Tamir Executive to proceed. Chief with turn over Officer, that, and Chairman Poleg. like

Tamir Poleg

growth thanks, and the the our the agents Then, we to Jason, like some thanking Officer, will financials. Ressler, I are I updates today. by by have community it who Thanks, Real operational start teams agents I for to to and contributed to everyone, turning large who few months, turn joined to in of before would provide deeper our hundreds of top-level joining and financial Chief now into our highlighting over continue some experiencing. Financial dive results. Michelle past will in

the joining in increase revenue as results. revenue estate $XX.X XXX% as that real of financial Let's an the nearly agent was year-over-year. to the QX was growth in quarter start increase Real, $XX,XXX. per XXX% first with agents well Driving XXX% million, a increase

highlights. operating to turning Now

provinces of Mexico, expansion Maine. District of Mississippi, the XX first announced tally Real's during bringing into Arkansas we the Ontario. states two in our quarter, Subsequent Canada. of quarter, Canada, end terms into geographical in expansion, announced Columbia states, we expansion the and in launched the our of and to In And we to New

in with deeper We to and on pleased North America. expansion our efforts plan focus areas growing are existing our within

referrals, we hard appeal to culture. factor build are kind more agent attracted our being collaborating. to to incentives to to the like-minded growth. and and working a attracted driving and of and importantly, social they're Moving highly to principal agents culture. that individuals agents reiterate providing tools, best I'd We people. a by We our They're culture like believe managed

culture. events across this countries throughout to have We the the year develop

the of this resonates who important that rolling also in attracting have maintaining lot of belonging to Culture, is to programming We a agents out opportunity also feel We not is who values. only greater Director that these something see values. see the their of they with opportunity,

realtors a in since homes, Just platform billion luxury expand XXXX in With named residential the onto North example, clients, of investors one Invidiata, real February. continues as early its the estate is of XX real XX this sold attracted than March. what in network over an team in Canada our success and has Invidiata estate which has Group, attracted of on focus in It a more number times. years what RE/MAX team and to also XX,XXX been has $X

Trends ranked Perry platform top list which in the Additionally, this Mega as on Utah quarter, XXXX. the attracted team our for Real Group Teams

part Group our forward in role are play an Invidiara, to Group of look and Real them the the North having We to and say proud now team Perry the that growth. are important

that agents pleased everything advantage and why continues to retention. they in It's an enjoy stay. have of equity taking come element consistency include are the most incentives, at retention to of to Moving to benefit offer. our equity as These I'm they we why benefits Real. offering share Agents enjoying benefit.

continued increasing offering we focus. product I'm more of more to payments to instant Now turning the to and in product QX, glad that agents. update

storage adoption, of a and to integration process, of has year, increased short the saving months. recall, in and Real completed be January now a is you we been into Inc. title simplifies in October last escrow be launched title Real's product and contracts of in rebranded progressively April highlights a Real increasing Expetitle, and it Tools reducing such which As and part include title product in ranking, Title. benefit this acquisition the app to this information, Expetitle an will orders providing original app. paper-intensive the may is Full time-intensive expected errors as time. is and agents. were few integrated document Other as Title that

was In terms progress started, Real revenue seeing monthly. so for in growth revenue we since highest of company are the month March Title QX, the

terms on development of technology. continues in our Finally, products, consumer-facing

an have that a to sell previously to I mentioned, will enable online into estate beyond company aims As grow outdated process. the broken brokerage and fixing real this Real large way people and traditional homes, buy change

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

QX XXXX, team, fact, agents be right the as the full-time company. competitive XX, X XX. to continues around that remains another divided of believe for March In high period of by a currently employee this efficiency are We the is To ratio, which was to number advantage. our on successful conclude, our

services We rapidly to adding core are our ancillary brokerage growing offering. and

this steady to our of a and cash balance Michelle? financials. I point, a sustainably in-depth turn for positive with Michelle At view flow. operating now are will more We it sheet

Michelle Ressler

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

at year-over-year to Our XXX% XXXX, X,XXX our an count further which This is year-over-year technology accelerated QX by QX compared up to XXXX. grew XXX% year-over-year. which in proprietary XXX% pace. driven by was QX growth Real which $XX.X and revenue agent was mostly growth, revenues agent, of per supported increase million. This footprint grew XXX% was us allow completed an platforms, continue expanding and transactions which geographic increase agent to

million $X.X XXXX. XXX% Our year-over-year profit gross grew in QX to

by to margin gross are margins number margins of newly-launched of by cap, pressure affected prices. previously, on the producing and from as agents profit services the and higher increase downward increasing increase the touched volume to Tamir our in adding Payments Instant offset through of We agents introduction financial other program services. gross by rising unit that Our such seek ancillary

We have now service Expetitle, the acquisition added of Real with now our first Title. ancillary called

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

in X% XX% monitor versus quarter demonstrating responsibly. thus As our QX loss to XXXX. million in at a the $X.X XXXX QX for percentage to in of ability revenue, total XXXX, recorded in and $X.X were execute spend QX EBITDA comparison million was losses Adjusted

increased increases provides revenue As company. believe a QX minimal EBITDA of that transparency. called the The $X.X be further in count that us effect QX With serve adjusted personnel our to is agents efficient trends on best-in-class with Expetitle, believe expenses the scale and change agents agent The we in attributable useful our as XX% revenue our employee In and have the and expenses XXXX. our now exclusion growth revenue, head being the a in expand provides costs. of of expenses public information masked we in Overall, customers. to percentage onboard the to we employees proven in underlying related Title. that stock-based better agents, better financial our primarily EBITDA Real in These compared our ability the in measure due our million to XXXX by last highly service evaluating allow that management company, of program our to we in compensation of in $XX.X calculation. losses in and adjusted key supports at We identify operations operating operational were could and of also performance otherwise to productive number performance growth comparison about X% and full-time investments to we to were in useful sharing commitment our provides in million year. business exclude QX impact supplemental XXX%, as also the helps growth a as a QX to highly manner expenses well further is particular, believe offer of Real's our year-over-year to acquisition and

company, comparison General of side mostly in of related a the $X.X talent and brokerage in of as expand growth. as in they are $X.X are Note As to Real’s driven the title does on to compared in next expected administrative their is to through the that increase G&A March costs XX to rapidly. we last QX as mentioned, of to increase X the support ratio million that geographic costs scale new March that fuel our XX, continue Tamir employee in to to direct calculation X footprint, are forward were wave increases increases full-time is expenses going business being the we and revenue and support headcount year. by public agent agents. not supports in Real not XX, in invest That we include to consulting the XX our XXXX as growth. to focused further as XXXX million team driving Title business of this

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

in associated the incentive $X costs to last XXXX, due was of long-term to acquisition were costs Research stock. the of our success goals the year. in agent the company. foundation The to our see contribute to the $X and primarily which comparison is of of in now Crunch to expect million QX decrease We tech and million Realty with programs development

residential developing capitalize transaction Additionally, began program. QX XXXX, real we in to our associated estate costs with cloud-based

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

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

its for balance demonstrate terms issuer remarks. million pursuant normal market share my I as company $X.X now can X.X This the of total up bid. and the quarter, you the the strengthen course ask sheet During continues to will The for Operator, company repurchased poll its a the common million to financial concludes shares questions? year-over-year as open well growth. significant for please Q&A. line to net operator of

Operator

Capital the And Aftahi first Darren Instructions] [Operator is from Partners. coming question from Roth

Darren Aftahi

Couple, if I may.

maybe brought QX I you agents XX the months that what versus XX about been know, just of First, speak comparable you've year? to has the don't productivity in year last, of their this could on QX last and

Tamir Poleg

of I that the ago, increase on that we months at So seeing the think is agents. we're a number what looking agents fast XX brought in

the to XX So typically, that months in think account. compared because need joined nine was two real fact into are in the is so. of this One stronger take increase that have just this estate there months prices. that past the us or that I ago But joined factors to quarter overall, or overall year home market recently we the high-producing agents the

can we tricky. is if to a mean, happens today we're if joined about production somewhat here about we What of that little bit case-by-case us past think the that seeing a day, I to what XX of see only attribute the improvement, bit I'm productivity, a over just have on and in saw bit I'm somebody quarter XXXX, to but that around because a look of we so is rapidly the agents QX we it's mean, trying say a does apply it joined past is the trying second At the little what it that takes what the we attribute I too platform little time. I who to attribute end think We is that that grew of us information effect platform. can sure their to to that early What market. our to basis, have bit because of to. not overall, little our productivity we determine agent I months. over the

Darren Aftahi

just the sort a Obviously, to seen interest curious quarter, and out? little then April call housing kind have curious XQ in And May. you'd kind of anything the and bit. rates just I'm of terms I'm of market post of you've moved maybe what of kind date,

Tamir Poleg

do just agents over to still just buyer hear and not try Texas. of the less slowdown. about else, everybody to and Every any cautious less see in that Florida Like asking and areas. strong. market, search a spent the all seeing now was is it's we because in it. then, reaction days their affordable. We're obviously, market starting them provide Well, there we I not about the to Orlando, becoming and you market paused phrase San a a sudden be signs of in the guidance, we we how of week, Antonio, softening Last couple talking are When different

we the West softening signs But the seeing strong. think is that bit little on overall, still I of a Coast. market are of

As market agents this for alternative. an sort in an I attract opportunity just more gather said us, and and of to a agents before, like is downturn Real more some a the showing platform opportunity for

started we are very market the that. we in for talking We've been preparing So I months internally, a for prepared shift about that. few for think well so

think I a fundamentals But are us. no happens, still inventory be will a estate out of surprise that have real there. to that we the strong that We not market. job have all if

that to rising plays have so be it We rates, how interesting out. will see

Darren Aftahi

Just two may. I if more,

Looked your curious March And would business, pretty ramped in Just maybe other think title of to talk was Michelle. live that you have about kind of into states the of this what do quarter. sort kind the right strongest the How quarter. for payables said strategy. like significantly last I'm a I title the one develop? just plan about that you XX spoke now? you integrate You

Tamir Poleg

three Expetitle, additional When into acquired We states. rebranded expanded that Title. in was now Real them, to they we were licensed states.

in to We states. a we is things. in of Title are then more. do not working main integrating One, sure we one successful, and specific into operating are on expanding what still consumer-facing market, are to second And two want apps. completely proof have we it we the What those making Real is concept our and if that the

a are we a of So place I concept. to will elaborate means Texas chose focus on on for It each. as We that proof out there.

We're about agents. that the the events our them agents. some will will other other and or up using our to company. transactions set in agents funding company of JV. that of agents will they ensure with a the explaining likely the use their also title with that, asking they talking are our We same agents top-producing be benefits title attracting become part having owners because be JV We're our At time, we will into they to

longer-term one result So in of will thing. our believe probably into That's structure amongst The integrate agents. Real Title app. JV this our a leasing Title is Real approach consumer the adoption we that massive completely

in starting our be Title. an that choose one signing work so services. the seamless with, to buyer, today, it documents it will a title that care them our not they agents really them. faster most Real is buyer probably closing, are to work with a to for do result title are will So and we going buyers pretty of our Again, And potential use visibility which to company, authorization will whenever offer company the more be to if own smoother use

us. for win-win to for So it's agents client, and a be going our the

of so more We that a October months concept, do. for work are the development targeting to few have of we proof

Michelle Ressler

payable around the account just answer jump. your quickly I'll last question So

processed second in United in significant that is bit last in this towards of Real in that a year, seen year. the of So and than in quarter half increase the in we've a the little transaction is launched the the way Canada first business business different States. Canada Canada way works the The

are So point Canada, a before on deal escrow and closes, the so the funds represents time. held that be books required in in in that until to payable

payable increase and cash So the will accordingly. between balance accounts

Operator

next And question Instructions] coming D.A. [Operator the from White Davidson. Tom from is

Tom White

was are of I maybe CY thoughts like on I and all it's look One, hoping if can When kind for updated we updated how a give thoughts around realize I what there bunch few, of A done, margins us about agent just unknowns gross of kind margins gross you moving 'XX? there said pieces market any could. might your capping think instant should and price kind of just and and home the But and for payments. the year? on appreciation

Tamir Poleg

margin around is on gross quarter keeping the a gross increased that are actually agents X.X%. agents higher margin bit producing is and a little stabilize commission knew be going increased are to What that and this We XXX% we the the is us fact bit and starting quarter. are their fee. to attracting that and we seeing those by little capping, high-producing It a paying previous only affected they're therefore, of

going the XXXX, And we affecting so same optimize optimization margin, it and So margin. gross we this knew the of the would gross comes different half at second model. One time, be be about thought into an ways of forms. into XXXX in will that to

shareholders clients about less model that's company, a we agents agents, both are company, to our are hats. the by in is but the the need fact thing. talking our to create gross both can of one affected are they We producing that so higher where agents How wear the also margin there

meaningful will with That a time, We Second as on payment of thing margin. on think gross is services this of will Payment payments, effect the of that have margin. additional year. effect couple gross Instant a is currently instant on contribute have to hundreds instant a track small financial all of such dollars those thousands

Title, The talking believe that Real in we margin. XXXX Real about Title on have a will meaningful impact Going into gross

in think is additional minimum its we're the more future. where I least So are margin thinking services. Obviously, we all adding about at ancillary at when time at that And in point the one just gross add think thing. about I'll all, a we

So title at was the looking Obviously, well. looking insurance at first. we're are we as mortgage,

we margin. couple XX% the to year, later in a in margins think we I up, and start gross seeing that obviously, moving those will So gross this getting services is us target years for as of XXXX, add above

Tom White

Maybe just Payments. on Instant a follow-up

two, out you of of to transactions are payments? look years you your what If think relate kind instant three, like any out, idea percentage four

Tamir Poleg

What we payment requests we're about seeing four month. about roughly $XXX day, now is processing new per that's that instant so are per

think embedded I opening payments and I of up. be with that the to will teams for moving and transactions assume drive it forward, in that has leaders team probably will that the that would XX% them. we It up instant have will probably do fact adoption

Tom White

seen in And count, I'm specifically, swell some guess, be you're recently net up add I curious agents total then of in pandemic, just the big kind And had I headlines maybe during changes about of seeing guess retiring. thinking this the gross agent on might there any folks leaving that in US kind the versus add I've around but whether -- trends. you or some industry

be become and like whether a market if your you're slows seeing in trend, exposed there that Just if the you curious how does that business might anything maybe down?

Tamir Poleg

their six they up coming what were renewals their question licenses that weeks, not their Board just and past that over an the up agents is actually productive five, gave seen licenses. on It's we've were because or interesting of

non-productive. to interesting is those that seems agents starting were trend the eliminate that's it an like market So because

well. starting roster in we as to our So see are that

and process roster, and now By cleaning What are anything It's asked the we out say just the not the trend. that that are that do seeing is agents if real to of I you it's fall not think is out they we market. same still think have then. just that real up ourselves in that past, huge that we seeing we since this in healthy and to still those were to happens reaching the periodically, doing way, question, every that intentions numbers. a estate. But are asking the that the now of starting practicing I agents performing important are

Operator

and And I concludes questions you conference that call. in today's And all queue. see no there for today. ladies are joining gentlemen, further Thank

may now your lines. You disconnect