Real Brokerage Inc Q3 FY2024 earnings call

Strategy Overview - Real is a real estate technology company differentiating through financial incentives, proprietary software, and collaborative culture. Vision is to simplify home transactions. - Key highlights include Leo Copilot (AI tool for agents), Leo for Clients (consumer-facing portal), and Real Wallet (financial platform for agents). ### Agent Growth and Experience - Continued growth momentum with over 2,000 net new agents in Q3 despite traditional slow period. - Navigated NAR settlement with 89% of agents feeling prepared. - Private label program has 1,000 agents. - Culture is a key draw, with 92% of new agents citing culture as influential. ### Financial Results - Revenue up 74% to $372.5M. Gross profit up 71% to $32.1M. Operating expenses totaled $34.6M, 9.3% of revenue. Adjusted EBITDA improved to $13.3M.

In the third quarter of 2024, The Real Brokerage reported revenue of $372.5 million, a 74% increase from the prior year. Brokerage revenue was $370 million, driven by a 76% increase in closed transactions. Ancillary business revenue, including mortgage and title, totaled $2.6 million, a 97% increase. Gross profit was $32.1 million, an increase of 71% from the prior year. Gross margin was 8.6% in Q3 2024 compared to 8.7% in Q3 2023. The total value of homes transacted over the platform was $14.4 billion, a 78% year-over-year increase.

Forward-Looking - Q4 operating expenses expected to increase sequentially. - Planning to expand in Canada in 2025. - Focus on scaling AI tools like Leo for Clients and Real Wallet for long-term value.

Risks - Affordability challenges weighing on existing home sales. - Regulatory changes could impact commission rates. - Market volatility and interest rate fluctuations could affect business.

Q: On revenue churn, why has it been lower than last year?

A: It's a testament to the value created for high-producing agents and optimized offering with no better alternative.

Q: What's the expected trend in agent additions for Q4 and 2025?

A: Q4 is seasonally lower, but conversations around Real Wallet and platform are driving pipeline. In 2025, focus on supporting agent growth and smooth transitions.

Q: Thoughts on mortgage rates and elections affecting the business?

A: The business has grown despite external factors and will continue to focus on building value regardless of market conditions.

Q: When to expect expansion in Canada?

A: Actively working towards opening in Saskatchewan in 2025.

Q: How quickly will Real Wallet become profitable?

A: Current priority is building out the product, with profitability expected to follow as it scales.

Q: Strategies for agent growth and retention?

A: Focus on smooth transitions for big agents/teams, revamped Real Academy for training, and Real Wallet for financial flexibility.